The US sub prime mortgage market crisis has trapped all major financial investors into its snare. After the Citigroup, Goldman Sachs it is now time for Morgan Stanley to show its weakness. First time in the investment bank’s 72-year history, Morgan Stanley faced its first quarterly loss with a $9.4 billion write-down.

The bad shape of the US investor is welcome for the emerging economies of the world. To help it bail out of the crisis, Morgan Stanley is looking eastwards. It will sell $5 billion stake to the China Investment Corporation, which is under the direct control of China’s finance ministry.

Riding on the back of a booming housing market, the US financial institutions had resorted to large-scale loans to borrowers with dubious credibility. However, trade in sub-prime securities went wrong causing rise in the number of foreclosures in the USA and the banks recording huge losses. To help clear matters, the banks are looking eastwards to the emerging Asian countries. The joke that is currently popular among the Wall Street players is ‘Shanghai, Dubai, Mumbai or goodbye.’

John Mack, the banks CEO has saved his job for the time being. However, his compensations will plummet to $800,000 down from $40 million last year. Mach admitted taking his company to the current crisis. He emulated the wrong efforts of Goldman Sachs in using it own capital in trade that had earlier saw the CEO of Goldman Sachs loosing his job.

Image Credit:Business week

Source: IHT