Forum Archive Index - August 2002

["Steven Tong" <soarer2@xtra.co.nz>]

Capitalist,

 

I think the point being made is that all is not well within the international financial system. Are you saying US banks have minimised their exposure to financial collaspe in South America ? You would agree these economic models are clearly not working and if they were in  business they would be wound up. For obvious reasons this cannot be allowed to happen, but surely Washington is delaying the enevitable.

 

I agree with you that Citicorp has a very strong balance sheet but to suggest they have no risk in South America is a little naive.

 

 

 

----- Original Message -----

From: Capitalist

To: sharechat@sharechat.co.nz

Sent: Saturday, August 10, 2002 4:59 PM

Subject: Re: [sharechat] IMF

US banks countered their risk to Brazil ages ago.Banking shares may go down USD 2. Nice try Nick.

 

Interesting news overnight.  Steven's post was startling and the IMF news
even more so.  Why didn't they just give the money to Shittigroup and/or
JPMC?  That is the net effect.  Where does IMF money come from?  The banks. 
It is a short term solution to a long term problem and the DOW overreacted. 
The loan took the heat off US banks in the short term.  It also represented
a change in stance for the US government.

Since the IMF loans are funded by major banks all over the world it is
obvious the banks knew it was in progress.  Conspiracy theorists might
speculate that Alan Greenspan blessed it as a way to support the US markets
without having to cut rates.  Time will tell there.

I've read that major US banks have about a $30 billion exposure in Brazil
already and had the country gone under would have had serious implications
for the US.  It still  might have.  The Fed have obviously made a decision
that any measure be taken to keep the US stock markets from melting down
before November elections.  The PPT has been busy for a while now.  With
insolvency rumors swirling around JPMC and Shittigroup the Fed decided to do
whatever it took to protect the markets - simple as that. The IMF move in
Brazil is one of those steps.  Brazil's debt is at $500 billion.  There is
no hope it can avoid a default and the loan was only a stop-gap measure. 
What you did not hear in most media was that they would only get $6 billion
this year.

IMHO the world outlook has not changed.  Watch for Greenspan's bullish
statement this week when the Fed reserve meets.  Again, IMHO it is all hot
air.

Have a good weekend everyone.

Nk