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

To: Hawkmoon who wrote (13181)	6/7/2012 11:17:04 AM
From: Augustus Gloop	1 Recommendation Read Replies (2) \| Respond to of 33421

I think the free spread they've been enjoying was because the banking system was much closer to insolvency than any of us want to know and it was the one way to bolster them without creating panic in the streets. <<So the question is whether these low rates are going to require banks to take more risks in lending to a private sector that is already burdened with debt and intent on de-leveraging and raising cash?>> I'm not sure what's more risky 1) Resetting lower rates on existing loans (distressed or not) or 2) leaving things as they are now knowing that there's a wave of new defaults and foreclosures Maybe I'm being a mental minion but it seems to me there's risk regardless of path. The question of how to address NEW lending is more tricky. I fall in the camp that banks played a role in destabilizing the economy. Just because congress made it possible to loosen lending standards in 2004 doesn't mean landing institutions were obligated to abandon all good lending practices. That was a choice and when it backfired it negatively impacted the entire economy. With that as my opinion (and my opinion could be way off base) I believe resetting lower rates on at least has a chance of helping the situation with negligible additional exposure....at least in the mortgage market. and for anyone who want's to label me a liberal - save it because that's not true. We need to be willing to try almost anything (other than printing MORE money) to stabilize housing and this economy

To: Hawkmoon who wrote (13181)	6/14/2012 2:26:40 AM
From: John Pitera	3 Recommendations Respond to of 33421

The credit markets are dysfunctional.... don't take my word....... several global fixed income specialists have said precisely the same thing. *You don't work your way out of this type of completely broken scenario without unexpected developments to clear the tables* Understated assets on a balance sheet, which is perfectably acceptable in GAAP accounting are know as "hidden assets" 85% of foundations have assets that they have not market to market and are undervalued. Foundations are required to give out 5% of their assets each year...... if you have a number of assets that are on the books at cost and not current value it reduces the yearly 5% payout amount. John