12. - 19. 5. 2014
unter dem Nördlichen Tierkreis
und unter den Nördlichen Königskonjunktionen
aus den Jahren 1603, 1802, 1980 und 1305
(Anklicken vergrößert)
And God said may there becoming lights on the firmament dividing day and night and giving signs times days and years. 1 Gen. 14
The departure from and to get in contrast to instinct creates awareness. " (CG Jung, of Life, Zurich 1931, p. 249)
"Instinct is nature and will nature . Awareness, however, can only want culture or its negation ... (ibid. p. 250)
"Instinct is nature and nature will. Awareness, however, can only want culture or it's negation ... "
(click to enlarge)
Consider a hypothetical asset manager, PIMROCK. PIMROCK reviews a pool of loans held by the bank J.P. Citi of America, and its analysts determine they are worth 30¢ of par value. The bank holds them at 80¢ on its book. PIMROCK agrees to put down $10B to purchase loans from the pool at 82¢ thrilling stock markets everywhere. It was all just a bad dream!
Under Geithner's plan, PIMROCK's $10B permits a $10B equity investment from the Treasury. Then the FDIC levers the whole thing up, providing $6 of debt for every one dollar of equity. So, $140B of bad loans are lifted from J.P. Citi of America, nearly $90B of which is sheer overpayment to the bank.
Of course, as cash flows evolve, PIMROCK's $10B is wiped out entirely, as is the Treasury's investment. The FDIC gets repaid in a bunch of securities worth about $50B, taking a $70B loss. But, as Calculated Risk, likes to say "Hoocoodanode?" These were real market prices, Geithner or his successor will argue. Our private partners lost everything. There was no subsidy here.
Meanwhile, taxpayers will be out around $80B.
interfluidity.powerblogs



“Then came Meredith Whitney with news. Whitney was an obscure analyst of financial firms for Oppenheimer Securities who, on October 31, 2007, ceased to be obscure. On that day, she predicted that Citigroup had so mismanaged its affairs that it would need to slash its dividend or go bust. It’s never entirely clear on any given day what causes what in the stock market, but it was pretty obvious that on October 31, Meredith Whitney caused the market in financial stocks to crash. By the end of the trading day, a woman whom basically no one had ever heard of had shaved $369 billion off the value of financial firms in the market. Four days later, Citigroup’s C.E.O., Chuck Prince, resigned. In January, Citigroup slashed its dividend.”The following months Meredith Whitney continued her warnings. She pointed out, that the "incestuous" relationship between the banks and the credit-rating agencies during the real estate bubble will have a long-lasting impact on banks' ability to recover."
http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom
In a comment in today's Financial Times, Whitney gives some recommendations for the financial services industry, all of which are sensible. But the most striking part of the piece is her downbeat I am more bearish today than I have been in the past 18 months. In so far as the market has impacted on the economy, capital destruction has been so intense that multi-trillions in capital raised by institutions through both private and public capital has gone to plug holes and not stabilise the effects of shrinking liquidity to corporations and consumers. More than $3,000bn (€2,365bn, £1,955bn) of available credit has been expunged from the markets and therefore corporate and consumer borrowers so far this year.
I estimate that the mortgage market will shrink for the first time in US history and that the credit card market will be 18 months behind it. While just over 70 per cent of US households have access to credit cards, 90 per cent of these people use credit cards as a cash-flow management vehicle, or revolve payments at least once a year. While the credit card market is small relative to the mortgage market, it has grown to play a key role in consumer liquidity. Declining liquidity here will have disastrous effects on consumer spending and the economy reading:
http://www.nakedcapitalism.com/2008/12/meredith-whitney-sounds-like-nouriel.html
Here are some easily adoptable changes that would make a difference.
First, re-regionalise lending. Since the early 1990s, key bank products, mortgages and credit card lending were rapidly consolidated nationally. Banking went from “knowing your customer” or local lending, to relying on what have proven to be unreliable FICO credit scores and centralised underwriting. The government should now motivate local lenders (many of which have clean balance sheets) to re-widen their product offering to include credit cards and encourage the mega banks to provide servicing and processing facilities to banks that sold off these capabilities years ago.
Second – fourth …
One of her suggestions for regulators to focus on encouraging regional rather than national lending operations. Whitney stresses, as we have, that local/area knowledge is necessary for sound credit judgments; reliance on FICO scores has proven to be a disaster.
This is no time for partisanship. The situation is too dire. These changes are ones I would never have imagined endorsing a year ago, but these are extraordinary times.(http://www.ft.com/cms/s/0/11344d06-befb-11dd-ae63-0000779fd18c.html:)
