Remember, a big chunk of this toxic shit is in British and Swiss banks who are no part of the Euro zone and secondly the likes of Citi, BAC and JP Morgan have a multi trillion $ exposure to toxic crap just as well why would the market rate their shit less of a problem then with their european peers? cheers.
back when this all started, there was a little bit of sneering going on from europe towards america i was pretty sure they would live to regret it couldn't see how their socialized loans were going to be of higher quality than our slightly less socialized loans answer: they're not
No one believes me when I tell them of this situation. I have to come here, pull up the article, and either show it to them or email them the link.
Oh, also, there is rampant speculation that a key provision of Geithner's plan to be unveiled will involve suspension of mark-to-market. If so, it just adds more credibility to the complex theory that we're screwed, IMO.
They also completely deleted the original article. Has anyone else noticed this? First, they removed the 16 trillion euro figure. Then, they completely removed the article. I've rarely, if ever, seen this happen.
The statement that the "toxic" assets are XX trillions, is based on what ? Do you know that mortgages in Europe are still packaged in MBS, just to deposit them as collateral at the ECB ? Even if those MBS don't have a value in the market now, they are not toxic, since they are made of good mortgage debts in european countries where there isn't such a big wave of foreclosures like in the US. IMHO the credibility of the Telegraph is ZERO.
Do you get the idea that too many people are making money prolonging the crisis to just solve it? What would happen if all CDSs were declared null and void by international agreement, and all loans, property, credit cards and student loans were reset to a 4, 6 and 6 % interest rate respectively. Since the banks do fractional reserve lending I don't see how they can NOT be making money if 80% of their loans are still preforming, even if they were getting only 4% and were PAYING 4% interest, since for every $10.00 in deposits they get to loan $100.00. So for $.40 they would maken$3.20 if only 80% of the loans preformed. So tell me why the banks are in trouble? Cause I don't think it is from lending.
I know how ya feel. 359 Kidnappings in Phoenix,AZ last year due to Mexican Drug Cartels. Some don't believe me. http://www.kpho.com/news/16888051/detail.html wow..link dead...they yanked it! :eek: http://blogs.telegraph.co.uk/bruno_...02/11/toxic_eu_bank_assets_total_163_trillion
They aren't Many companies that hold CDS and loans would declare bankruptcy.. The cut in interest rates would create a steep sell-off in bonds (would you keep your money in a bank that only paid 4% but had a 6% chance of defaulting?) Without CDS protection, bonds would sell-off especially sharply (interest rates on all new debt would rise) Companies that own bonds in their portfolios would declare bankruptcy, rinse and repeat. It would be a complete bloodbath in banking, insurance, and pensions. The FDIC would bailout consumers' lost checking/savings accounts, but it wouldn't do much for commercial depositors (e.g. money of payrolls) or the people expecting a pension check or a payout or coverage from an insurance company. You've got your numbers mixed up. For every $10 in risk capital (i.e., money with no strings attached other than the right to be last in line when the profits come), banks get to lend $100. For every $10 in deposits, they only get to lend about $9 +/- something (and hold the other $1 as reserves). Re-run your numbers with the bank earning 4% on $9 and paying 4% on $10 and see what you get. Next, go look at the balance sheet of Citibank. As of Sep, 30 2008 (before the crash!), Citi had $2.050 Trillion in assets which sounds like a lot, but most of those "assets" are actually loans which may or may not be repaid or may pay a lot less than Citi expected if the loans are renegotiated. On the liability side, Citi owes a total of $1.925 Trillion. Thus, if Citi's assets lose just 6% of their value, the bank is in deep trouble. Given what's happened in the markets and the economy since Sep 2008, many think that Citi's assets are worth a lot less than they were on Sept 2008. That's why Citi's stock lost over 80% of its value since Sept 2008. Even with all the promises of bailouts, Citi sits on the brink.
Not exactly: that is not how fractional reserve lending works. http://en.wikipedia.org/wiki/Fractional_reserve_banking_system The bank does not usually pay interest on demand deposits such as checking accounts, but those deposits count as reserves. What happens is that the money loaned is deposited in a bank somewhere and that becomes the deposit that 9/10ths of is lent out, which is deposited and 9/10ths is then lent out, which is deposited and then 9/10ths is lent out. Then the loan is deposited and 9/10ths is lent out..........