Will foreign lending make up for all the losses in the subprime catastrophe? How much will it take?
skahhh asked:
Do you think the banking industry that has borrowed this money will buy stocks and options and ratchet the market up and down while they bilk millions from the baby boomer’s retirement funds?
Do you think the banking industry that has borrowed this money will buy stocks and options and ratchet the market up and down while they bilk millions from the baby boomer’s retirement funds?
No, it’s an explostion of risk that can’t be staved off permanently through any amount of money. In Eurpoe they just loosened things up to the tune of 500 billion and the market didn’t react much.
There is no way to ‘make it up’. Investment portfolio’s, whether it be loans, collection accounts, stocks, and so on, have a beta. Beta is considered the risk relative to the market. Subprimes were risky, because they were high risk loans(loans are investments). You take that risk anytime you have investments. Goldman Sachs was smart enough to leverage their position, which minimized the risk relative to the earnings expected.