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: Haim R. Branisteanu who wrote (96384)	4/12/2009 12:49:57 PM
From: rich evans	Read Replies (1) of 116555

Investing in AAA rated MBS’s or CDO’s and buying CDS’s AAA rated also increased the bank equity very substantially which enabled the bank to lend out more etc. and that is the root of the credit debacle – mark to market in a credit bull market and ignoring the present value of the debenture the bank invested into, which debenture value remained the same by maturity!! These investments would be with bank capital or deposits. The only increase in equity would be the net interest rate spread IMO. Rich

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