More Foreign Investment for Wall Street

Over the past few months, foreign governments have come to the aid of ailing Wall Street investment banks. And this week, Singapore's Temasek Holdings joined the list when it bought a stake in Merrill Lynch.

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STEVE INSKEEP, host:

NPR's business news starts with losses on Wall Street.

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INSKEEP, host:

Stock prices are lower so far today. It appears that investor trading was dampened by today's assassination of Pakistani opposition leader Benazir Bhutto. Stability and the lack of it in Pakistan could affect a lot of things, including a lot of economic issues.

Coming into today's trading session, the market have risen in the past four trading days.

Now, we told you earlier this week about getting another foreign government investing large amounts of money into an ailing Wall Street investment bank. It's practically a trend.

And NPR's Adam Davidson examines what it means.

ADAM DAVIDSON: This week's news, the government of Singapore is investing $4.4 billion in Merrill Lynch. Last week, it was the government of China; 5 billion dollars invested in Morgan Stanley. A month ago, the government of Abu Dhabi puts 7.5 billion into Citigroup.

This is a complete reversal of what was normal for most of the 20th century. Big, rich Wall Street banks are usually the one sending money out investing their billions in poor, emerging markets, but a lot has happened in the past few years. First off, rising oil prices have meant that oil-rich nations have a huge amount of money, far more than they ever did before. China and Singapore also have a lot of cash on hand mainly because they've become key players in global trade.

All of these formerly poor emerging nations are suddenly very, very rich. At the same time, the mighty New York investment banks have all lost huge amounts in investments backed by subprime mortgages.

To just about everyone's shock, these banks have lost billions of dollars each. This quarter, some lost money for the first time ever. So this winter has created a perfect storm that flipped traditional investment on its head.

Adam Davidson, NPR News, New York.

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