I know that UK had their own sub prime loan problems. How did the credit crisis spread over to Germany, Japan, China, Australia? They don’t own that many US Sub prime debt.
It’s way, way, way beyond subprime.
It’s up to sovereign debt, every money market instrument, bank deposits insured by the FDIC, debt from AA-rated companies, etc, But it did start with subprime.
It’s all connected baby!
In Canada the saying goes “If the moose is taller than your igloo, you’re in for a long winter…” oh wait, nevermind - irrelevant. The other saying we have is “When the US sneezes, Canada catches a cold” - but that could apply to pretty much every nation, so a collapse of this scale in the US would definitely have very strong worldwide ripples. I think one major contributing factor for China, specifically, would be its holdings of US Treasuries (is $1.3-trillion a good estimate?), not to mention the impact at a more fundamental level owing to China’s export market quickly drying up (not to mention that the Chinese gov’t is spending a lot of energy trying to procure a large enough rug to sweep so many scandals under). But with such direct ties to US money markets, US issues in lending/cash liquidity etc will certain spill over.
Wow! This is China’s fault!
Nike Wrote: ------------------------------------------------------- > I know that UK had their own sub prime loan > problems. How did the credit crisis spread over to > Germany, Japan, China, Australia? They don’t own > that many US Sub prime debt. Because the disequilibrium between financial assets and real assets–which is currently being corrected by the natural forces of the market–is global in scope and scale.
The truth is that Hank Paulson is the guy to blame. Granted that he didn’t cause the sub-prime and real estate problem, but his handling of the earlier problem and the mixed messages of how the government will do to the falling firms/banks, injected an heaven-sized ambiguities into the markets. Ambiguities breed uncertainties, Uncertainties deplete trusts/credit, Lack of trust/credit suffocate capitalist market… So, again, it’s all the lame duck Hank Paulson’ fault.
What grudge do you have aganist Paulson?? The guy is doing the best to his ability…he is the one who has the red phone call every 2am in the morning.
Give it a rest Alpha - just boring. Make a case about what Paulson should have done differently and when he should have done it.
How did it connect to such far places as Australia and Germany? Some of these countries owned US Treasuries, but that is safe. However, if they owned stocks then of course their portfolio would have been down. However, this shouldn’t affect their own countries lending and credit policies? Lets say that country doesn’t have a huge real estate bubble and no one is defaulting on loans. There banks aren’t going belly up due to bad investments in subprime.
Nike Wrote: ------------------------------------------------------- > How did it connect to such far places as Australia > and Germany? > > Some of these countries owned US Treasuries, but > that is safe. However, if they owned stocks then > of course their portfolio would have been down. > However, this shouldn’t affect their own countries > lending and credit policies? Lets say that country > doesn’t have a huge real estate bubble and no one > is defaulting on loans. There banks aren’t going > belly up due to bad investments in subprime. Australia had their own subprime mortgage debacle. Germany’s a multi-faceted problem. They loved the SIV structure, then let banks (IKB) let the SIV sit and spin. What’s interesting is that Hypo RE was a part of Hypo-Vereinsbank when HVB was embroiled in an eastern european subprime mortgage problem. That caused HVB to lose their A rating, effectively killing the bank. That allowed Unicredit to buy up HVB at a huge discount, UCI was a fraction of the size of HVB. Part of the deal was to spin off Hypo RE. Now, Hypo RE got into the same mess, most of it in Europe. I find it hilarious that the Prime Minister of Germany was in the WSJ trashing the US financial system, saying that the German regulators (BaFin) are far better than US regulators. Yet, the same company was able to get into the same problem, within the last 7 years. Talk about laughable. Greedy suckers were everywhere.
WS, Joey - I think Paulson should have either let Bear fail and the market free market sort out the later problems; OR bailed out Lehman and every firm that’s falling. Bottom line, a consistent stance to the market… I don’t what level of CFA study you guys are. But at level III, there are a few LOS reserved for behavior finance. This is specifically addressing the inconsistent messages’ negative impact on investors… Good to debate with you guys (or gals).
there is no banking crisis in Asia -including Japan.they simply didnt take on the leverage or risks the european or american banks did. Definitely value emerging there with the stock crash These nations are suffering from a dollar withdrawal surge from their countries.-collateral damage-no true safe haven exists anymore.since all assets rose synchronously in the last few years, a secular deflation leaves no one unscathed.
AlphaSeeker Wrote: ------------------------------------------------------- > Ambiguities breed uncertainties, > Uncertainties deplete trusts/credit, > Lack of trust/credit suffocate capitalist > market… Fear leads to anger Anger leads to hate Hate leads to (pause) suff-er-ing Well thanks for the lesson yoda, but I disagree with you that Paulson’s policies have had more to do with the bad economy than the TRILLIONS of bad loans made around the world. i think maybe you are making him a scapegoat for years of economic behavior that pushed growth past any reasonable equilibrium point.
AlphaSeeker you could even go way beyond that by saying Paulson should have restricted reckless lending and trading of toxic derivatives. If you want to blame someone, blame it on Bush. Cuz everyone blames Bush.
When did Paulson lose all his hair? Would you trade your hair for 100m ? I sure wouldn’t do that.
DonYuan Wrote: ------------------------------------------------------- > When did Paulson lose all his hair? Would you > trade your hair for 100m ? I sure wouldn’t do > that. Are we talking ZImbabwe dollars or US dollars here?!
Yes. In addition to Pauslon, Bush sucks too… No quesiton about it. If Bloomberg can ask for a 3rd term, we should bring Bill Clinton back to the office for 4 more years.
Yeah, because Clinton had NO part in all this. Plenty of blame for everyone…