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

To: see clearly now who wrote (103221)	10/13/2013 12:42:34 PM
From: Maurice Winn	1 Recommendation Recommended By dvdw© Read Replies (1) \| Respond to of 217832

Don't worry about banks. There isn't really a problem, other than for the banks' shareholders. JPM WFC GS have $500 billion market capitalization. If that goes to zero, who cares other than the shareholders? Suppose I own the whole lot and my employees mess up some derivatives gambling and the $500 billion goes to zero. Why would you care whether my market cap is $1 or $500 billion? No doubt you would feel some sympathy for me, but not be worried about your own situation, though you might like to enquire whether there are some assets you could buy at a bargain price. Why would anyone care? All it would mean is that I would not be able to go shopping as I thought I could do. Imaginary wealth is not actual wealth. The shareholders are the people who need to worry about the market capitalization. Our great, estimable and venerable idol Alan GreenSpan KBE was right to say leave the bank shareholders to look after themselves. If the bank shareholders employ the wrong people, the shareholders will lose their wealth. Suppose the problem is more extensive and the banks have borrowed a couple of $trillion to play derivative games. Those creditors had better make sure the banks have got sufficient collateral to repay the loans. Those creditors have shareholders who had better be minding the store to ensure the loans will be repaid, or they will lose their wealth like the bank shareholders. With all those shareholders and creditors out of the way, the sellers of Lexus and other luxury goods and services will have fewer people clamouring for the baubles of wealth. That will mean regular people like you and me will be more able to go shopping as prices will be lower. How is that bad? Heck, I would probably buy the defaulted debt for 1c on the $1 and buy the banks from the busted shareholders for 1c on the $1. The panic of 2008 was great for transferring $trillions from citizens and taxpayers to miscreants in the financial swindling realm, but it wasn't really a problem. Barclays was happy to snap up Lehman Brothers assets using sovereign wealth fund cash when Lehmans went bust. They didn't even get it really cheap. Changing the name of the building when the owners changed is just par for the course. No biggie. Warren Buffett bought a big pile of WFC, as did I at the same price, though I was covering a short while he was buying in for the long run, during which he has doubled his share price and received dividends as well. The WFC shareholders who took the hit were disappointed, but that's life in the fast lane of investing. WFC did not go to zero. Fannie and Freddie shareholders took a big loss too. They thought "House prices can never go down". Oooops. Remember the slogan, "Don't let a slogan do your thinking for you." Don't worry about derivatives. If somebody wants to gamble, that's their problem. Just wait around with $1 and one day you might be able to buy the assets backing the $trillions in derivatives for a good price. No worries. Mqurice