Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: James C. Mc Gowan who wrote (34179)	10/20/1998 11:46:00 AM
From: Knighty Tin	Respond to of 132070

Vocex, I think there will be zero new loans to non-prime borrowers. What AG's rate cut does is allow the banks to roll old loans and lines of credit without having to admit that they are non-performing. Which makes reported eps higher than they would otherwise be. In reality, the bad credits are still not paying, but the banks are allowed to lend them the money to pay interest and pretend that that is profit. This is an old game and it works if the brink firms come back to life. So, we have a situation where even Greenspan has to pull the plug on the most leveraged pieces of crap. But the average firm that can't pay is given a new lease on life. BTW, he is not doing this to support the corps, but to make the banks look solvent. The wide spreads for junk shows what the market thinks of the junk credits, even with the rate cut. Not much. MB