Chinese Fund May Be Biggest Fool Thursday, October 16, 2008 1:08 PM By: Julie Crawshaw Article Font Size As much as $5.4 billion of Chinaâs $200 billion sovereign wealth fund could be frozen due to a U.S. money market account that failed, the Financial Times reports. U.S. regulatory filings show that a China Investment Corporation (CIC) subsidiary was the biggest institutional investor in Reserve Primary Fund, a $62 billion money market fund that was the oldest such fund in the United States, and which recently closed its doors. Until recently many investors considered money market funds to be as safe as bank accounts. However, Reserve Primaryâs net asset value fell below $1 last month when the fund was forced to value $785 million of Lehman Brothers debt securities at zero following the investment bankâs demise. The revaluation prompted frightened investors to withdraw $10 billion at $1 per share before shares fell to 97 cents and Reserve Primary froze redemptions. The freeze is the latest in a string of bad news for Chinese investments and may well add fuel to a political backlash already underway, observers say. According to The Wall Street Journal, much of the assets remaining in the money-market fund are bank commercial debt that appears sound but could lose value before it matures late next year. Bloomberg reports that CIC also invested $3 billion in Blackstone private equity and more than $5 billion in Morgan Stanley last year â and its subsidiary parked another $5.9 billion in three other money market funds. Overall, these shares have dropped more than 70 per cent since China purchased them. © 2008 Newsmax. All rights reserved.
And................ Once the price falls 70%.....the price has to increase over just a small 200%.....just to BREAK EVEN...... And....at the attractive rates soon to be offered by the FED.... at almost 0%..... GUESS WHAT THAT MEANS.......... Now think about the range of losses by most exchanges to date.... Now think about who used to get credit ....and where the credit came from......and how much will be available to the same person to price goods and services..... And guess what happens to prices .....when there is 1/3 or less the money that was available before....to create the prices of all products..... This is like a huge brick wall falling down.....and is going to be replaced brick by brick...... Government policy which remember creates no real wealth.....only prolongs financial agony...... Basically....those that have the bricks for the new wall....are going to be the big winners.....along with the cement sellers...... And this is not just China......this is the majority of all the world's markets..... http://online.wsj.com/mdc/public/page/2_3021-cntrytitan.html?mod=topnav_2_3024 New Prices are going to have to reflect much much lower pricing....before much of anything can be sold..... And the nations with the least debt on an overall basis will be the winners......No debt wins the game..... ie GM, F, Chysler.....if these companies cannot radically drop their prices because of non-auto costs....then some company needs to buy the good parts that can reach those prices at which the goods will sell.......