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Post by NOTTHOR on Sept 29, 2008 7:01:02 GMT -6
Bye bye Wachovia. Who's next? Good luck borrowing money in the next 5 years.
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Post by 101 on Sept 29, 2008 7:12:33 GMT -6
Too bad everyone is going to get f**ucked for the greed of a few. Bye bye Wachovia. Who's next? Good luck borrowing money in the next 5 years. |
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Post by germaine on Sept 29, 2008 7:34:38 GMT -6
Too bad everyone is going to get f**ucked for the greed and stupidity of a few. |
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Post by NOTTHOR on Sept 29, 2008 8:02:19 GMT -6
Ma just called - she works for a big Japanese bank that only does commercial lending, they are significantly curtailing taking on new customers and their rates for everyone but the biggest companies has tripled since Friday afternoon. The credit market is now officially dead, not on life support, not sucking wind, it's dead. Now, you can say we're in a recession - no way GDP doesn't drop on the heels of these bank failures, we'll now get to the textbook definition of a recession. And, oh by the way, if they pass that $700 billion mortgage purchase plan, expect oil to spike back up again as the value of the dollar will plummet again.
You gotta feel bad for the politicians. If they support the plan, there's a pretty good shot the credit market gets going again and the economy stays in decent shape, but their base will be upset. If they don't support the plan, we'll see a big bump in unemployment as the ripple effect of the recent bank failures works its way through the market (in terms of tens of thousands of layoffs and bankruptcies as credit dependent businesses fail) and they risk not getting re-elected.
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Post by bucketochicken on Sept 29, 2008 8:22:14 GMT -6
...You gotta feel bad for the politicians. If they support the plan, there's a pretty good shot the credit market gets going again and the economy stays in decent shape, but their base will be upset. If they don't support the plan, we'll see a big bump in unemployment as the ripple effect of the recent bank failures works its way through the market (in terms of tens of thousands of layoffs and bankruptcies as credit dependent businesses fail) and they risk not getting re-elected. Yeah, my heart bleeds for them. Poor dears. |
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Post by socal on Sept 29, 2008 8:32:16 GMT -6
Ma just called - she works for a big Japanese bank that only does commercial lending, they are significantly curtailing taking on new customers and their rates for everyone but the biggest companies has tripled bince Friday afternoon. The credit market is now officially dead, not on life support, not sucking wind, it's dead. Now, you can say we're in a recession - no way GDP doesn't drop on the heels of these bank failures, we'll now get to the textbook definition of a recession. And, oh by the way, if they pass that $700 billion mortgage purchase plan, expect oil to spike back up again as the value of the dollar will plummet again. You gotta feel bad for the politicians. If they support the plan, there's a pretty good shot the credit market gets going again and the economy stays in decent shape, but their base will be upset. If they don't support the plan, we'll see a big bump in unemployment as the ripple effect of the recent bank failures works its way through the market (in terms of tens of thousands of layoffs and bankruptcies as credit dependent businesses fail) and they risk not getting re-elected. If the credit market is "now officially dead, not on life support, not sucking wind, it's dead."... How will the politicians supporting the bailout get the credit market "going again"? Is it dead... or not dead yet... or feeling much better... or think it will go for a walk...? |
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Post by NOTTHOR on Sept 29, 2008 9:09:54 GMT -6
The theory is that the money center banks are not lending and will not lend until they move some mortgages off the books, but they can't move them off the books because there are virtually no buyers. With mark to market rules, I wouldn't be surprised if almost every bank is technically insolvent today. When Lehman went down, mortgage backed securities plummeted even further (seven cents on the dollar is the rumored last trade). Banks have tight standards governing the ratio of their internal assets to the loans they make, when the mark to market rules indicate that most of their mortgage portfolio is worth zero or almost zero, their asset base gets wiped and they are precluded from originating loans, and whatever lending cushion they do have is probably spoken for - it goes to their biggest and best clients who have multi billion dollar credit facilities.
So it goes, if the bank sells some mortgage backed assets to the government and the government creates some liquidity in the market, the fear and panic will disappear, the securities the banks retain will tick up in value and the banks will then have a cushion to lend against. At this moment, I don't think there is a cushion at most banks. Other institutional investors won't buy bonds, either. And with the recent money market fund ticking under $1 on the Lehman failure, the commercial paper market is in shambles. This is quite the storm we're seeing, no bank financing, the bond market is closed for all intents and purposes to new issuances and the commercial paper market is wobbly. The three biggest sources of credit are gone. Until confidence is restored and people are willing to take some risks again, the market will stay dead.
The fear in this market will make deep pockets who are liquid right now very, very rich. For every mortgage in California or Florida that gets wiped and the holder takes a 50% haircut on, there are at least 25 mortgages with decent equity backing and an American who will make good on his or her promise to pay, meaning that the guy buying at these fire sale prices stands to get a hefty interest rate and a nice chunk of principal return for holding this stuff.
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Post by mattahawk on Sept 29, 2008 22:34:23 GMT -6
I have no doubt that the credit market is in fact dead. Over the summer the wife and I were averaging for sure half a dozen credit card offers per week. I don't think I have had 3 or 4 the entire month of September. I don't exactly know how much what is going on at Wallstreet plays into that but I would have to think some. As Leno said, WaMU has turned into ScrewYou.
I don't know about every bank being insolvent though Jeff. I know the small town banks are faring pretty well right now, mainly because they aren't stupid enough to loan money to people that can't pay I suppose.
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