Think about this for a second. How long do you actually thing that these highly leveraged buyouts can go on for? The credit that is helping finance the leveraged buyouts has to dry up sooner or later. I think the sub prime mortgage problems will be quickly forgotten when the first leveraged buyout gets into serious trouble. Will they tighten the lending standards anytime soon, the answer is probably NO. I would take notice of the Highly leveraged buyouts and pay close attention to where private equity is heading, this cant last forever.
Until the banks realize they are the ones left holding the bag if/when consumer spending softens. The way we'll know for sure is when financing for one gets turned down or a Monday passes with no new deals announced. It may be that they get all the financing arranged before making an offer, so if that was the case we wouldn't hear anything at all about the ones that were refused. At the moment, I think the banks are desperate to find anyone to lend to that they can make anything on, and will tend to dramatically underestimate risks in order to take the deals. I recall similar silliness in 1987. For example, take Chrysler. LOL, TAKE CHRYSLER *PLEASE*. The banks are going to lend money so they can be bought out? Money that lands on Chrysler's balance sheet as debt? Are you kidding me? They barely have a chance to survive WITHOUT THE DEBT!!! And the banks are thinking they are going to generate positve cash flow sufficient to repay plus interest? Gimme a break. Its not the figures that lie, its the liars that figure. You watch. It will end up like ford with the 4th or 5th "restructuring plan" projecting to make money 18 to 24 months out, just like all the plans before it. In the end, instead of them being healthcare and pension providers that make cars on the side, they will be banks that WISHED they didn't have to make cars on the side.
Bank fears threat from credit standards By Chris Giles and Gillian Tett in London and Richard Beales and Chrystia Freeland in New York Published: April 25 2007 22:24 | Last updated: April 25 2007 22:24 A surge in cheap corporate lending with looser credit standards âhas increased the vulnerability of the [global financial] systemâ, the Bank of England will warn on Thursday in its strongest comments to date on financial stability. The Bank also cautions against weakening standards of risk assessment when bank loans are repackaged and resold to new investors, such as pension and hedge funds. In its twice-yearly financial stability review, it says the recent turmoil in the US subprime mortgage market illustrates a problem that original lenders, which sold off the default risk, often allowed their standards to slip. âSimilar problems in a more significant market, such as corporate credit, could have more serious consequences if credit quality were to deteriorate,â the Bank says, but it insists the UK financial system remains highly resilient, underpinned by a benign global economic outlook. Its concerns relate to the consequences of an unforeseen shock to the global economy, world politics or a large financial institution. It is worried that other big financial institutions could find themselves over-exposed in the event of serious turbulence on global markets. The Bankâs concerns accord with those of Larry Fink, the chief executive of BlackRock, the $1,000bn-plus fund management group, in a Financial Times interview on Wednesday. He said lending to highly indebted companies was becoming lax in ways similar to those that have undermined the US subprime mortgage market, making the leveraged loan market âtomorrowâs problemâ. âIf I was the chairman of the Federal Reserve Iâd be paying more attention to that because, to me, this is going to be tomorrowâs problem,â Mr Fink said. âStandards have deteriorated to levels that we never even dreamt we would see.â The biggest reason for weakening lending standards were plentiful liquidity and consequent strong investor demand, Mr Fink said. But he warned many investors were moving into illiquid âalternativeâ investments such as hedge funds and private equity. Aggressive lending is also supporting the private equity industry and Mr Fink said that any credit slump would have a knock-on effect on private equity groups such as Blackstone, which is planning a public offering. He said Blackstone, where he once worked, was highly diversified and âuniquely qualifiedâ to go public.
As long as the printing presses are working, this is a no risk fed chairman, just friggen buy this dumb ass will never let the market fall.
They can last for a surprisingly long time. Unfortunately, they also tend to end like the Hindenburg.
================== And in real estate markets which had single % gains, or low %%gains, with strong demand , real long uptrend time. Several good reasons for that including Delta airline stock can /has gone to $ o.oo; real estate, unless highly polluted ,usually doesnt trend like that
The sad thing is, guess who is going to fish the bankrupt families and firms out? The US government (in part at least). And who finances them? WE DO. So, even if you never got to own that McMansion you always wanted, you're still paying for one. Lovely.