Subprime Woes Gives the Chinese Politburo 10% Stake in Major US Bank

I know it’s strictly business, but I find this piece of news rather fascinating:

Morgan Stanley posted its first quarterly loss ever Wednesday after taking an additional $5.7 billion write-down related to subprime mortgages. The investment bank also said it would sell a $5 billion stake to China Investment Corp., a sovereign wealth fund, to shore up its capital.

The sale, which would give the Chinese government a stake of about 9.9 percent in one of Wall Street’s biggest investment banks, is the latest example of a foreign investor aiding a Western financial firm after the housing meltdown.

It’s rather interesting to observe how much the world has changed since the end of the Cold War. The Chinese Communist Politburo now controls almost 10% of a major US investment bank (Morgan Stanley) and it’s not even major news. Mao may have said “political power flows through the barrel of a gun” but modern Chinese leaders also realize that “money begets power”. 

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