Will the Japanese come to our rescue again?
Back from the dead, Tokyo banks buy into Wall Street
Once considered too naive and cautious for the high-risk, high-return world of investment banking, cash-rich Japanese firms are once again aggressively pushing abroad.
"The balance of power in the global financial industry has changed dramatically over the past one to two weeks," said Shinichi Ina, banking analyst at Credit Suisse in Tokyo.
"I don't think anyone imagined a few months ago that Mitsubishi would be making Morgan Stanley into a group firm. I don't think they could have imagined it themselves."
Not that anyone listened...
Buffett's "time bomb" goes off on Wall Street
On Main Street, insurance protects people from the effects of catastrophes.
But on Wall Street, specialized insurance known as a credit default swaps are turning a bad situation into a catastrophe.
When historians write about the current crisis, much of the blame will go to the slump in the housing and mortgage markets, which triggered the losses, layoffs and liquidations sweeping the financial industry.
But credit default swaps -- complex derivatives originally designed to protect banks from deadbeat borrowers -- are adding to the turmoil.
"This was supposedly a way to hedge risk," says Ellen Brown, the author of the book "Web of Debt."
"I'm sure their predictive models were right as far as the risk of the things they were insuring against. But what they didn't factor in was the risk that the sellers of this protection wouldn't pay ... That's what we're seeing now."
Brown is hardly alone in her criticism of the derivatives. Five years ago, billionaire investor Warren Buffett called them a "time bomb" and "financial weapons of mass destruction" and directed the insurance arm of his Berkshire Hathaway Inc., to exit the business.
It's a fascinating, slighly complex, article which gives some details on the massive shell game played by Wall Street and the Federal Government just in the past couple of years.
Someone in China has been reading my mind:
China paper urges new currency order after "financial tsunami"
Financial Tsunami. That's what I keep think of this as, as well as The Perfect (Fiscal) Storm.
Hi, my name is Laura and I'm a big geek.
Threatened by a "financial tsunami," the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.
The commentary in the overseas edition of the People's Daily said the collapse of Lehman Brothers Holdings Inc., "may augur an even larger impending global 'financial tsunami'."
The article goes on to state:
China is a major buyer of U.S. Treasury bonds, and through its sovereign wealth fund it has taken stakes in two large U.S. financial institutions.
In July 2005, China revalued the yuan and freed it from a dollar peg to float within managed bands. But the yuan and China's trade remains tightly linked to the fortunes of the dollar.
The commentary suggested China must brace for grave economic fallout and look to alternatives, saying the crisis brings to mind the Great Depression of the 1930s.
"Lehman Brothers announced bankruptcy will not only have a domino effect on the global financial world, it will bring a shock to the world economy," the front-page comment stated.
It's not just a US problem - it's global. We need the rest of the world to help out the US, but after eight years of the Bush administrations horrendous foreign policy I don't see the rest of the world flocking to our side to help out. I can't say that I blame them, but it would be in their best interests to help the US.
I hope the rest of the world sees it that way as well.
"We must all hang together, or assuredly we shall all hang separately."
Benjamin Franklin
