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

To: Haim R. Branisteanu who wrote (44120)	12/20/2008 2:31:55 PM
From: Hawkmoon	Read Replies (2) \| Respond to of 217740

the mistake is in the fact that European Banks are also "investment banks" and therefore they are not more leveraged Guess I'm not following that. The article, which I give some credibility to, mentions Barclays was (is?) geared up to 60:1. That's 60 dollars of liabilities for each dollar in collateral no matter how the bank is structured, right? (repost of link) money.cnn.com Sure.. the Europeans are better savers than Americans and that gives the Euro-Banks more cushion to back up their leveraged positions. But they are also a confederation, and thus subject to the politics of each member country and some might resent having to bail out countries like Italy and Spain, where sub-prime WAS taking place and pushing up property values to previously unheard of levels. But what I think Europe has the MOST exposure to is emerging market debt. Spain, in particular has tremendous exposure to Latin America. Italy has tremendous exposure to Eastern Europe.. And each of these developing regions are exposed to declining markets for their products, denying them the capital they require to repay those loans. And again, they have their own subprime issues, primarily in those areas where immigration was prevalent: eurointelligence.com I really can't say where all of this is going to lead (and if I did, I'd be selling that information for big $$$!!.. ;0) But I just continue to have the sense that the rest of the major economies which were so dependent upon exporting to the US will suffer more from American consumers going on a buying strike. Hawk

To: Haim R. Branisteanu who wrote (44120)	12/20/2008 7:51:02 PM
From: rich evans	Read Replies (1) \| Respond to of 217740

The Fed has about 45 bill in capital and used to have about 500+ bill assets.Noww they are at about 2.3 trill in assets. for a 50+ leverage ratio. They have done this to fight the deflation/recession etc. But their assets/loans are high quality. And they are a reserve bank and thus not subject to capital ratio regulations or reserve requirements. They can expand their balance sheet forever by making loans and increasing the corresponding deposit liability of their customer banks. The trick is to get those loans repaid before inflation kicks in from all the bank lending at 10-1. This lending is not occuring yet. They are pros so lets hope they know what they are doing. Rich