I am referring to the recent CDO (Collateralized Debt Obligation) fiasco that has sent the global stock markets to roller coaster rides. Even central governments have injected a lot of money to increase liquidity and Fed even went further one step by reducing the main interest rate.
Here is my take:
Imagine there is a hole in your pocket and you lose money as a result. How much will it help if I offer to lend you money with lower interest rate? Definitely it will help, but in the end of the day, there is still loss which affects the bottom line.
In other words, there will be definitely a bumpy ride ahead.
1 comment:
Buying debts has always been part of the economic policy in China (ie, buying US bonds).
If this debt resale in US caused the "roller coaster ride", think of what'll happen when China wants to cash all its US bonds (6)
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