monday1929

America's Banks: Are They Really Insolvent?

If the Market is wrong, smart PRIVATE money would be rushing in to buy the crap. Bankers must return to being mere low paid clerks- highly regulated and low paid. let the Banksters put their entire net worths at risk to prove these assests are worth more than ZERO.


On Feb 12 10:41 AM Jolly_Rancher wrote:

> I think there is some validity to this. The service that banks provide
> is very valuable. They provide investment dollars so that the economy
> can function. Most of what they provide is long term to maturity.
> Why should these investments no matter how stupid they were be shown
> on the books at market value as if the market is so accurate. The
> market is notoriously wrong in pricing assets much of the time. The
> problem now is not just marking to market. Additionally, the banks
> are caught in a spiral downward. They mark their assets down to market.
> The market panics and takes the assets down farther. The banks mark
> down further. The markets panic. And so forth. The government should
> in fact break the spiral and my guess is that it has to do this by
> throwing trillions at the problem.

America's Banks: Are They Really Insolvent?

I've learned that it is better to take money from those who deny reality than to try to convince the delusional of a truth they will not face. Thank you Harvard MBA's for a great year. Keep following those models.


On Feb 12 08:47 AM MICHAEL SHULMAN wrote:

> Insolvency, in banking does not mean a bank shuts down in a meaningful
> way -- the customers can get their money, the loans are still serviced
> and so on. Insolvency means the banks have less tangible equity than
> liabilities -- and this is truly the case for several very large
> banks. Geither would not look like a deer caught in the headlights
> if this were not true -- and check out page 21 of the Citgroup town
> hall meeting presentation last November where they use acronyms to
> describe more than $1.2 trillion in off balance sheet assets. What
> insolvency means is shareholders in selected banks, over time, will
> be wiped out and so will some unsecured bond holders. Any solution
> you come up with, including bone head ones like suspending market
> rules, and there is so much dilution and so little of the current
> equity left shareholders get killed. And that is exactly the way
> it is supposed to play out. When I said this on Fox Business a week
> or two before Freddie and Fannie disappeared Ben Stein made fun of
> me, saying this was somewhere between improbably and impossible.
> So.....