Why bank shares are falling
The government announces massive, unprecedented financial support for our banks, and their share prices fall - well all of them but that of HBOS.
Shome mishtake shurely.
Well no, that's completely predictable on the basis of a decision by the Treasury and the Financial Services Authority - as part of the rescue package - to pressurise eight banks into agreeing to raise at least £25bn in new capital.
This capital can come from commercial sources. But even if, for example, Barclays was able to raise new capital from regular private sector investors, that capital would be expensive - which is why its share price has fallen (by 15%, as I write).
And since the Treasury is actually making available at least £50bn of new capital to recapitalise the banks, it's pretty clear that the FSA - the City watchdog - thinks they'll need that much.
So it may be good news that the Treasury is prepared to shore up their balance sheets, but it's pretty bad news that there's such a big hole to fill.
Also the £50bn from government comes with expensive strings attached - such as reductions in dividends payable to other shareholders, and commitments to start lending again to small business and home buyers.
In other words, shareholders in the banks are being punished for the sins of executives who will need to go cap in hand to taxpayers.
Why has HBOS's share price risen?
Well, the big danger for HBOS was that it wouldn't be able to refinance its medium-term borrowings from the money markets as they fall due in the coming couple of years.
It faced possible insolvency due to the drying-up of these wholesale sources of finance.
HBOS has in effect been taken back from the brink by the Treasury's decision to provide a guarantee for new short-term and medium-term issues of debt securities by banks.
This may sound like gobbledegook. But what it means is that when banks raise money from other financial institutions, those loans will be guaranteed by the state.
Which means that when a bank or money manager lends to HBOS from now on, it is in effect lending to the Treasury or to all of us as taxpayers - and we're a pretty good credit.
So HBOS - and other banks that take advantage of the guarantee - should be able to start raising funds again from commercial sources.
Now here's the resonant conclusion.
If HBOS is no longer in imminent danger of going bust, there's no longer quite the same imperative for it to be rescued and taken over by Lloyds TSB.
That deal now looks like a fantastic one for Lloyds TSB, because it's a once-in-a-lifetime opportunity to create a retail super-bank.
But HBOS shareholders might wonder whether they're selling out too cheaply.
And the competition authorities may bristle too. They may nag the government about whether ministers were right to rule that the deal should go through, irrespective of whether consumers could be hurt by the birth of this monster bank.