Mexican billionaire weighs in on US financial crisis
Mexican billionaire Carlos Slim has some advice for the US in its financial crisis: Acquire temporary stakes in failing financial institutions instead of buying up their bad assets. And, a more dramatic fix: Turn to China for help.
In the $700 billion bailout plan, now waiting for Congressional approval, the government can purchase bad mortgages and other delinquent assets now held by investment banks. Slim thinks that buying those debts would put the government in a bind where it would have to manage and then sell the debts. He thinks it would be better if the government purchased the institutions themselves, which would give them more capital for restructuring and recovery.
Banks should be responsible for their own losses, he also said. Using Warren Buffet's $5 billion investment in Goldman Sachs as an example, he suggested the banks seek private investment from individuals or from sovereign wealth funds. He did not say if his own conglomerate would make such an investment.
Slim's more intriguing suggestion is that China put its considerable financial clout behind the crisis and rescue the US. "China is now the most important country to help responsibly in this crisis," Slim told journalists at a meeting in Mexico City. "China has great liquidity, large resources, surpluses in its current accounts and a lot of capital flow. There is a systematic crisis in the whole financial system and the problem is that everything is interconnected."
He'd also like to see improved rules for world financial markets and better – not more, but better – regulation.
He thinks that Latin America can weather the financial meltdown. If the region aggressively promotes job growth and controls inflation, the crisis "not only will not affect us, but we will be able to have more employment and moderate growth," he said.
He refused to go on record in support of either presidential candidate running for election in the US, only that the best would be the one who most quickly restores the US economy.
Slim's fortune is estimated to be about $60 billion.
Tags: Carlos Slim , Financial Crisis , Investment Banks , China
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