FROM CNN's Jack Cafferty:
Some may call it a troubling sign: foreign governments coming to the rescue of American banks.
Just today, the no. 2 U.S. investment bank, Morgan Stanley, posted its first quarterly loss ever, and announced a $5 billion cash injection from a Chinese state-run investment fund. That represents less than 10% of the company's total shares.
Morgan Stanley says the purpose was to raise capital along with improving its ties to the world's fastest growing economy. They said the China fund would be a passive investor, with no management role and no say in naming a member to the board of directors.
But, this isn't the first time we're seeing this scenario play out. China also invested heavily in Bear Stearns and the private equity group Blackstone. Rival Citigroup announced a similar move last month, selling a $7.5 billion stake to the Gulf Arab emirate of Abu Dhabi in an attempt to raise capital. Abu Dhabi also invested in the politically connected takeover firm The Carlyle Group.
U.S. banks have been wrestling with issues like the subprime mortgage crisis which have forced many of them to write off billions of dollars due to bad loans.
Here’s my question to you: What does it mean when foreign governments are having to come to the rescue of American banks?
Interested to know which ones made it on air?
Martin from Blue Ridge, Georgia writes:
Jack, It means what we all have suspected for some time now: America as we have known it is gone. We have been sold down the river by the feds in every way possible. Our sovereignty has been compromised by big money.
China's investment is a great thing for U.S.-China relations. This growing co-dependence between the two countries and their economies will only lead to stronger political ties between the two nations, an essential outcome for the U.S. given China's growing role on the world stage.
Perhaps foreign countries are "coming to the rescue" of our banks for the same reason that we "come to the rescue" of weak, oil-rich countries such as Iraq – ownership by hostile takeover?
It means that the United States is mortgaged to the hilt. We are owned by the world. It's a sad day when the U.S. has to be bailed out. We have spent almost $1 trillion on a failed war and that money should have been spent here at home. Oh, well, Attention K-Mart shoppers today’s Blue Light special is: America to the highest bidder… Let the bidding begin.
It means that America is crumbling before our eyes. This is the tip of the iceberg. Americans have been surviving the past 20 years borrowing on the equity in their homes. Now their homes will start losing value and their equity will become negative. They will not be able to sell their homes or continue borrowing to support consumer spending. We are not looking at a recession next year – we are looking at the beginning of a financial collapse in the US that will decimate the middle class.
This country is in the toilet and the world is just waiting to flush us down!
I guess we should start learning Chinese and Arabic.
Maybe Jack will read yours tomorrow.