Quote:
Originally Posted by sebastian_dangerfield
In any scenario, the institution selling the bonds will not be lending the resulting liquid to domestic businesses who aren't seeking loans or to underwater homeowners seeking refis. The money will look for returns abroad. The devaluation will boost export markets, and maybe that will create enough activity to spark some form of hiring, but it seems unlikely given the lack of response last time.
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I think you're off a bit here. Lend money to BofA and it likely won't be invested anywhere, just go to supporting their current loans and investments as they continue to suck wind. Maybe that gives shareholders and bondholders some comfort, and so maybe that helps out the Chinese bondholders a bit, but really all that happens is that the money makes it possible for them to continue to work to salvage what they have, and maybe avoids them pressuring some big American businesses to repay their loans and lets them forestall some foreclosure proceedings in their acquired mortgage business.
But if you're a medium size business and did business with BofA, they've already squeezed you until it hurt and you're probably borrowing from someone else.
There are lots of domestic businesses seeking loans these days, including some good sized ones. More available money would probably lead, for example, to a round of consolidation in several industries, and a fair bit of M&A activity. You are right that there would be more foreign buyers than domestic ones. But that money's probably not coming from BofA for at least a couple quarters, and even then you've got to be a little wary about taking it the way they've behaved.
Goldman, on the other hand, looks ready to pump some more money out any time now.
