[Acting Like Godot]

Originally Posted by Dan.Linehan

Does your country not use a fractional reserve system?

Yup ... However, we don't have investment banks the way you have (or had) Goldman Sachs, Morgan Stanley, Bear Stearns and Lehman Brothers. Basically, all the locally-incorporated banks in my country have to have cold hard cash in order to do business here.

The subprime loans are a red herring for the whole financial collapse though. Easy to blame foreclosures, but they have very little to do with this credit unwind. The banks were very highly leveraged, they lied about their asset valuations.

Guess what .... very few CDOs are actually originated in my country (or for that matter, the whole of Asia, excluding Japan).

The losses that institutions here did suffer from CDOs, mostly came from CDOs they bought from the banks in your country.

Then they pretended that their balance sheets turned to crap overnight when, in reality, other people's money was being placed into the pockets of a few top people for quite some time.

Actually the money was used to purchase rights to housing mortgages which turned out to be rather useless, because the American people bought waaaay too much properties than they were actually able to pay for.

I'm expecting your US credit-card-backed securities to blow up next, for essentially the same reason.

Ooops, guess what, credit-card-backed securities are something else we don't really have, here in Asia.

As you might see now, the US system functions quite differently from many other parts of the world.