YucaLandia
Jun 25, 2011, 11:39 AM
Post #5 of 5
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mevale,
Do you believe that there is currently $30 billion in real estate fraud in Mexico, combined with 30X & 40X margin borrowing by Mexican investment firms, combined with 2 million - 30 million of virtual (non existent) stock shares per key Mexican companies and banks, combined with Mexican investors/companies buying 100's billions of bogus insurance policies that pay-off if a business fails, and that Mexican Banks are loaning negative-interest rate real-estate loans where the buyer does not even make interest payments (where the "missed" interest payments are just added to the principal balance)?
Since Mexico does not allow 30X margin borrowing, since Mexico does not allow naked short selling, since Mexico does not allow credit default swaps, and because Mexico does not allow negative interest real estate loans, the situations do not seem to compare. Mexico's banking and investment regulations also do not allow Clinton's banking and investment regulation policy changes, nor does Mexico have a lax financial regulatory climate like under Bush the Second.
Your comparison of the two ratings systems evaluations seems like apples to pineapples.
They both have the word "apple" in them, they can be sweet, they are both are juicy fruits, but I bet the bars don't sell may Manzana-coladas.
The combination of Clinton's regulation changes and Bush's lax regulatory climate leveraged $60 billion in bad real estate loans by 30X margin borrowing into $1.8 trillion in near-fraudulent high-risk lending + another $1.5 Trillion in Credit Default Swaps and Naked Short Selling, rang-up roughly $3 trillion in previously hidden fraud. Mexico has nothing even close to the USA's extremely precarious 2007 & 2008 financial positions. Remember Bernanke declaring in May 2008 that everything was "OK"...? The hidden fraud and corruption in US investments was so broad and deep that even the mountains of Fed data that Bernanke had would not reveal the messes - which put Moodys, S&P, etc in a bad bad position in 2007/2008 when estimating bond strengths.
US 2010 GDP is $15 trillion vs. $3.8 trillion of Federal Outlays ($1.3 Trillion 2010 Deficit = 8.7%) , while Mexico's Deficit is 0.5% of GDP, which means US relative deficits are 17X larger than Mexico. Public Debt Figures: accumulated US Federal 2010 Debt is 93% of GDP. compared to Mexico's 45%.
Really, Mexico's position as an oil producing country with more strict financial regulations is much much different (better) than either the current US position (US Govt. threatening to get junk bond status if Congress does not agree to raise their already-high debt ceiling) or the really awful hidden 2007-2008 US financial weaknesses the Moody's, S&P, the Fed, and Bernanke did not recognize.
Mexico's low 0.5% deficits vs US's 8.7% deficits vs GDP, make Mexico's govt bond future look better too.
steve
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Read-on MacDuff
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