Thread: Wendy made me do it.

The "new" business the really big banks are into, notably but by no means exclusively Goldman, is making very wide margins on investing in the fairly high risk, presently unregulated derivative transaction business. The banks are now able to do this with a base of funds which comes from Federal guarantees to otherwise regulated institutions and access to Fed Funds at very cheap rates. The "old" businesses...

Inflation doesn't really fix anything Inflation allows the banks and the homeowners to inflate their way out of negative equity. It also allows us to pay back the dollars we borrowed at a lower value. (It is my belief that we haven't stolen anything as the lender, our trading partners, had artificially made the dollar strong anyway.) Failure to revalue real estate destroys the banking industry. I am not talking figuratively, I mean...

A failure there would be just as devastating as a failure of the central government. if it is that vital, then it doesn't sound like we should allow bank ownership to reside in private hands

<My forecast is simple, for the next two years, maybe more, this will be a stinking mess and no one knows how to solve it sooner. “Pretend and extend” will be the policy for a lot of banks waiting for things to improve, mostly they probably will eventually, but the special servicers may feel they have no easy choice but to go by the book and hold real auctions, come what may to avoid being sued themselves.> Japan went the...

Welcome and thank you for that great contribution. It fits well into the prevailing mood over here ;-) My forecast is simple, for the next two years, maybe more, this will be a stinking mess and no one knows how to solve it sooner. “Pretend and extend” will be the policy for a lot of banks waiting for things to improve, mostly they probably will eventually, but the special servicers may feel they have no easy choice but to go by the book...

When looking at REITs it is important to remember that the REIT Modernization Act of 1999 that went into effect in 2001 changed the rules so that REITs could operate companies in the property that they own. Greg

I dunno why, but my screen says....."dispose of the best asses" and it sort of made sense.

Missash, I didn't say it didn't make sense. I didn't even say I don't agree with it. What I do say is it wasn't what I intended to type. Pariseur Freudian slip? ;-) IP

Federally insured banks and S&Ls hold about another $3.05 Trillion in real estate loans, REO, etc. They have about 14.05 Trillion in assets and only $1.16 T in net capital. It’s not too hard to think 25% of the loans will hit default and recovery may be 50 cents on the dollar or even less. On the upside (if there is one), there was an interesting article in the FT a few weeks ago on the underlying profits being made in the banking...

We may well be the British of the 1930's. Their depression ended when Germany bombed London into rubble. ============== Acutally, Britain did pretty well in the 1930s, compared to Germany and the US. Britain didn't have a bad Depression. They'll have a worse time now. I fear in 5 years time, Britain will be full of civil unrest.