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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: XoFruitCake who wrote (149675)9/24/2008 6:17:44 AM
From: butschi2Read Replies (2) of 306849
 
Even if GS wouldnt have losses on their assets they must be desperate for new capital, because they are far more leveraged than allowed as a supervised bank and therefore they must deleverage sharply or raise a lot of capital. Perhaps a combination of both.

I would therefore expect a exemption from capital limits for GS/MS for some time until they can downsize enough. They will nearly have to cut theirs assets/liabilites in half by going to a regulated bank.

Credit should get rellay tight with around $1 trillion alone getting canned from the system through LEH hitting the wall and GS/MS going from IB-Leverage 1:20/30 to bank leverage ~1:12/15.

Coupled with other players in need of deleveraging, i would expect credit exspecially for hedge fonds und LBOs to get elusive and for normally investment to get really tight AND expensive, like for JUMBO-Mortgages.
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