Thursday, November 8, 2007

Who is Hank Paulson Fooling?

"This may sound silly, but let me ask you a question. Let's say that I maxed out my credit at Citigroup to speculate on a house whose market price is now less than what I paid. Citi wants its money, but instead I say, 'Sorry, the house is selling for less than its true value. As soon as it sells for what it should, I'll send you a check.' What do you think Citi's reaction would be? ... Citi clearly screwed up with its SIVs. When a financial institution borrows short term to buy long-term assets--it's supposed to have a plan for when its bet goes bad--rather than just whining about 'disorderly markets'," Allan Sloan in Fortune, 12 November.

Amen Allan!

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