Next leg of banking collapse underway

Laughing_man

mewbie wrote: »

I think you'll find Thanks mean very little in terms of how valid your statements are. HPC nutter is quite reasonable really, and the feeble minded doom mongers who inhabit this board have happily reclaimed that expression as their own.

a. I brought something to the table ITT rather than a vacuous ad-hominim.

b. When one poster is telling another to GTFO of his message board the Thanks- which I haven't seen elsewhere- suggests his view is not generally held.

What is HPC nutter in your view anyway?

Kez100

Where does Nationwide sit in all of this?

mewbie_2

Laughing_man wrote: »

What is HPC nutter in your view anyway?

A term of endearment.

Really2

Conrad wrote: »

Really2

You have a point in so far as none of us know, but there is a spectrum of possible outcomes, and I personaly do try to make a best guess given the facts as to where the most and least lilkely outcomes on the spectrum lie.

I have to say the case for further price falls has to be the most realistic position to take.

I too take the view prices will continue throughout this year.

Really2

Laughing_man wrote: »

Awesome post. I don't know how Really arrived at the conclusion that Banks are making up fictional losses that probably won't occur to make things seem worse than they are . For some reason alot of posters here are committed to looking for the silver lining and ignoring the cloud.

? I was just explaing what a writedown was.
It's not an easy job to know which debts will go bad and not all of them will that is a fact. (So a write down is a provision for bad debt)
Also some debts will not be including with writedowns will go bad so I can't see where at all I said anything about"fictional losses"
the only thing fictional is what you think I said.:rolleyes:

Really2

Laughing_man wrote: »

Anyway since I currently have a higher thank ratio than you it would seem this forum prefers my voice to yours, I think I'll hang around.:cool:

You can join the others thankers from HPC on here. (got to get this keyboard fixed;) )

Thrugelmir

Interesting post and subsequent comments.

From what I've read. The adminstrators of Lehman Brothers say it could 10 years to unwind the CDO's and other financial instruments that were issued. The CDO's were created by the same "rocket scientists" that created the programming for the first space rocket sent to Mars.... and that ship got lost! Hence that's where their name came from. Brilliant brains but no business/banking background.

In simple terms the CDO's were originally split in tranches according to risk. The risk obviously carrying a premium. As was said in the post earlier the tranches in effect became mixed. Rather than consisting of purely AAA graded debt for example. Lehmans started EEE graded debt ie American sub prime, and no doubt Northern Rock 125% LTV mortgages.

The CDO's were wrapped inside other CDO's and even swapped for other debt. The net result of this is nobody knows who holds the poisioned chalice.
Until the mortgages included in these CDO's are repaid or defaulted upon, no one knows their potential loss.

The price of CDO's will progressively increase as the months pass. As the risk of default will progressively reduce.

The issue for the banks is that if the CDO's were valued prudently. They would all be technically insolvent, as no value would be placed on these assets. So by lending the banks money, Governments are ensuring that banks remain solvent. Otherwise there could be a stampede as happened with the Northern Rock. No bank could meet the demands of its depositors if all wished to withdraw their money at the same time. So confidence in the banking system must be maintained.

So although Governments are lending their banks funds at would appear to be high rates ( 8% USA - 12% UK , the banks potentially have an enormous upside. As the majority of mortgage holders will ultimately repay their debt.

Kez100

Following that, there is also a big interest in Governments getting the property market moving again as well and preferably while people are in work.

Thrugelmir

Kez100 wrote: »

Following that, there is also a big interest in Governments getting the property market moving again as well and preferably while people are in work.

On that line I think it's more an issue of stopping a collapse in the housing market and creating an enviroment for an orderly fall. Such as has been created by the fall in interest rates.

Woby_Tide

Thrugelmir wrote: »

Interesting post and subsequent comments.

From what I've read. The adminstrators of Lehman Brothers say it could 10 years to unwind the CDO's and other financial instruments that were issued. .

Yet in the bankruptcy hearing the other day the Lehman administrators said it could be wrapped up in 18-24months.