Jolly_Rancher

America's Banks: Are They Really Insolvent?

Your argument is a tautology. You say that if the market has mispriced the assets, then a market participant would step in and buy the assets. That makes no sense. The fact is that when markets are mispriced, they are that way because there are no buyers. People say the banks got us into this mess, and, while I think they deserve much of the blame, I think investors also made matters worse by chasing yields. Never happy with 4% CDs, they had to find a small bank in Timbuktu that paid 4.1%. Slick finance satisfied this crave.


On Feb 12 11:10 AM monday1929 wrote:

> 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:

America's Banks: Are They Really Insolvent?

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.


On Feb 12 08:03 AM Tradememe wrote:

> So, does that mean all we need to do is redefine insolvency and the
> banking crisis is over ? Just remove the mark-to-market requirement
> and the problem is gone.