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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (8114)	8/12/2007 6:37:59 PM
From: MulhollandDrive	Read Replies (1) \| Respond to of 33421

"Credit anorexia" set in once "bank directors awoke to the inadequacy of their capitalization relative to the credit risks they had taken," causing them to cut off the new loans available to their clients. Soon afterwards, long lines of panicked depositors were forming outside several banks waiting to withdraw their funds. jon, i've been saying this for some time...."bank directors awoke to the INADEQUACY of their capitalization relative to the credit risks' lenders are correctly assessing the underlying asset values and are finding them overvalued.... the game of hot potato has come to an end... as long as lenders were able to find buyers of the debt, they were willing to make unbelievably risky loans call it the game of hot potato, musical chairs or just wile e. coyote realizing he is in mid air, i'm guessing that added 'liguidity' still won't make the horse drink i had a friend who was presented with an investment of buying into a fund that purchased 'highly securitized' (meaning loan to value of 70%) loans.....i pointed out to him, well, yah....for NOW....but what happens if the underlying securities (the RE) goes down 20%? suddenly that secure loan to value rate disappears....it was tempting, he was being offered a low double digit return, but he turned it down.... i would love it if he would contact the seller of the investment to see just where it is right now