When economy changes; history repeats; money flows from one hand to other, but story is different here?

Have you ever though where all the monies going now, US/UK/Asian are busy doing just one thing called “bailout” (you can call it the "word" of year 2008). Is tax payers money going into the hand of financial institutions which are ailing, I would say no, govt doesn’t have so much money collected from tax payers because to my memory most of the govt are under trade deficit or loaded with lots of loans already.

Now the question is from where they will get such a huge amount of money and in case if they it also what will be the impact of raising such a huge amount if we consider interest cost to be just 5% then for raising $1 trillion that country need to pay $50bn per year as interest only. Believe it or not impact will be worst and long lasting for any country doing these bailouts.

Even current market bounce should not be taken as a rally which is NOT going to last longer. In the Titanic movie, before the ships breaks apart and grows down vertically in the sea, one section of it rises high....very high.....but that does not mean it’s not going to sink. Sooner or later we are going to see the bottom again.

• Europe’s three biggest economies will spend over $2 trillion to rescue their banks. The French and German governments joined the fire-fighting with French president Nicolas Sarkozy announcing a €360 billion package of bank guarantees ($491 billion) to shore up the country’s lenders. German chancellor Angela Merkel said her government would provide as much as €500 billion ($681 billion) in loan guarantees and capital to bolster the banking system, the country’s biggest government intervention since the Berlin Wall came down in 1989.
  

Just look at these Euro Zone guys when US is going for $700bn bailout, these guys are planning for $2 trillion, one can understand that more crisis is in europe compare to US.

• Measures taken by the UK government and the Bank of England included emergency loans and lending guarantees totalling £500 billion ($865 billion), about 30% of GDP.
• Australia and New Zealand earlier guaranteed all bank deposits and Indonesia upped its guarantee to 2 billion rupiah ($203,000) while India pledged more liquidity to help financial markets.
• Qatar launched a $5.3 billion plan to purchase shares of its listed banks. Saudi Arabia cut its lending rate on Sunday to provide liquidity to banks and the United Arab Emirates guaranteed bank deposits.

Okay forget about these bailout and tell me where all these monies are going finally?

• Current crisis has created a situation when no one has trust on other. Who knows the bank in which his deposits are will go belly up next day. Banks are not lending to each other and every one is just trying to hold cash, FED is providing liquidity and lending money to banks but are banks lending to retail or corporate, I doubt?
• So, there is no money flow. Dollars are going into bank's kitty in turn FED or Central bank is getting stake in bank which is close to bankruptcy or buying paper which are worthless. So, this time money is not changing hand but just sitting where ever it is finding place.

-HBJ Capital Team