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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 375.93-1.8%4:00 PM EST
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To: Hawkmoon who wrote (44122)12/20/2008 6:04:02 PM
From: Haim R. Branisteanu  Read Replies (2) of 217764
 
Hawk, based on the assertion you posted with the link the USD had its reflex rally - since there was substantial de-leveraging and we do not know the ratios now.

As a side comment the issue of leverage is irrelevant if all loans are paid the more important issue is the quality of loans in those bank portfolios and the manufacturing / raw material base of the companies that they are lending to them.

For example Deutsche Bank has the backing of the German government if needed. Germany is a country living thrifty in relation to the US etc.

Further I am not privy to their loan portfolio makeup and therefore only looking at the debt to equity ration would be misleading to anticipate profitability. The quality of the loans and other assets are the main concern for any lending institution.

If 12% of the loan portfolio of Bank America will not perform and residual value is ZERO, then the low debt to equity will not save the bank as it will end up with negative equity <GGG>

On the other hand if DB has a big chung of German Government debt, leveraged and hold to maturity is that riskier than holding on US GSA debt for example? - ( insured by US Treasury )

BWDIK
Haim
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