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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: DebtBomb who wrote (109781)	3/21/2010 11:28:38 PM
From: Hawkmoon	1 Recommendation Read Replies (1) \| Respond to of 116555

"The rest of the world is in the same predicament that we are." How do you think they got there? Well, from what I can understand, AIG played a big role in assisting a number of European banks to leverage themselves between 50:1 and 70:1. We look at the US Investment Banks and their leverage of up to 40:1 and it pales in comparison to what the Europeans have been up to. But they have different rules and apparently it's less scrutinized than it was here. China engaged in "manufacturer financing" for the goods they sold to us. They financed our debt so they could continue selling cheap stuff to us. They purchase those CDO and SIVs because the US was no longer selling 30 year T-bonds and their only alternative was mortgage related yields. Flood the RE market with all that Chinese cash and it was inevitable that our RE market was going to soar on the backs of that cheap capital. And it wasn't just in the US. European RE markets soared.. as did Asian and M-E real estate. The US cannot be solely blamed for what has transpired. We certainly bear a lot of blame, but let's not become myopic and think that the rest of the world wasn't equally as culpable. And it's not just the US financial system that is broken.. You'll find plenty of problems around the world if you open your eyes. As for people being paid not to work, ever been to Spain?.. ;0) Hawk