via NYT
>
Source:
Breaking a Barrier to Lending
NYT, February 20, 2009
http://www.nytimes.com/interactive/2009/02/20/business/20090220-lend-graphic.html
In any great organization it is far, far safer to be wrong with the majority than to be right alone. —John Kenneth Galbraith
Asian currencies continue to sell off vs the $ on the heels of the news yesterday that South Korea said they will look into hot money inflows stemming from the $ carry trade and the Bank of Indonesia said they are looking into the foreign buying of bills. This follows the news a few weeks ago that Taiwan was limiting foreign deposit holdings and Brazil was taxing foreign inflow transactions. As I mentioned yesterday, we may have reached a short term pain threshold in terms of $ weakness and foreign countries are fighting back as they certainly won't wait for...
read more »
February 20th, 2009 at 12:28 pm
Could anybody possibly be any more ill-informed than the guy who proposed this?
Let’s start with the very first words: “The banks have come to depend…”
Stop.
So what?????
February 20th, 2009 at 12:29 pm
May I suggest a new security. Instead of ABS/MBS we will now have GBS (Government-Backed security
and have ourselves a ‘brand’ (pun intended) new bubble!
I’m sure the volume chart of GBS will resemble that of ABS/MBS displayed on the right of the NYT image (but starting in 2008 instead of 1996)
February 20th, 2009 at 12:37 pm
Looking at the volume chart, right…
Not counting 2001-2007, it looks like the average loaned amount is ~500B (.5T).
If we take the loans made during 2001-2007, it looks like a total of ~7 Trillion in ’surplus’ loans (loans beyond the average amount).
I bet not every single person will default… but Roubini’s 3.6T estimate of losses may be optomistic.