Asia Sentinel
17 Mar 2008
Philip Bowring
In the space of three days last week the US Federal Reserve had to throw an additional US$200 billion at a tottering US financial system and organize the rescue of the Bear Stearns investment bank. It is a humiliation bigger even than the Bank of England suffered with the bail-out of Northern Rock – and with far bigger international implications.
But there will be plenty of embarrassment in Asia too, particularly for officials from the sovereign wealth funds of China, Singapore and the Gulf who had been such enthusiastic investors in western financial institutions, both before the crisis broke and when riding prematurely to the rescue of balance sheets ravaged by massive loan write-offs.
Asia Sentinel warned three months ago that the sovereign wealth funds had become too easy a touch for US financial giants. Their investments in the likes of Citibank, Morgan Stanley, UBS, Merrill Lynch and Blackstone, intended to gain seats in the sancta sanctorum of western finance, would probably come back to haunt them. And so it transpires as prices of the whole financial sector continue to plummet
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