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Politics : Ask Michael Burke
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To: Zeev Hed who wrote (79675)4/16/2000 12:31:00 AM
From: Joan Osland Graffius  Read Replies (2) of 132070
 
Zeev,

I suspect what has been going on for the last 4 to 5 years is the same thing that happened when the railroads started the expansion of this country. The problems with our financial systems during the late 1800's was because of the misallocation of capital. In the last 5 or so years the requirement for capital has been massive for the build out of the internet. I am only talking the infrastructure build out. I have seen figures like a trillion $ of credit per year, but I can not verify this number. These are high risk loans and bonds (junk) have been thrown at anyone that asks for it. Why do you think AG has been screaming about risk management for the last two years. He knows just how much risk is out there in our financial institutions. Just think about the Motorola, investors and banks that took a blood bath on Iridium. The infrastructure went poof in the night, with no return on the capital.

In my opinion the USD is an accident ready to happen, because of the massive credit carried by the public, banks, financial institutions, and corporations as well as the GSE's. On top of that we have been borrowing from foreign nations to spend on their goods. And on top of that this country is in debt to its citizens to the tune of 5 trillion $'s. This thing is a house of cards and no one but no one can stop it if it starts to crumble. The RTC bail out will look like a birthday party. <g>

Joan
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