Comments on: Officialdom to Close the Leverage Gate Now That the Horse is in the Next County http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html Sun, 22 Nov 2009 15:18:28 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Juan http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html#comment-21293 Juan Mon, 13 Oct 2008 18:11:00 +0000 http://www.nakedcapitalism.com/2008/10/officialdom-to-close-the-leverage-gate-now-that-the-horse-is-in-the-next-county/#comment-21293 Mara,<br/><br/>What you describe is not so dissimilar to what took place in a number of South American nations as dictators and their cronnies happily borrowed from intl banks, wasted some of it, offshored the rest and left populations to pay. But then that was only a few decades ago and came to involve the favors of IMF austerity programs. Mara,

What you describe is not so dissimilar to what took place in a number of South American nations as dictators and their cronnies happily borrowed from intl banks, wasted some of it, offshored the rest and left populations to pay. But then that was only a few decades ago and came to involve the favors of IMF austerity programs.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html#comment-21235 Anonymous Mon, 13 Oct 2008 09:52:00 +0000 http://www.nakedcapitalism.com/2008/10/officialdom-to-close-the-leverage-gate-now-that-the-horse-is-in-the-next-county/#comment-21235 @Mara: Being Danish myself I fully understand the desire for f.ex. Swedbank to be burned seriously on it's exposure to Eastern Europe ;-)<br/><br/>It is sad that your government wants to waste your tax money on a bunch of foreign speculators. Unfortunately this is the global trend! @Mara: Being Danish myself I fully understand the desire for f.ex. Swedbank to be burned seriously on it’s exposure to Eastern Europe ;-)

It is sad that your government wants to waste your tax money on a bunch of foreign speculators. Unfortunately this is the global trend!

]]> By: paddy http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html#comment-21212 paddy Mon, 13 Oct 2008 05:37:00 +0000 http://www.nakedcapitalism.com/2008/10/officialdom-to-close-the-leverage-gate-now-that-the-horse-is-in-the-next-county/#comment-21212 On trying to stock pick at the bottom and leveraging, there was a guest presenter on CNBC Europe (sorry, can't remember his name) who said that over the next 12-18 months, cashflow and a robust balance sheet is king. I guess this is the great DELEVERAGING. He said he'd be dusting off a few text books from the early '80s. On trying to stock pick at the bottom and leveraging, there was a guest presenter on CNBC Europe (sorry, can’t remember his name) who said that over the next 12-18 months, cashflow and a robust balance sheet is king. I guess this is the great DELEVERAGING. He said he’d be dusting off a few text books from the early ’80s.

]]> By: doc holiday http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html#comment-21205 doc holiday Mon, 13 Oct 2008 05:19:00 +0000 http://www.nakedcapitalism.com/2008/10/officialdom-to-close-the-leverage-gate-now-that-the-horse-is-in-the-next-county/#comment-21205 Pardon my French, but these retards @ The Financial Stability Forum are about 20 years too late to the derivative party. OK, I wont swear! Pardon my French, but these retards @ The Financial Stability Forum are about 20 years too late to the derivative party. OK, I wont swear!

]]> By: Mara http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html#comment-21190 Mara Mon, 13 Oct 2008 04:28:00 +0000 http://www.nakedcapitalism.com/2008/10/officialdom-to-close-the-leverage-gate-now-that-the-horse-is-in-the-next-county/#comment-21190 Being a latvian I have to make a comment when my country gets dumped on (again). The latvian govt would be stupid to guarantee any of this debt (good, bad or otherwise), because most of it was taken by foreigners or non-resident latvians. I suspect Lithuania and Estonia have similar issues, Turkey as well in some areas. We had flats going for 90-200K euros, no local has that kind of money. It was coming from Sweden, England and Russia mostly. Probably the bigger worry would be for someone like Hansabank (or any number of swedish banks), who were lending into this wildly appreciating market. <br/>Now the govt will pay for the mistakes of foreign banks, as well as some local idiots, who were given free reign because they understood "western" ways. Ugh. Hopefully not many locals were sucked into this to lose savings. It's taken a long time to get this populus interested in common banking (16 years since independence) because it was so untrusted in soviet times. [Previously house/land prices were low because all transactions were cash/trade settled immediately]. Now they're getting burned in the fast, wild and free times too. <br/><br/>What can they do now? I think they're screwed either way. They either dish out money they don't have (and have to raise taxes and drive away foreign investment), or have to step in and severely regulate foreign banks and/or oversee land and property acquisitions very strictly, which again hurts people who are trying to do it the right way. When I see stuff like this, I have to fight my populist feelings to say 'stop all foreclosures and screw the banks'. Being a latvian I have to make a comment when my country gets dumped on (again). The latvian govt would be stupid to guarantee any of this debt (good, bad or otherwise), because most of it was taken by foreigners or non-resident latvians. I suspect Lithuania and Estonia have similar issues, Turkey as well in some areas. We had flats going for 90-200K euros, no local has that kind of money. It was coming from Sweden, England and Russia mostly. Probably the bigger worry would be for someone like Hansabank (or any number of swedish banks), who were lending into this wildly appreciating market.
Now the govt will pay for the mistakes of foreign banks, as well as some local idiots, who were given free reign because they understood “western” ways. Ugh. Hopefully not many locals were sucked into this to lose savings. It’s taken a long time to get this populus interested in common banking (16 years since independence) because it was so untrusted in soviet times. [Previously house/land prices were low because all transactions were cash/trade settled immediately]. Now they’re getting burned in the fast, wild and free times too.

