Wednesday, November 14, 2007

Banks of China: the ideal subprime hedge

From FT Alphaville:

You’re a big bank. Things got tough. Looks like they’re getting tougher. While everyone around you was losing their head… you lost yours too. And now you’re buried in a mortgage-backed train-wreck. Worse - here’s the clincher - other banks hedged to the hilt and now no one will hedge any more. Shorting the ABX costs the earth. How do you offset those big CDO writedowns?

Buy a Chinese bank!

Bank of America announced on Tuesday that it was sitting on a potential gain of more than $30bn...MORE