Friday, September 19, 2008

Biggest international heist in Financial History

Consider This

## Sometime back ##

(a) US denies Dubai Port company to takeover Us Ports company citing security reasons.

(b) Similar voices are heard against chinese companies too (though no official comment on the same)

# Still Sometime Back #

(a) sub prime crisis surfaces.

(b) Lot of financial institutions on shaky ground

(c) Spate of write off follow

(d) Bear stearn crisis, bail out done..

(e) US financial institutions need huge capital to bolster balance sheets.

(f) Fed action follows, credit & liquidity infused. lot of US financial institutions take capital infusion from chinese, Japanese & gulf (basically dubai based) companies.

(though could not verify which gulf company has invested in US Financial institution)

(g) Dollar depreciates, oil rises, world crisis looming.

*** Now ***

(a) US institutions crash

(b) Freddie & Fannie (biggest home mortgage companies) bailed out...

(c) Lehman follows same path.. US refuses bail out

(d) same fate announced for meryll & AIG but bail out package made.

(e) Oil prices decreasing despite hurricanes & Opec announcing reduction in production

(f) Dollar continues to strengthen against currencies

(g) One analyst finds out that biggest unsecured creditors of lehman brothers are Asian institutions!!!!!! (read this article in "from all street journal" in financial daily "mint")


What is the best way rob anybody?

Borrow---> Spend---> declare bankruptcy----> lender is finished.

Who is better off?

The person on whom the money is spent.

The person who borrows has nothing to lose as he is where he was earlier

Lender is punished...

Did same thing not happen with US markets? Did US government pull out biggest heist in financial history? Who lost most money in this turmoil? borrowers from those insitutions (i.e. US public who may not pay now to the lehman bros) or the ones who had faith in these institutions and lent them huge monies( Asian & other financial institutions)?

Why is dollar appreciating in such situation?

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