Decline of America's investment bankers

Morgan Stanley and Bear Stearns have written off billions in bad subprime loans in the last quarterly earnings reports of their. A signal event, the more especially in the long history of these two houses, it is the first time the balance sheet is in bright Christmas colour red! Morgan Stanly lost us$9bn, but they found an China with a fat wallet of us$200bn over in sovergein funds to buy a 10 per cent share in this old white shoe house. Bear wrote off us1.3bn, and had arranged months before to enter in a mutual us$1bn mutual investment in funds--Bear in Citic and Citic in Bear, allow each to worm its way into each other's market. CitiGroup found a saviour in the oil wealth of Abu Dubai. And of course the greedy Blackstone Group sold off a 10 per cent share to the Chinese.
The outsiders have presently no voting rights but the weight of the investment will have an effect of the poor management of the Americans. Bear a fair haired boy in prime brokerage has been pushed out of the top 3 by the Swiss UBS. What is even more telling is that although Bear has kept its top customers [many of whom lost a bundle in Bear's two hedge funds which went belly up in which these fat cats--but not Bear--lost big money], these very good clients are shifting funds to other banks. So not only do we see a loss of big bucks but a serious crisis in trust which will take years to recover from.
Foreign monies to bail out weakened by greed in the subprime mess, means that the sun is setting on America as the cock of the walk in the world's financial empire.
Nayan Chanda had an op ed piece in 19 December Financial Times of London, in which he urged Asian and Arab leaders to speak up more boldly in financial markets since they have strong funds to back up their words, and as such, the power to do so and sway markets and use their influence. They no longer have to take second place!
The crisis in American banking houses should be a stern lesson and a warning to the world's capital markets. No one reads but should have in hindsight 'Finanaz Kapital' of the Austrian Rudolph Hilferdings. It is out of print more likely than not in translation, and although written more than a century ago, should serve as a warning as the quixotic nature of the banking industry!