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Yes... the mkt was huge. Everybody was demanding higher returns, from your bosses if you were a trader, to the shareholders, to the investors. 10-15% return on capital. With Fed fund rates at 2-3%.
Somehow people though it was ok to borrow money at 3% from the Fed and invest it in these sub-prime bonds/funds and make 20%. Super easy.
But if Merrills offers that then Deutsche and Bank Paribas need to follow suit? And what about Banco Santander aand/or Banca Intesa?
They are all in it. All sitting on HUGE losses that nobody has disclosed. In Europe it is much easier to do that. Company gobvernance is not so transparent. Multi-partecipation is common.
With a small % of the stocks u control (throught the board) a whole company... so it is easier to mask losses.
The flip side is that the real economy will be hit much harder than the local financial mkt would make you assume...
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