>>assuming 5% default rate, then require 2.25 tril cash pay out
- do you know any group of financial institutions, except the fed reserve that is 45% owned by jpm, and j6p tax payer, with 2.25 tril cash sitting around?<<
No I don't.
>>try another number, assuming 500 billion equity gets wiped out from usa banking system, then, at 10:1 leverage, 5 trillion of loans would have to go poof
- do you know any asset class that can take a 5 tril sell-down so that 5 tril of debt can be called in?<<
Again no. But didn't Japan go through something similar, scale wise? Of course, they still haven't fully recovered 20+ years later, gulp!Nor has the Real estate values.
So you are saying we are in for a period in the USA of de-leverage/bankrupcy/devaluation of the currency, deflation of assets.
Europe will probably follow as they are in a similar position, at least UK, Spain, France and probably many of the Euro banks in other countries.
Asia, will not be too affected by the banks but it's export market will shrink as USA and Europe hit slowdowns.
Ok so then what will do well? Gold and commodities may get sold off too, certainly industrial metals will be in less demand. Even food may be affected if people cut back, certainly nonessential food commodities such as coffee and sugar would. |
