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Buddy, Can You Spare a Billion?

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moh malekpour

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May 25, 2002
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Certified Residential Appraiser
State
California
http://www.nytimes.com/2008/01/16/b...tual funds to bolster their weakened finances
First hard-pressed Wall Street banks turned to rich foreign governments for help. Now, they are seeking aid from the likes of New Jersey and big mutual funds to bolster their weakened finances

Citigroup and Merrill Lynch said on Tuesday that they were raising a combined $19.1 billion from parties that range from government-backed funds in Korea and Kuwait to New Jersey’s public pension fund and T. Rowe Price, the big mutual fund company. Other investors include a large bank in Japan, a hedge fund in New York and private investors in the Middle East.

While so-called sovereign wealth funds are investing the most, the emergence of new investors like New Jersey underscores the rising aversion on the part of United States banks to being seen as beholden to foreign governments. In recent months Citigroup, Merrill and several other banks have sold multibillion-dollar stakes to foreign government funds.
 

Lawrence R.

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Mar 27, 2007
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Certified General Appraiser
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South Carolina
Sooner or later the music is going to stop, and these banks are going to realize someone took away ALL the chairs.
 

Big ole Boy

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Dec 6, 2003
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State
Tennessee
"Buddy can you spare a billion?" - now thats funny .....!
 

Greg Bell

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Gvmt Agency, FNMA, HUD, VA etc.
State
Louisiana
The big losses are still to come.Soon we will hear about some pension fund that went broke or a City that invested in New Century bonds , should be a hoot and maybe we will see the every famous workplace shootings.Disgruntled investors taking their rage out on some hapless stock broker of Mortgage company , Quick , buy some beans and ammo..:new_2gunsfiring_v1: :new_2gunsfiring_v1:
 

Caligirl

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Jan 27, 2006
Professional Status
Certified General Appraiser
State
California
The big losses are still to come.Soon we will hear about some pension fund that went broke

That was already the big news in Great Britain last summer, with regard to all the large pension funds that invested in US mortgage-backed securities considered 'safe' at the time they were purchased. Rut-roh.
 
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Randolph Kinney

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Apr 7, 2005
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Retired Appraiser
State
North Carolina
I wonder what happened to all that "retained earnings" on the balance sheet?

It becomes obvious that what these institutions are calling "assets" are impaired. In fact, they are so impaired that write offs in the 10's of billions are taken and then more follow at a later time. They can't take the adjustment all at once with out placing the institution into insolvency. Therefore the need to raise more capital by selling "equity" to absorb the next round.

Strange, borrowing money to buy or create new assets yielding a positive return does not seem to be an option. And that is the reason the FED will continue to lower the interest rates, until it is.
 
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