Zeev:
Thanks. That does help me to understand a little better, though I am still not really getting the "big picture". Also, I have read (too long ago to recall where) that Mexico paid off our "loan" by borrowing the money from other sources (?European), so if that is true, I am back to my bewilderment about the shifting funds reminiscent of the illegal practice (for people, not governments) known as "check kiting".
And speaking of Mexico, at the time our bailout was done, I recall musing that it was yet another bailout of the foolhardy with the funds of the prudent. Since Mexico has defaulted or devalued regularly every decade or so during my adult life, those who chose to buy Mexican bonds were paid a premium for the additional risk they were taking. But they were not really taking a risk, because when it came to the default, those risk takers had their losses paid for with the funds of those who chose not to take the risk. So, who was the prudent investor? And also, we must remember, that much of that Mexican debt,I am told, was sold by Goldman, Sachs, the former firm of Secretary Rubin, who, with funds not authorized by Congress (the Currency Stabilization Fund) engineered the bailout. A coincidence, I'm sure <g>.
Yes, I am a bit cynical.
Thanks again for your explanation.
Jack |
