bank/credit crisis - is this a net gain for the US?

The way I see it, lots of overseas banks bought tens (hundreds?) of billions of dodgy CDO products from US investment banks - which apparently are now of dubious value. Considering the money effectively ended up in the hands of US property owners (e.g. the lucky ones that sold their homes before the crunch), then this represents a net transfer of lots of money to the US.

  1. Am I right?
  2. How much are we talking about?
  3. Is it a significant amount in terms of the US balance of trade and debt?


No, if for not other reason than it might cause foreign entities to not loan us money or trust our financial instruments in the future. The damage our reputation has taken will also affect our long term financial status. There has been bad debt offloaded to those in foreign countries, but one reason that is so is because we live in a global marketplace that is interconnected. As such, the impact of that will be felt here too.

This current global financial crisis is still ongoing, and will persist for awhile, and once it all shakes out it will be written about and studied for many years to come; I don’t think the U.S.A.'s reputation is necessarily what’s at stake, it’s the fact that all first-world countries have become so interconnected, so interdependent on each other, that the failure of one country’s banking system could blow the whole system to smithereens.

Indeed, I believe this current crisis (which could have gotten extremely bad last month, but looks like now we’ll eventually recover) could just have been the impetus that drives the U.S.A. towards adopting socialist democracy and moving towards a One-World Government type system (aka New World Order.) Indeed, it may have already happened behind the scenes – by Tuesday, we’ll know more.

Those CDOs might be sort of worthless - using Mark to Market valuation

  • but the ones that are ‘insured’ (credit swaps) with things like the AIG (now owned by the US Govt) are potentially worth rather a lot.

Personally I doubt that the USA will benefit, but the downside to the USA is limited due to the lack of an alternative viable reserve currency.

while I agree with the comments above, I was not looking for an answer based on it as a reputation thing or for secondary effects on the economy, but rather as a straight foreign currency transaction - has there been an net effective input in the US on a hundred billion or so (it may be that no one including the banks / government actually knows)

Dream on! I think the best we could hope for would be to reinstate the regulatory controls that Roosevelt put in in the 30s. And given the growth of special interest lobbying, even that is highly doubtful.

I suppose so, but it is a little like earning money by going bankrupt. Sure you are the net winner, but in the long run it can only damage you.