What can they do now? I think they’re screwed either way. They either dish out money they don’t have (and have to raise taxes and drive away foreign investment), or have to step in and severely regulate foreign banks and/or oversee land and property acquisitions very strictly, which again hurts people who are trying to do it the right way. When I see stuff like this, I have to fight my populist feelings to say ’stop all foreclosures and screw the banks’.

]]> By: alex http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html#comment-21187 alex Mon, 13 Oct 2008 03:42:00 +0000 http://www.nakedcapitalism.com/2008/10/officialdom-to-close-the-leverage-gate-now-that-the-horse-is-in-the-next-county/#comment-21187 so they basically want to undo what the SEC allowed the top 5 ibanks to do a few years ago? great.<br/><br/>http://www.nytimes.com/2008/10/03/business/03sec.html<br/><br/><br/>"On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.<br/><br/>They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.<br/><br/>The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary. " so they basically want to undo what the SEC allowed the top 5 ibanks to do a few years ago? great.

http://www.nytimes.com/2008/10/03/business/03sec.html

“On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary. “

]]> By: luther http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html#comment-21186 luther Mon, 13 Oct 2008 03:24:00 +0000 http://www.nakedcapitalism.com/2008/10/officialdom-to-close-the-leverage-gate-now-that-the-horse-is-in-the-next-county/#comment-21186 "Bankers should manage the money system AFTER the money has been created, operating with a 100 percent reserve system."<br/><br/>interesting...that's how gramman, the microfinance bank in Bangladesh does it.<br/><br/>checkit -- http://www.theworld.org/?q=node/21433<br/><br/>now check out their balance sheet:<br/><br/>http://www.grameen-info.org/<br/><br/>(under data & reports)<br/><br/>elegantly simple and simply elegant "Bankers should manage the money system AFTER the money has been created, operating with a 100 percent reserve system."

interesting…that's how gramman, the microfinance bank in Bangladesh does it.

checkit — http://www.theworld.org/?q=node/21433

now check out their balance sheet:

http://www.grameen-info.org/

(under data & reports)

elegantly simple and simply elegant

]]> By: Dave Raithel http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html#comment-21183 Dave Raithel Mon, 13 Oct 2008 02:31:00 +0000 http://www.nakedcapitalism.com/2008/10/officialdom-to-close-the-leverage-gate-now-that-the-horse-is-in-the-next-county/#comment-21183 "..banks ... will have to set aside more of their own resources, or capital..." Set aside where? If there's one thing I think I'm learning here, it is this: For any pile of money or financial instruments, someone will try to make more money or financial instruments out of it. Set aside capital won't be stuffed in matresses, so where is it put so it cannot be abused? “..banks … will have to set aside more of their own resources, or capital…” Set aside where? If there’s one thing I think I’m learning here, it is this: For any pile of money or financial instruments, someone will try to make more money or financial instruments out of it. Set aside capital won’t be stuffed in matresses, so where is it put so it cannot be abused?

]]> By: Juan http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html#comment-21180 Juan Mon, 13 Oct 2008 02:21:00 +0000 http://www.nakedcapitalism.com/2008/10/officialdom-to-close-the-leverage-gate-now-that-the-horse-is-in-the-next-county/#comment-21180 Juan F.<br/><br/>Recall that the de facto zero reserve ratio through sweeps grew out of a somewhat earlier fed attempts to recap the banking system after the S&L debacle, that money market funds had grown very substantially, that the GSEs were being expanded and that all of above interacted with international flows until, I believe it was in 2001, Larry Lindsey called the whole process "nuclear credit fission".<br/><br/>But of course there had to be limits, which I happen to believe began being imposed by the (global) real economy so early as the mid-1990s, limits which the frenzy seemed to overcome even as uncontrollability rose to its now evident position. Juan F.

Recall that the de facto zero reserve ratio through sweeps grew out of a somewhat earlier fed attempts to recap the banking system after the S&L debacle, that money market funds had grown very substantially, that the GSEs were being expanded and that all of above interacted with international flows until, I believe it was in 2001, Larry Lindsey called the whole process "nuclear credit fission".

But of course there had to be limits, which I happen to believe began being imposed by the (global) real economy so early as the mid-1990s, limits which the frenzy seemed to overcome even as uncontrollability rose to its now evident position.

]]> By: Art http://www.nakedcapitalism.com/2008/10/officialdom-to-close-leverage-gate-now.html#comment-21176 Art Mon, 13 Oct 2008 01:53:00 +0000 http://www.nakedcapitalism.com/2008/10/officialdom-to-close-the-leverage-gate-now-that-the-horse-is-in-the-next-county/#comment-21176 Interesting article on credit crisis in UK. Mortgage fallen by 95% last month. Which is shocking. <br/><br/>http://www.guardian.co.uk/business/2008/oct/13/economics-creditcrunch Interesting article on credit crisis in UK. Mortgage fallen by 95% last month. Which is shocking.

http://www.guardian.co.uk/business/2008/oct/13/economics-creditcrunch

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