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  • a fat panda: 
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  • Joe The Economist
  One has to ask whether JPM repaid the loans that financed the Bear Sterns deal. My guess is not. While it isn't a large deal, it demonstrates the lack of initiative that our banks have in unwinding the welfare in the system. (It isn't just the TARP).
  
  The market is suppose to weed-out the weak, and the government has stopped that process. What the government doesn't realize is that it is enfeebling the strong with it cheap money policies.
  
  Here is the problem. Having worked in and around banks for 20 years, I can tell you that we are training the dog to piss on the carpet. The more we subsidize interest for these people the more they expect it. This is just human nature. They will start pricing deals as though capital and risk are free.
  
  Just ask yourself which manager is going to get promoted. The one that takes the subsidized risks or the one that exercises prudent lending standards. The crappy manager looks great on paper, until the price of risk rises. Guess which one gets promoted.

  Nov 15 08:21 PM | Link | Reply