Comments on: Banks Need Fistfuls of Dough Through End of 2009, Thanks to Refis http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through.html Mon, 23 Nov 2009 00:58:00 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through.html#comment-13579 Anonymous Wed, 27 Aug 2008 11:28:00 +0000 http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through-end-of-2009-thanks-to-refis/#comment-13579 Yes...why assume it's just the commercial banks it's the i-banks as well. Yes…why assume it’s just the commercial banks it’s the i-banks as well.

]]> By: doc holiday http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through.html#comment-13576 doc holiday Wed, 27 Aug 2008 06:27:00 +0000 http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through-end-of-2009-thanks-to-refis/#comment-13576 As I clean up old bookmarks, this stands out here:<br/><br/>In the case of portfolio insurance, the models assumed that there would be sufficient liquidity to execute the waves of orders, but the human element crept in and the system locked up, creating a free fall in prices. Of course, this would seem obvious to an old time floor trader, but to an academic buried in equations and proofs, it was an overlooked factor (one of the inventors went on to argue that the insurance had worked, it was the market that failed).<br/><br/>http://acrinv.blogspot.com/2008/06/book-review_25.html As I clean up old bookmarks, this stands out here:

In the case of portfolio insurance, the models assumed that there would be sufficient liquidity to execute the waves of orders, but the human element crept in and the system locked up, creating a free fall in prices. Of course, this would seem obvious to an old time floor trader, but to an academic buried in equations and proofs, it was an overlooked factor (one of the inventors went on to argue that the insurance had worked, it was the market that failed).

http://acrinv.blogspot.com/2008/06/book-review_25.html

]]> By: Thomas http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through.html#comment-13575 Thomas Wed, 27 Aug 2008 06:17:00 +0000 http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through-end-of-2009-thanks-to-refis/#comment-13575 An important point made in the WSJ article is the fact that SIVs were major investors in the floating-rate paper being issued by the banks. Now that banks are increasingly being forced to bring SIV assets back onto their balance sheets it should do wonders for their ability to rollover that $871 billion as it comes due.<br/><br/>The depth of the ponzi based financing utilized by the banks is truly astounding. Leverage piled on top of leverage. That's what happens when you try to extend beyond the natural terminus point of a fractional reserve banking system. An important point made in the WSJ article is the fact that SIVs were major investors in the floating-rate paper being issued by the banks. Now that banks are increasingly being forced to bring SIV assets back onto their balance sheets it should do wonders for their ability to rollover that $871 billion as it comes due.

The depth of the ponzi based financing utilized by the banks is truly astounding. Leverage piled on top of leverage. That’s what happens when you try to extend beyond the natural terminus point of a fractional reserve banking system.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through.html#comment-13574 Anonymous Wed, 27 Aug 2008 06:11:00 +0000 http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through-end-of-2009-thanks-to-refis/#comment-13574 The Rising Risk of a Systemic Financial Meltdown: The Twelve Steps to Financial Disaster by Nouriel Roubini February 5, 2008<br/><br/>Eleventh, the worsening credit crunch that is affecting most credit markets and credit derivative markets will lead to a dry-up of liquidity in a variety of financial markets, including otherwise very liquid derivatives markets. Another round of credit crunch in interbank markets will ensue triggered by counterparty risk, lack of trust, liquidity premia and credit risk. A variety of interbank rates – TED spreads, BOR-OIS spreads, BOT – Tbill spreads, interbank-policy rate spreads, swap spreads, VIX and other gauges ofinvestors’ risk aversion – will massively widen again. Even the easing of the liquidity crunch after massive central banks’ actions in December and January will reverse as credit concerns keep interbank spread wide in spite of further injections of liquidity by central banks. Twelfth, a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices will ensue leading to a cascading and mounting cycle of losses and further credit contraction. In illiquid market actual market prices are now even lower than the lower fundamental value that they now have given the credit problems in the economy. The Rising Risk of a Systemic Financial Meltdown: The Twelve Steps to Financial Disaster by Nouriel Roubini February 5, 2008

Eleventh, the worsening credit crunch that is affecting most credit markets and credit derivative markets will lead to a dry-up of liquidity in a variety of financial markets, including otherwise very liquid derivatives markets. Another round of credit crunch in interbank markets will ensue triggered by counterparty risk, lack of trust, liquidity premia and credit risk. A variety of interbank rates – TED spreads, BOR-OIS spreads, BOT – Tbill spreads, interbank-policy rate spreads, swap spreads, VIX and other gauges ofinvestors’ risk aversion – will massively widen again. Even the easing of the liquidity crunch after massive central banks’ actions in December and January will reverse as credit concerns keep interbank spread wide in spite of further injections of liquidity by central banks. Twelfth, a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices will ensue leading to a cascading and mounting cycle of losses and further credit contraction. In illiquid market actual market prices are now even lower than the lower fundamental value that they now have given the credit problems in the economy.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through.html#comment-13573 Anonymous Wed, 27 Aug 2008 06:09:00 +0000 http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through-end-of-2009-thanks-to-refis/#comment-13573 Great hits FYI: By other measures, costs for banks' borrowing needs have also been rising. The spread between three-month Libor and overnight index swaps has been climbing since February. What's known among credit analysts as the BOR-OIS spread gives a view of Libor that strips out expectations that central banks will raise or lower rates. Great hits FYI: By other measures, costs for banks’ borrowing needs have also been rising. The spread between three-month Libor and overnight index swaps has been climbing since February. What’s known among credit analysts as the BOR-OIS spread gives a view of Libor that strips out expectations that central banks will raise or lower rates.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through.html#comment-13572 Anonymous Wed, 27 Aug 2008 04:25:00 +0000 http://www.nakedcapitalism.com/2008/08/banks-need-fistfuls-of-dough-through-end-of-2009-thanks-to-refis/#comment-13572 Merrill Lynch & Co., Wachovia Corp., Lehman Brothers Holdings Inc. and the rest of the U.S. finance industry are about to find out how expensive credit has become. <br/><br/>Banks, securities firms and lenders have a record $871 billion of bonds maturing through 2009, according to JPMorgan Chase & Co., just as yields are at their most punitive compared with Treasuries. The increase in yields may cost them as much as $23 billion more in annual interest versus a year ago based on Merrill Lynch index data. Merrill Lynch & Co., Wachovia Corp., Lehman Brothers Holdings Inc. and the rest of the U.S. finance industry are about to find out how expensive credit has become.

Banks, securities firms and lenders have a record $871 billion of bonds maturing through 2009, according to JPMorgan Chase & Co., just as yields are at their most punitive compared with Treasuries. The increase in yields may cost them as much as $23 billion more in annual interest versus a year ago based on Merrill Lynch index data.

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