A country's economy does not necessarily mirror the state of its financial institutions. Though Singapore may be headed for a recession
according to its finance minister, Tharman Shanmugaratnam, the two
Singapore sovereign wealth funds may be spared the worst of the Wall
Street meltdown thanks to help from Washington.
Citigroup — in which the Government of Singapore Investment
Corporation has a 4 percent stake — and Merrill Lynch, in which
Temasek Holdings was the largest shareholder until the Wall Street
investment firm was bought by Bank of America last week — are both on
the protected list. The US authorities have banned short selling their
stocks to prevent them from going under. See the US Securities and Exchange Commission list of protected stocks.
And now Barclays, in which Temasek has a 2 percent stake, and UBS,
which includes GIC among its shareholders, could also end up being
rescued by Washington's $700 billion bailout plan. The New York Times
reports:
Foreign banks, which were initially excluded from the plan, lobbied
successfully over the weekend to be able to sell the toxic American
mortgage debt owned by their American units to the Treasury, getting
the same treatment as United States banks.
Foreign banks like Barclays and UBS, whose American affiliates also
hold distressed mortgage-related assets, will be covered by the
bailout, the report adds.
And now Barclays has also got legal permission to go ahead with its
$1.75 billion deal to buy Lehman Brothers' investment banking unit.
No wonder Americans are unhappy. As a New York Times report pointed out two days ago, it's American taxpayers who will have to fund the $700 billion bailout plan.
The Guardian reports:
A proposed state-sponsored organisation to sweep up banks' toxic
mortgage debt will require funding equivalent to more than $2,000 for
every American citizen. It involves raising the statutory ceiling on
the United States' national debt from $10.6 trillion to $11.3 trillion.
The New York Times report asked:
How is it that the administration and Congress, which have not tried
to find huge amounts of money to, say, improve the nation’s health
insurance system or repair bridges and tunnels, can now be ready to
come up with $700 billion to rescue the financial system?
And it came up with the answer:
To make the bailout palatable to the public, it is being described
as far better than inaction, which administration officials and members
of Congress say could imperil the retirement savings and other
investments of Americans who are anything but rich.
In other words, American taxpayers are being asked to bail out the
banks to keep their own money safe. No wonder there is widespread
anger, even among US lawmakers, reports Chicago Tribune, Obama's hometown newspaper.
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