Posted on 08/26/2007 2:27:07 PM PDT by FightThePower!
Not a day goes by without a major European or US bank announcing some kind of financial complication or the other. While much of the problem lies with exposures to the US subprime market, it is perhaps no exaggeration to point out that when banks cannot or will not lend to one another, the global financial system is for all intent and purposes broken. There are multiple facets of this problem, as I described in recent articles: first, [1] the penchant of Asian countries to preserve fixed currency values against the US dollar, which has caused the massive and unnecessary reserves buildup that underpins the whole deck of cards that the financial system is today. The second issue is the repackaging of billions of dollars of US housing (mortgage) debt, the defaults on which threaten to wipe out many years of already meager investment returns for Asian central and commercial banks. [2] Third, we have the reactions from the Western central banks such as the US Federal Reserve and the European Central Bank that are aimed at stabilizing the financial system but draw much on the implicit support of Asian savers. p>
(Excerpt) Read more at atimes.com ...
That’s all the talk about on CNBC.
More likely, Japanese snatch up bargain condos.
Some interesting links on that page, i.e., the robbery of the century. Bump. Read later.
That brings up an interesting point. Would China’s central bank end up owning millions of American homes when the owners can’t pay their mortgage?
Not yet. Foreign banks bought securites backed by mortgages, but they didn’t buy the mortgages themselves. The servicing is still handled by American firms that pass on the payments to those who hold the securities after deducting a small service charge. So the foreclosure rights are still generally held in the U.S.
Of course, it’s only a matter of time before some large U.S. mortgage service company needs to bailed out itself. I wouldn’t be surprised to find foreign firms taking some of them over. But I don’t expect the Japanese to be among them. Japan has already been through this and they’ll stay as far, far away as they can.
It remains an unmitigated principle of banking that if one owes a million dollars to a bank and cannot pay, one is in trouble, but if one owes a billion dollars to a bank and cannot pay, the bank is in trouble. By lending to inept bankers in North America and Europe, Asian savers will now realize how true that principle is.
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The asian money center lenders will now learn how Donald Trump always seems to stay in the good graces of his creditors...even though he manages to run money losing casino’s within easy driving distance of the entire NE U.S.
No, the Chinese government buys treasury bonds from the US treasury. They are redeemable on specific dates as they are issued for 10 years or thirty years.
There are rumors that Hank Paulson has been traveling to China so much recently to ask their Central Bank to help us with the mortgage problem.
That sounds like nothing but a rumor.
I’m sure he was going there for fun? When you get into trouble, you meet with your banker. Our banker is China.
He was there to get them let the yuan float or move higher. It’s artificially low, which is one reason they’ve accumulated so much money in their reserves. It’s the Asian way of trade and finance wars. Japan showed the way. China follows.
Ping.
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