Monday, February 04, 2008

Ben Franklin Report: the Buttered Side

Even though the Industrial & Commercial Bank of China, the largest bank in the Middle Kingdom has announced $1.2 billion in exposure to the subprime crisis, there may yet be a silver lining. Considering that the Bank of China, number two in terms of amount of exposure in China, announced that they might post a loss on the year on such transactions, the executives at the ICBC are obviously re-examining the fundamental risk beneath the AAA-rated financial instruments behind the ongoing crisis.

There are still a couple of good opportunities out there in the world of finance for even the most bearish investor. If you are looking for banks that have strong fundamentals, no exposure to the subprime crisis, and are being sold at bargain prices, look no farther than Scandanavian banks. Or, if you are completely risk-averse and require underlying assets to your investment, perhaps you should consider Islamic banking, like in Malaysia.

Here in the U.S., the economy has risen to the tip of everyone's tongues. In hard-hit California, candidates are pitching their message to whoever will listen. In Massachusetts, the State is bringing civil suit against Merrill Lynch, seeking profits from selling the aforementioned AAA-rated credit instruments, collateralized debt obligations to Springfield, Massachusetts. And there are one or two more thoughts floating around about the planned economic stimulus moving through Congress.

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