Jan

21

What Goes Around Comes Around

Posted by cameron

January 21, 2008 |

We all know about the housing situation and the resulting huge losses in sub-prime and other mortgage investments. We have also heard several news stories over the last month about Billion dollar infusions of cash to strapped financial companies. I was reading today about where the cash was coming from. It turns out that many foreign governments own banks and investment companies, directly or indirectly, and they head up the list of most substantial investors. The list is interesting with two areas of the world standing out. The Chinese have poured money into Bear Stearns and Morgan Stanley while Citigroup is accepting cash from Abu Dhabi and Saudi Arabia. Other investors are Japan, Korea and Singapore.

I find it interesting that countries we send huge amounts of money to are turning around and buying shares of our financial institutions. Chinese manufacturing and Arab oil are standouts. It seems they have all the cash these days and the cost of screwing up the mortgage mess is to sell off chunks of those companies along with all the personal pain it has cost. Since the Financial heart of America is now more compromised than before, the people who created this mess have caused America to be a little less secure than we were.


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