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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Snowshoe who wrote (72033)1/12/2010 3:08:31 PM
From: Maurice Winn1 Recommendation   of 74559
 
One unenlightened aspect of USA bankruptcy is the handing over of taxpayer money to bust bankers to enable them to roll in fat bonuses as a reward for nearly bankrupting the shareholders.

The process did look little different from a fantastic swindling which made Bernie Madoff look like an amateur. It's odd that Bernie goes to gaol but the Goldman Sachs self-dealing mob roll in umpty$billions. That's the difference between legal and illegal swindling.

NZ government did that with Bank of New Zealand in 1989 and it made me really angry to see shareholders piling up loot from taxpayers having bungled their business. It was a privately owned bank. It was only about NZ$600 million but that was serious money for NZ at the time. Now the NZ government is going down the gurgler at $1 billion per month with no end in sight.

It's crazy stuff that NZ$1 is at US74c instead of US40c but that's interest rate arbitrage and carry trade for you. Japan and USA are both sources of carry trade for NZ$ with their zero interest rates. But in the end, borrowers have to be able to repay their loans with interest or the lenders lose their money. My bet is that the lenders to NZ are going to lose their money. When the elephant creditors all try to rush for the door at once, one of these days, they are going to find the keyhole of the locked door too small for all to squeeze through.

Mqurice
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