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

To: robert b furman who wrote (10054)	9/21/2008 9:41:26 PM
From: Hawkmoon	Respond to of 33421

Where did you get that? A book or just your well rounded base of knowledge? Well.. I get an education every day.. But I didn't write that article.. I just tagged on the stuff at the bottom.. ;0) But I will say that one thing the author failed to mention, from my recent reading, it's pretty clear that the SEC failed when it permitted those 5 primary investment banks go to 40:1 leverage without some serious oversight of their books. I can understand it might have been because the European banks weren't hampered by the same capital restraints and were eating our lunch, but they are leveraged to an even greater degree than US IBs are. Barclays, for example, is apparently leveraged 60:1!!!! The key problem on this side of the Atlantic is that the largest European banks have become not only too big to fail but also too big to be saved. For example, the total liabilities of Deutsche Bank (leverage ratio over 50!) amount to around 2,000 billion euro, (more than Fannie Mai) or over 80 % of the GDP of Germany. This is simply too much for the Bundesbank or even the German state to contemplate, given that the German budget is bound by the rules of the Stability pact and the German government cannot order (unlike the US Treasury) its central bank to issue more currency. The total liabilities of Barclays of around 1,300 billion pounds (leverage ratio over 60!) surpasses Britain’s GDP. Fortis bank, which has been in the news recently, has a leverage ratio of "only" 33, but its liabilities are several times larger than the GDP of its home country (Belgium). voxeu.org We live in some TRULY scary times.. Yet the Europeans are laughing out our situation.. What Hubris!!: latimes.com Hawk