j-dub

If Asset Prices Are Dropping, Why Are Bank Stocks Rising?

Tack-
What bank do you/your spouse work for?

Wany to brink a smile to everyone's face?
Trying claiming you don't work for one


"upset the apple cart"
Give me my 700 billion apples back!!!!








On Aug 22 06:39 PM Tack wrote:

> In response to your post:
>
> 1) Paper solvency is only an issue if you're a third-party lender
> that has short-term maturing debt that needs to be rolled over and
> your creditors are either a) scared to death and want to take their
> money and run, or b) opportunistic predators, who wish to drive you
> into bankruptcy and/or deeding vastly-undervalued assets to them
> to satisfy your debt, so they can make the big money in the recovery
> phase. That's precisely what happened to leveraged outfits, like
> Thornburg Mortgage, etc., in the early going of this panic.
>
> That phase of the panic is over, now, and the commercial banks are
> not going to face a "covenant call" on their debt unless one is contrived
> for them by the predatory forces. (That's precisly why we still see
> opining and lobbying to have Washington force the banks, by law,
> to sell all their distorted-market-value debt assets at what would
> be insane prices. The same entities that shorted all this stuff to
> death, now want Congress to giftwrap it for them so they can make
> the huge money on the upswing, too.)
>
> 2) Sure, there are tighter lending standards in play. For heaven's
> sake, let's hope so. The 125%, no-docs loans to people who couldn't
> have paid back 50% loans are how we got here. I do not in any way
> think the economy is being constrained at this point by inadequate
> loan supply; it's being limited by caution on borrowers' parts and
> by inadequate confidence being restored, as a whole, to the public.
> We're in the "early-adopters" phase of the recovery (where the big
> money is always made), and the general public will follow, gradually,
> as a lagging indicator, just like employment. It may be gradual,
> rather than sharp, but it's the direction that matters.
>
> Regarding banks "getting through this," they are now at record levels
> of liquidity and deposits --absolutely huge amounts never before
> seen, en toto. The banks, also, despite all the fear whipped up about
> commercial realty, have already built up very large reserves, and
> continue to add, to deal with continued weakness in the commercial
> sector. They will not be caught off guard, as they were with the
> residential-writedown panic.
>
> I continue to believe the banks are well positioned, presently, for
> returning profits and, especially, for growing cashflows.
>
> In my own view, the only things that could upset the apple cart would
> be if:
>
> 1) Washington changed the rules and forced banks, against all logic,
> to sell their assets at firesale prices. For the moment, I'm betting
> that enough saner minds remain that this will not happen. However,
> if it did, it would have catastrophic consequences to our economy,
> the financial system, stock markets and any hope for world recovery.
>
>
> 2) Some new scare develops or is conjured up, which sends business
> and the public into a deeper retreat that reverses the initial positive
> news and emerging fledgling confidence we're beginning to see, now.
>

If Asset Prices Are Dropping, Why Are Bank Stocks Rising?

Three reasons

1) PPT

2) greater fool theory operating LIKE I HAVE NEVER SEEN BEFORE, stemming from the perpetration of accounting fraud.

3) governement intervention (stealing taxpayers money on a LEVEL NO ONE HAS EVER SEEN BEFORE)