The US Economic Meltdown: The American Way to fail: by Robert Peston
The breathtaking rises in the price of bank shares this morning are symptomatic of a stock market that is bereft of reason and is being driven almost purely by hysteria and momentum.
It would be more rational for the Chinese to own the American financial system itself, rather than lend to the US Government (and in that context, it's resonant that Morgan Stanley may well be close to selling almost half of itself to CIC, China's state investment fund). In this game of Wall Street Monopoly, there's no "get-out-of-jail-free" card. Maybe the US is still big enough and powerful enough to persuade the rest of the world to pay for the mistakes of its financial sector - which is broadly what's being proposed by Mr. Paulson. Note EU-Digest : Privatize profits but Socialize losses? It seems crazy.
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