Posts Tagged ‘International’
Russia’s markets are facing the biggest test since the government defaulted in 1998. However, it looks like past history and a poor track record does not instill much confidence. Russia poured $44 billion into its three largest banks and halted stock trading for a second day in a bid to stem the most severe financial crisis since its devaluation and debt default a decade ago. We thought it was just a matter of time before we heard the truth from Russia.
People have an amazing ability to justify anything in their minds. ‘Abilities’ is defined in the free dictionary as “The quality of being able to do something, especially the physical, mental, financial, or legal power to accomplish something.” Our emphasis is on the financial. (perhaps it should be on the power to accomplish something?) Positive proof exists and suggests that one can be asleep, miss critical factors, destroy their company, and still walk away a bonus, although slightly embarrassed. Take the case of Northern Rock.
The excesses of the current ‘subprime’ era are not the only excesses with ties to structured finance transactions. Many banks were sued by Enron Corporation. Enron filed suit in September 2003 against 11 banks, accusing them of conspiring with former Enron officials to manipulate the energy company’s finances. Enron says the banks helped set up a series of structured finance transactions with Enron that buried the company in debt, forcing it into bankruptcy. Every bank settled and paid Enron.
Fallout from investments in the United States, subprime debt, and commercial paper has spread around the world. Some countries are feeling the impact as infection in the US has spread to the real economy around the world.