If the US doesn't bail out its own financial sector (by borrowing money it doesn't have) then the only people with enough money are foreign sovereign funds and large investors. And they will bail it out for cents on the dollar at fire sale prices. The end result would be that New York is, definitively, no longer be the world's financial center. Odds on favourite to be the new one? Dubai. London doesn't want the job (they want to be middlemen). Tokyo can't quite do it. Shanghai isn't ready. But Dubai is raring to go.
And that's one real reason why Congressional leaders and Wall Street CEO's are panicking.
If Wall Street isn't bailed out by Congress, the executives will all be either working for Chinese and Arabs, or they'll be out on the street, drowning their sorrow in their 50 feet yachts drinking $100,000 dollar bottles of whine. Er, wine.
Wednesday, September 24, 2008
Ian Welsh blogging at FiredogLake has a fascinating take for the abject terror of the politicians and wall street executives. This too makes more than a little sense in attempting to explain the the reasons for the necessity of doing something (anything) quickly.