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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (31900)	3/30/2008 5:27:34 AM
From: elmatador	Read Replies (1) \| Respond to of 217693

Collateral is required to assure the lender that there is something he can go after in case the guy doesn't pay. I never owed money since 1974 (barred a flat I bought 1979 get debt to be eaten by the inflation I saw coming and indeed came. I put 50% upfront.) I don't want lender to co-own what I purchase. Thus I always deferred my consumption to the time I had the cash. If you buy a house, the lender owns the house until you finish paying it and can call it yours. That because the banks still have the rights to have it as the guarantee for the money you still owe them. The banks do not let you borrow money that makes an instalment go above 30% of the family's income that is going to be signing as borrowers. That's how banks do in Brazil where capital is scarce. If capital is a plenty banks and banks started doling out money left and right, without asking for collateral, nor guarantees and allowed people to have multiple mortgages, it is not a problem of the consumer, it is a problem of the economy as a whole. Distortions are bad. Very bad. Too much money in Switzerland makes very easy for people to own their homes because lots of people park money there. Countries that are good parking lots for money can have it nicely. Therefore countries love capital hogging!!! Now with the sucking sound of money going south we can provide some nice parking ground for the money and do nicely for a three decades as demographic window sends the SCALE to in imaginable levels. But the culture of asking for guarantees is there. And if things get out of control government steps in and quiet it down.

To: TobagoJack who wrote (31900)	3/31/2008 12:12:14 PM
From: carranza2	Respond to of 217693

A ray of light or a head fake? Fed eyeing Nordic style nationalization of banks: telegraph.co.uk The US Federal Reserve is examining the Nordic bank nationalisations of the 1990s as a possible interim solution to the US financial crisis. Hedge fund legends humbled by crisis Read more of Ambrose Evans-Pritchard The financial crisis in full The Fed has been criticised for its rescue of Bear Stearns, which critics say has degenerated into a taxpayer gift to rich bankers. A senior official at one of the Scandinavian central banks told The Daily Telegraph that Fed strategists had stepped up contacts to learn how Norway, Sweden and Finland managed their traumatic crisis from 1991 to 1993, which brought the region's economy to its knees. It is understood that Fed vice-chairman Don Kohn remains very concerned by the depth of the US crisis and is eyeing the Nordic approach for contingency options. Scandinavia's bank rescue proved successful and is now a model for central bankers, unlike Japan's drawn-out response, where ailing banks were propped up in a half-public limbo for years. While the responses varied in each Nordic country, there a was major effort to avoid the sort of "moral hazard" that has bedevilled efforts by the Fed and the Bank of England in trying to stabilise their banking systems. Norway ensured that shareholders of insolvent lenders received nothing and the senior management was entirely purged. Two of the country's top four banks - Christiania Bank and Fokus - were seized by force majeure. "We were determined not to get caught in the game we've seen with Bear Stearns where shareholders make money out of the rescue," said one Norwegian adviser. "The law was amended so that we could take 100pc control of any bank where its equity had fallen below zero. Shareholders were left with nothing. It was very controversial," he said. Stefan Ingves, governor of Sweden's Riksbank, said his country passed an act so it could seize banks where the capital adequacy ratio had fallen below 2pc. Efforts were also made to protect against "blackmail" by shareholders. Mr Ingves said there were parallels with the US crisis, citing the use of off-balance sheet vehicles to speculate on property. All the Nordic banks were nursed back to health and refloated or merged. The tough policies contrast with the Fed's bail-out of Bear Stearns, where shareholders forced JP Morgan to increase its Fed-led rescue offer from $2 to $10 a share. Christopher Wood, chief strategist at brokers CLSA, says the Fed's piecemeal approach has led to "appalling moral hazard". "Shareholders have been able to lobby for a higher share price only because the Fed took over the credit risk on $30bn of the investment bank's dubious paper. The whole affair also amounts to a colossal subsidy for JP Morgan," he said.