Saab is Dead
According to Bloomberg, GM's deal to sell its bankrupt Saab division is dead. Koenigsegg, the Swedish supercar maker was on track to buy Saab, until the European Investment Bank backed out of a $600 million loan for the deal. GM has threatened to just close the company. The sad truth is that unless Koenigsegg is paid to buy Saab, they won't do it. This setback follows GM's failed sales of Saturn and Opel.
Good luck getting that money back, Mr. Obama.
In other news, the FDIC is technically bankrupt, at -$8.2 billion. And the problem is just getting bigger: problem banks now total 552, with $345 billion in assets. Losses could easily total 30-50% of that.
Oh, and guess what? Chinese banks are raising capital because after their lending binge, they're undercapitalized. Whodathunkit? And the plan to do that: sell shares on the stock market. BNP Paribas estimates Chinese banks need to raise over $50 billion. But how will the stock market hold up without a trillion dollars in new credit every year? One old trick for raising capital is beeing taken away. Regulators plan "to tighten capital requirements for banks by capping cross-holdings of subordinated bonds." Gone are the good old days when banks could raise capital by calling across the street and saying, "I'll buy $10 billion of your bonds if you buy $10 billion of mine. Great. Now we can start lending again."
So, if the Chinese economy slows down again, how will that affect the global financial picture?
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