Large US bank collapse ahead, says ex-IMF economist

last SG · 2008-08-22T13:49:35+00:00

Relying on another person's word without any analysis or after thought often leads to grave results, but that's just life, because some folks here can't thi...

reyes SG

SINGAPORE - The worst of the global financial crisis is yet to come and
a
large US bank will fail in the next few months as the world's biggest
economy hits further troubles, former IMF chief economist Kenneth
Rogoff
said on Tuesday.

'The US is not out of the woods. I think the financial crisis is at the
halfway point, perhaps. I would even go further to say 'the worst is to
come',' he told a financial conference.

'We're not just going to see mid-sized banks go under in the next few
months, we're going to see a whopper, we're going to see a big one, one
of
the big investment banks or big banks,' said Rogoff, who is an
economics
professor at Harvard University and was the International Monetary
Fund's
chief economist from 2001 to 2004.

'We have to see more consolidation in the financial sector before this
is
over,' he said, when asked for early signs of an end to the crisis.

'Probably Fannie Mae and Freddie Mac - despite what US Treasury
Secretary
Hank Paulson said - these giant mortgage guarantee agencies are not
going
to exist in their present form in a few years.'

Mr Rogoff's comments come as investors dumped shares of the largest US
home
funding companies Fannie Mae and Freddie Mac on Monday after a
newspaper
report said government officials may have no choice but to effectively
nationalise the US housing finance titans.

A government move to recapitalise the two companies by injecting funds
could wipe out existing common stock holders, the weekend Barron's
story
said. Preferred shareholders and even holders of the two
government-sponsored entities' US$19 billion of subordinated debt would
also suffer losses.

Mr Rogoff said multi-billion dollar investments by sovereign wealth
funds
from Asia and the Middle East in western financial firms may not
necessarily result in large profits because they had not taken into
account
the broader market conditions that the industry faces.

'There was this view early on in the crisis that sovereign wealth funds
could save everybody. Investment banks did something stupid, they lost
money in the sub-prime, they're great buys, sovereign wealth funds come
in
and make a lot of money by buying them.

'That view neglects the point that the financial system has become very
bloated in size and needed to shrink,' Mr Rogoff told the conference in
Singapore, whose wealth funds GIC and Temasek have invested billions in
Merrill Lynch and Citigroup In response to the sharp US housing
retrenchment and turmoil in credit markets, the US Federal Reserve has
reduced interest rates by a cumulative 3.25 percentage points to 2 per
cent
since mid-September.

Mr Rogoff said the US Federal Reserve was wrong to cut interest rates
as
'dramatically' as it did.

'Cutting interest rates is going to lead to a lot of inflation in the
next
few years in the United States.'

does merril lynch or citigp sound like one of the bigger US investment bank?

another billions fail investment down the drain soon?

AndrewPKYap SG

...another S$1.2b afterTemasek had already committed in December to injecting US$4.4 billion..

support Dr Chee more to get back the money.

jojobeach SG

Uh ohhh...

Looks like it's a penny for the dollar buyback soon.....

Just like what they did to the Japanese investors back during the meltdown.

baby hunter SG

...another S$1.2b afterTemasek had already committed in December to injecting US$4.4 billion..

support Dr Chee more to get back the money.

i still dun understand how we can get bk our $ by supporting CSJ

i only kn he will use the money to pay all his fine & travel ard oversea busy licking other "democratic" party's ball....

btw, I'm not a PAP supporter. just telling the true how i feel abt him

AndrewPKYap SG

i still dun understand how we can get bk our $ by supporting CSJ

i only kn he will use the money to pay all his fine & travel ard oversea busy licking other "democratic" party's ball....

btw, I'm not a PAP supporter. just telling the true how i feel abt him

The despots will keep on taking more and more and paying themselves more and more unless the people show them it is not acceptable.

How can you do that other than to make sure that we live in an open society where the media will dare to criticise the despots instead of only spewing out propaganda.

Dr Chee Soon Juan is fighting among other things, for this, by demonstrating peacefully on the streets because the other avenues, like the mass media is not available for criticising the despots.

Therefore it is only right that people show their support for Dr Chee if they want their money back or at least, stop the despots from losing billions to foreigners supporting foreign banks.

AndrewPKYap SG

It is supporting Dr Chee Soon Juan's CAUSE whether or not you like the man. I have only seen him once during the IMF meeting, when he was surrounded by police with taser even though he was unarmed, and all he was doing was speaking to journalists.

I have never personally met him. I dont know if he knows I exists, hahahahaha...

Stevenson101 SG

Remove a dictator and replace him with an idiot, and then you expect him not to turn dictator as well? Chen Shui Bian is already the perfect example.

You do not put an abused child in power and expect him not to use that same power on others.

