Banks will not be loaning money.

Discussion in 'Economics' started by PocketChange, Dec 16, 2009.

  1. Changes in the financial regulations of banks specifically abolishing previous restrictions from using deposits for speculative investments will make loaning money obsolete and unprofitable.

    As part of TARP and the financial recovery acts passed last year, bank holding companies are no longer restricted from using deposited funds to trade. Furthermore, the FDIC is insuring their bets.

    If you are a trader/banker with access to deposited funds at a cost of 3% a year and the additional benefit of the FDIC insuring your losses.

    Would you

    A: Use the deposited funds to loan money out at prime + 2%-5%.


    B: Use the deposited funds and trade large with no risk?

    The bankers are going to make a fortune either way and the ones that blow out will be on the FDIC's dime.
  2. We can all do the "bond carry trade" to earn zillions! :cool:
  3. hmm... How can I get the FDIC to insure my NewCo Bond? If I can get by this little hurdle I could probably print my own AAA rated paper redeemable in euros ;)
  4. pitz


    Yeah, why on earth would anyone invest in new capacity right now?

    Best use of funds is to buy up existing capacity in useful sectors that are in legitimate shortage (ie: energy, mining, etc.).

    Cheap loans to build more Subway-brand "sandwich" counters would be completely counter-productive.
  5. 1) "Americanized" burrito joints are a better way to go.
    2) If you can figure out a way to make East Indian food into a franchisable concept in the USA, you can earn quadrillions of dollars. :cool:
  6. Something like that exists in NYC, it's called Beluchi's. It's horrible food.

    East Indian food is associated with food poisoning, upset stomach, indigestion and painful times on the toilet for good reasons.
  7. pitz


    Well I'll shut my pie-hole (burrito-hole?) if Chipotle has any trouble obtaining funding from the markets in this environment.
  8. 1) Only if food is produced respecting the golden rules... If not it's bad for our physical and mental health...
    2) Ohh yeah :) Worldwide man !
  9. The power of the market, removing bad player... only possible trough tranparency...
  10. Street Food is at the common denominated currency through out the world.

    A Hot dog in NYC is $3
    A Shwarma in Amsterdam is 3 Eur
    road side tacos in Mexico is 3 Pesos
    A crepe on the street of Paris is $3 Eur
    Samosa's on the beaches of Mumbai are 3 Rupees.

    Doesn't much matter what the exchange rates are cheap street eats are always a few local bucks.

    I suppose cigarettes and beer are equally priced in common coin.

    #10     Dec 18, 2009