Interesting development with the growing global fallout due to the worsening US Sub-Prime mortgage mess. Globally banks need money, and they need it fast. So who has money? Rich people in Asia and the middle East.

Already the amount of investment in bank stock has risen to five times what it has been. UBS a global bank based in Switzerland just received a bailout of $11 billion form investors. $9.75 billion from the government of Singapore in exchange for a 9.75% equity stake, the remainder is said to come from the government of Oman.

“The [banks] desperately need new money – and the people who have it are in the Middle East and China,” explained Kenneth Rogoff, a professor of international economics at Harvard. “I think there’s a recognition of how dark the economic situation is, how vulnerable it is. Once Americans get used to this idea, we’re going to see even more of this.” (source: Reuters)

Last month Abu Dhabi’s investment arm paid$7.5 billion for a stake in Citigroup. Kenneth Chen, who is in charge of the massive Qatar Investment Authority $60 billion fund that there are “tremendous opportunities” for funds such as his to take advantage of the incredible buying opportunities in the US financial industry.

The good news is of course that the financial industry is getting their white nights and should be able to survive the crisis and hopefully we can get back to a normal market sooner then later. I will let you decide if you think it is bad that these middle east and Asian governments having such unprecedented stakes in our Banks.

This entry was posted on Tuesday, January 8th, 2008 at 11:47 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.