Chin Eng SG

I have never personally met him. I dont know if he knows I exists, hahahahaha...

isn't it about time you show your pudgy face to him? afterall you ARE his biggest fan.

... but knowing you, you've got nothing between your legs.

AndrewPKYap SG

isn't it about time you show your pudgy face to him? afterall you ARE his biggest fan.

... but knowing you, you've got nothing between your legs.

Continuing with your lies and delusions? hahahahahaha....

reyes SG

Remove a dictator and replace him with an idiot, and then you expect him not to turn dictator as well? Chen Shui Bian is already the perfect example.

You do not put an abused child in power and expect him not to use that same power on others.

singapore we do have a more foolproof system in place to prevent corruption opf anykind isnt it? in what way can CSJ corrupt in singapore?

anyway, chen shui bian is not corrupt officially. they are only charging his family members. it means the govt official is not doing their job of gatekeeping for the taiwanese ppl.

AndrewPKYap SG

Remove a dictator and replace him with an idiot, and then you expect him not to turn dictator as well? Chen Shui Bian is already the perfect example.

You do not put an abused child in power and expect him not to use that same power on others.

No. Supporting Dr Chee Soon Juan's cause so that highly qualified non-cronies of the depots can freely stand for elections without fear of persecution.

AndrewPKYap SG

singapore we do have a more foolproof system in place to prevent corruption opf anykind isnt it? in what way can CSJ corrupt in singapore?

anyway, chen shui bian is not corrupt officially. they are only charging his family members. it means the govt official is not doing their job of gatekeeping for the taiwanese ppl.

Right, he talks as if Dr Chee is controlling the national coffers and not the dishonorable despots that persecuted even one of their own, Ong Teng Cheong, when he asked them to account for the money.

Chen Sui Pian is investigated for "PARTY FUNDS" and not treasury funds.

These despot dogs, like to fake it, like their dog masters.

youyayu SG

the world or USA?

i personally thinks that the world rely too much on USA

jojobeach SG

Why old people like to loh soh so much ah ?

Young people see already don't like you understand or not ah ?

Chin Eng SG

Continuing with your lies and delusions? hahahahahaha....

what lies and delusions? you HAVE a pudgy face. you truly supports dr chee. the only thing you have not done - stand side by side, hand in hand with dr chee..... nothing between your legs.

Peuro SG

it gonna be Lehman ....dun worry..haaa...

novelltie SG

if you ask me, i rather support Potong Pasir’s Mr. Chiam See Tong or Hougang’s Low Thia Khiang. (all my life i’ve been living in the opposition territory. living in Potong Pasir Blk 115 for 18 years and shifted to Hougang till now)

At least they don’t get themselves into trouble with the government and expect us to bail them out with our hard earned money. they have already squeezed us so dry, you want us to donate to Dr. Chee? i know you will say support him to get our money back but i don’t see how it is possible.

he will never become a MP, don’t say Prime Minister like Anwar who have SO MANY SUPPORTERS that really supports him. he has a political party that supports him, he has political power because he was so close to become PM of Malaysia. He has experience and he knows how to play. Dr. Chee on the other hand, has no such experience. how is he going to lessen our load and burden and “get our money back”

i have nothing against him. i do feel for him, really… that he has to bear the brute of the government’s oppression but he should have played it wisely first. the screaming and name calling should not happen. even if he becomes a certain MP, what can he do? the numbers do not favour him. a bill will pass even without his support or his objection. he cannot change anything. so why are we donating to him when we should donate more to those who really needs it.

the poor, the oppressed, the orphans, the cancer patients, the charities (yes yes, they all embezzle money but still better right?), even the zoos need donations. Wildlife conservations need your donations to keep the Pandas, tigers, sharks and bees in healthy numbers! (it is theoried that without bees, our eco-system cannot survive more than 2 years for they are the very backbone of plants and agriculture reproduction. SAVE THE BEES! not kidding, read up on bees conservation efforts)

deathmaster SG

does merril lynch or citigp sound like one of the bigger US investment bank?

another billions fail investment down the drain soon?

u are asking the obvious. GIC alr lost several billions in these banks alr. yet they continue to pump billions in, despite of the astronomical losses.

and what you expect these banks to pay you with? they have enough trouble repaying creditors.

reyes SG

u are asking the obvious. GIC alr lost several billions in these banks alr. yet they continue to pump billions in, despite of the astronomical losses.

and what you expect these banks to pay you with? they have enough trouble repaying creditors.

as long as they are not broke, these investment are not write off, just paper lost. frankly, i am not sure what kind of conditions when temasek, GIC invested in merril lynch. if i dont remember wrongly, it is not tied to the fix share price at time of purchase.

my concern is what if they are broke? i think temasek and GIC jump at the opportunity too soon. the koreans and Chinese have recently rejected to buy some shit from lehmann. that pretty smart. wait and see attitude. would rather make less then to lose everything!.