Showing posts with label wall street. Show all posts
Showing posts with label wall street. Show all posts
Wednesday, 15 April 2009
Friday, 3 April 2009
Banks Plan To Bid Up Each Other's Toxic Assets With Taxpayer Money
Knew this one was coming.
FT has learned that the major US banks, Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and JP Morgan (JPM) are all interested in buying toxic assets from one another, using the massive leverage provided by Tim Geithner's public private investment partnership.
This was a possibility folks saw coming from the first day, and amazingly, Sheila Bair has said she's open to this kind of money laundering.
And let's be honest, that's exactly what it is. Banks buying assets from each other to inflate their books has nothing to do with "price discovery" or any such nonsense. It's all about using taxpayer money to create bids that are higher than what the market currently prices those assets at. And if it turns out those bids were too high and the cash flows never materialize then, oh well, it's the taxpayer left holding the bag.
When told about the plans by FT, ranking Republican Spencer Bachus promised to introduce legislation preventing this. That may be easier said than done, however, given the banks' ability to invest in various third parties, possibly having the same effect.
Source: Business Insider
FT has learned that the major US banks, Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and JP Morgan (JPM) are all interested in buying toxic assets from one another, using the massive leverage provided by Tim Geithner's public private investment partnership.
This was a possibility folks saw coming from the first day, and amazingly, Sheila Bair has said she's open to this kind of money laundering.
And let's be honest, that's exactly what it is. Banks buying assets from each other to inflate their books has nothing to do with "price discovery" or any such nonsense. It's all about using taxpayer money to create bids that are higher than what the market currently prices those assets at. And if it turns out those bids were too high and the cash flows never materialize then, oh well, it's the taxpayer left holding the bag.
When told about the plans by FT, ranking Republican Spencer Bachus promised to introduce legislation preventing this. That may be easier said than done, however, given the banks' ability to invest in various third parties, possibly having the same effect.
Source: Business Insider
Thursday, 26 March 2009
Citigroup's Latest Con: Commercial Real Estate Fine
One of the next big shoes to drop in the global asset price collapse is commercial real estate. Citigroup, of course, still appears to be carrying its commercial mortgage portfolio at par dreamy levels. (Goldman Sachs)
What is commercial real estate? It's a $6.5 trillion market financed with $3.1 trillion of debt (Real Estate Roundtable, as quoted in WSJ).
Deutsche Bank estimates that commercial real estate prices will fall 35%-45%. That will make commercial real estate a $4 trillion market financed with $3.1 trillion of debt.
The main problem with commercial real estate debt, meanwhile, is not default risk but refinancing risk. Over the next few years, hundreds of billions of loans will come due, and banks won't be quick to refinance them again. As in residential real estate, lending standards have tightened and collateral prices--the real estate--have dropped.
Citigroup has already dumped $20 billion of its commercial real estate risk onto the taxpayer in one of its many bailouts. But it still has $38 billion left. The company has been rapidly increasing loan-loss reserves, but we'd guess not nearly fast enough.
Knowing what you know about Citigroup, what do you think the odds are that Citi has adequately reserved against its commercial mortgage portfolio?
By the way, Bank of America (BAC) and JP Morgan (JPM) are both carrying their commercial mortgages at 100%, too. Wonder what their reserves look like.
Here's more background on the Commercial Real Estate implosion from Richard Parkus at Deutsche Bank:
Deutsche Bank Commercial RE Q1 2009
What is commercial real estate? It's a $6.5 trillion market financed with $3.1 trillion of debt (Real Estate Roundtable, as quoted in WSJ).
Deutsche Bank estimates that commercial real estate prices will fall 35%-45%. That will make commercial real estate a $4 trillion market financed with $3.1 trillion of debt.
The main problem with commercial real estate debt, meanwhile, is not default risk but refinancing risk. Over the next few years, hundreds of billions of loans will come due, and banks won't be quick to refinance them again. As in residential real estate, lending standards have tightened and collateral prices--the real estate--have dropped.
Citigroup has already dumped $20 billion of its commercial real estate risk onto the taxpayer in one of its many bailouts. But it still has $38 billion left. The company has been rapidly increasing loan-loss reserves, but we'd guess not nearly fast enough.
Knowing what you know about Citigroup, what do you think the odds are that Citi has adequately reserved against its commercial mortgage portfolio?
By the way, Bank of America (BAC) and JP Morgan (JPM) are both carrying their commercial mortgages at 100%, too. Wonder what their reserves look like.
Here's more background on the Commercial Real Estate implosion from Richard Parkus at Deutsche Bank:
Deutsche Bank Commercial RE Q1 2009
Source: Business Insider
Monday, 9 March 2009
"The Greatest Depression" Under Way By Gerald Celente
“Trends research analyst Gerald Celente, who has risen in prominence on the back of his deadly accurate economic predictions, says that the collapse of financial markets heralds the start of ‘The Greatest Depression'.
Sunday, 8 March 2009
Have Leaders Around the World Taken Their Eye Off the Ball?
The $700 trillion elephant
Derivatives are worth $700 trillion, but no one is speaking about them or regulating them. This is the real source of Wall Street's downfall -- and it's crippling the rest of us.
READ THE FULL STORY HERE
Derivatives are worth $700 trillion, but no one is speaking about them or regulating them. This is the real source of Wall Street's downfall -- and it's crippling the rest of us.
READ THE FULL STORY HERE
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