Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (2214)	3/16/2004 8:42:54 PM
From: BCherry168	Read Replies (1) of 116555

In response to John Succo's article that , in part, states as follows: "...The bank knew very well that the cash flow to service debt was highly dependent on the price of oil. So the bank insured the loans through liens on oil companies’ land and equipment. This made them feel safe, so they just kept on lending......" This is so right. I had a senior VP of lending at Interfirst tell some clients of mine in 1982 that they wanted them to increase their borrowing and do more drilling, and when asked what values they were putting on the reserves to justify that, they told us that their engineers predicted $75 per barrel by 1985. Fortunately, my clients declined, and sold out in 1985, thereby missing the crash in early 1986. My thought is that when banks are pushing loans, its time to call in the dogs, piss on the fire, and go home. They are pushing them now, with fewer takers, it appears to me.

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