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House Price Crash Forum


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About Backbone

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    HPC Newbie
  1. Not dead yet. The S&P downgrade on Friday is not going to help the bank's funding position. So we have a govt bailout but its ability to raise capital in the markets is worse than it was.
  2. He is saying that JPM has written a tonne of financial contracts with investors, some of who are scared that JPM may not be able to meet its side of the bargain. In short, investors are starting to lose their trust in JPM. It's not unthinkable.
  3. Everyone is going on about this government guarantee scheme. What they should really be asking about are the implications of the S&P downgrade of the bank's credit ratings late Friday afternoon and how this will impact the bank's funding position. It does not look like the implications have been discussed yet.
  4. [ And most financials are now worth jot all. No one seems to have picked up on that Lloyds and Bank of Scotland have had their subordinated debt cut to junk late this afternoon.
  5. ETFs. They are just indices based on underlyings and they are liquid. Nothing to be wary of unless you're financially illiterate.
  6. There seems to be the idea that a bankers bonus is tied to performance. Well, it is to a degree but it's also to do with how badly the bank needs you and how liquid the market is for your skill set. As such, you can imagine certain instances when a banker gets paid even though performance may not have been that good; perhaps because of conditions outside of his or her control. If you get paid, you're wanted. If you don't get paid, you're not. The size of a good bonus is as little (though actually quite large) as the bank can get away with in the context of what another bank would pay you.
  7. It's a disgrace. They are using tax payers money to pay tax payers rather than bonuses.
  8. Yeah, I think he'll get by. He sold his hedge fund to Citi for $800million before then working for Citi so he can probably afford to miss the odd $25m bonus over the next few years.
  9. Because debt ranks ahead of equity. But then sub debt ranks behind senior debt. Why don't you just buy a corporate bond ETF? These are trading well below par so you've got some decent upside.
  10. It is an interesting article in the sense that we learn that of the $67bn issued, $60bn was absorbed by the central bank suggesting that real investors stayed away from the party. So investors largely stayed away from investing in short dated paper issued by the very best rated US companies.
  11. Thanks. Did you see who bought the CP? The US government.
  12. I am talking about term debt. The stuff you need to fund your business, the stuff you may need to refinance in the next 12 months, revolving credit facilities, the kind of debt that your here to kind bank might lend you to cover your cash flow problems. There's minimal appetite for this risk. Most companies would not even know what commercial paper is.
  13. 460,000 US citizens losing their job every week. US car manufacturers looking for government support rather than letting them go to the wall. US$ being supported because investors are buying it to get out of other investments. The US will probably show negative growth this Friday. US consumer confidence at an all time low. UK in recession. US and UK borrowing money they cannot afford from investors who will never get their money back. These investors will have to keep lending to the US to keep their own economies afloat. Banks still not owning up to the toxic equity, mezzanine and subordinated shareholder loans (read equity) loans they have. RBS anyone? Banks still shedding jobs; Credit Suisse this week. Who's next? What does the US and UK make? We are distribution hubs for imported products, that's all. The money has all been spent on new kitchens, cars and holidays and there's nothing to pay it back with. That's right. Equities are cheap so FILL YOUR BOOTS. There's a thousand reasons why equities are cheap. This is a suckers rally. The US will cut rates, so will Europe and the UK. Normally, this will lead to a rally and upward valuation of equities. You've just seen it. Now what? Has anything changed for the better? No. Are banks going to start lending to failing companies because Al and Gordon ask them to? No. Are you going to go out and make any big purchases because interest rates are low? No. You're not going to because you should be thinking about the possibility of job loss. The equity markets are a side show right now stuffed with analysts with valuations based on hope. These have to come down, then there will be a fundmental revaluation. You need to watch the CREDIT MARKETS. The credit markets are locked. Banks are pulling in the reigns. Deals that would have been done 6-12 months ago are not getting done. The bond markets are trading at massive wides; maybe on forced selling by hedge funds but you want to do a sub-debt bond right now? That'll be 20% interest please sir; and that's if we can find buyers. Want to refinance right now? Shoulda taken the refi 6 months ago Mr FD. Mezzanine will set you back probably 20%+ all in and you'll give up equity. Investment grade bonds are getting done at 400bps; IBM did a bond recently that they'd have got done for maybe 300bps less 12-18 months ago. 400bps is where sub debt was pricing 12-18 months ago. There's always the US insurance companies. They are always up for a good bit of investment grade debt. Oh, hang on, they are going cap in hand to the government too. So, there's nothing to worry about. Equities are a screaming buy folks.
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