Merrill Lynch is still around, they are in the mist of
recovering from the subprime crisis.
Subprime, is a global crisis which orginated from USA and it
affects global financial institutions.
ML is a bluechip company and to be call a bluechip
company, one will have to have good earning and asset
value track records and trackrecord is something you MUST
use when making investment decision.
What makes you think that Singapore government is not aware of
the imminent depreciation of US dollar when making recent
acquisition decision?
Simple logical explanation, if you think that Temasick
(Singapore Government) did factor in the depreciation of the US
Dollar in Dec 2007.
Would it be cheaper to pay approximately SG$6.248 billions (US$1
= SG$1.42) for Merrill Lynch in Dec 2007, or
pay SG$6.072 billions (US$1 = SG$1.38)
for it now? At the end of the year, if the US Dollar falls to
US$1 = SG$1.30, would it be cheaper to pay for it using SG$5.72
billions?
You are ONLY factoring in the depreciation of the US
Dollar, you haven't even factor in the likely losses from the sub
prime debacle.
With the wide exposure of Merrill Lynch to sub prime
mortgages.
Do you think that it was a worthwhile investment if Merrill
Lynch gave you an approximately US$5 discount from it's share
price from it's
share price of around US$53 in Dec 2007.
Did they even factor in the imminent recession facing USA in
2008?
Then again, Temasick is not directly using CPF funds,
so directly it's not the money of Singaporeans.
BUT indirectly, MAS makes a loan of close to $100 billions to
Temasick, CPF makes a loan of $100 billons to MAS.
CPF $100 billions ==> MAS $100 billions ==> Temasick.$100
billions
