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Credit Markets Leave Banks Saddled With £250bn Of Debt

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Its growing, rapidly.

Surely these deals are no problem, after all the deals are sweet, they must be the investment banks are brokering them to sell off to investors, heck if they can't seell them on they should feel priviledged that they can keep hold of the loans and the ensuing profit themselves. :lol:

http://business.timesonline.co.uk/tol/busi...icle2182984.ece

From The Times

August 2, 2007

Credit markets leave banks saddled with £250bn of debt

Siobhan Kennedy and Gary Duncan

Leading investment banks on both sides of the Atlantic are saddled with almost $500 billion (£246 billion) in agreed leveraged loans that they are unable to parcel out to other investors.

New figures from Dealogic reveal that in Europe the banks are struggling to clear a backlog of $208 billion worth of leveraged loans that they would normally have sold on through syndication.

In the US, the figures also show that investment banks are stuck with $269 billion of agreed loans that they are unable to syndicate.

News of the glut of debt on the banks’ balance sheets comes as the shake-out in credit markets produced new casualties as global markets were racked by further volatility

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DBubb, sure is shocking, the only thing that is more shocking is that it has been going on for so long, such is the power of central banks screwing the whole financial system with low rates - they've polluted everything, everybody has got involved in trying to outpace the inflation they know is occuring, they almost had no choice..

The Times are really going for it tonight.

http://business.timesonline.co.uk/tol/busi...icle2182992.ece

From The Times

August 2, 2007

Five veils of sub-prime still to go

Patrick Hosking: Business commentary

Remarking on the American sub-prime meltdown, Eric Daniels, chief executive of Lloyds TSB, said this week that he thought that so far we’ve seen only two of the seven veils peeled back. Given the colossal size and opacity of the sub-prime loans market and the likely slide in house prices in the United States over the next year, there will be plenty more distress to come.

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Time for me to pitch in with a little snippet of gossip.

I attended a social function at the weekend and got talking to a Hedge Fund manager of a well know Bank. He is based in an overseas section.He told me personally his bank were in for £11 billion of losses due to the USA debacle. Not surprisingly he has recently sold all his shares in the very company he works for. Hardly a vote of confidence!

I overheard his mantra to the various interested business men & women there and it was:

Get out of everything,property, shares, hedge funds etc.Get into cash only.It's going to get ugly.

Insider information or what!

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Time for me to pitch in with a little snippet of gossip.

I attended a social function at the weekend and got talking to a Hedge Fund manager of a well know Bank. He is based in an overseas section.He told me personally his bank were in for £11 billion of losses due to the USA debacle. Not surprisingly he has recently sold all his shares in the very company he works for. Hardly a vote of confidence!

I overheard his mantra to the various interested business men & women there and it was:

Get out of everything,property, shares, hedge funds etc.Get into cash only.It's going to get ugly.

Insider information or what!

Very nice. I guess he did not mention/was unaware of gold?

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Hmmmm...a quarter of a trillion here, a quarter of a trillion there, soon you'll be talking big money! :ph34r:

A trillian £s is peanuts nowadays, apparently. Noone will even notice that it's gone! :huh::blink:

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A trillian £s is peanuts nowadays, apparently. Noone will even notice that it's gone! :huh::blink:

I heard the other day that if you counted from 1 to 1 trillion, it would take 30,000 years.

don't know if it's true though...... i haven't tried it yet.

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they must be the investment banks are brokering them to sell off to investors, heck if they can't seell them on they should feel priviledged that they can keep hold of the loans and the ensuing profit themselves. :lol:

Where are the investors' yachts eh?

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Very nice. I guess he did not mention/was unaware of gold?

Gold only works in an inflationary market. If the fear is that cash is going to be hard to find being in gold may not be the solution if you can't find a buyer.

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Gold only works in an inflationary market. If the fear is that cash is going to be hard to find being in gold may not be the solution if you can't find a buyer.

What's with the gold fixation around here?

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There are a lot of telephone number size figures being used around at the moment, $20bn losses at Bear Stearns, $250bn total credit losses at Banks etc.

Pardon my ignorance, but just 'how big', in banking terms, are these figures? E.g. If HBOS made £500m losses in a UK subprime scenario, would they hurt / notice / bring it down?

How much of a hit would it take to seriously rock someone like Bradford & Bingly, or HBOS for example?

Edited for spelling - sheesh!

Edited by garybug

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There are a lot of telephone number size figures being used around at the moment, $20bn losses at Bear Stearns, $250bn total credit losses at Banks etc.

Pardon my ignorance, but just 'how big', in banking terms, are these figures? E.g. If HBOS made £500m losses in a UK subprime scenario, would they hurt / notice / bring it down?

How much of a hit would it take to seriously rock someone like Bradford & Bingly, or HBOS for example?

Edited for spelling - sheesh!

I think I read somewhere that the world's 100 biggest banks have something like USD 200B in tier 1 capital. This is the amount of cash/other liquid assets they need to have to deal with unexpected losses. The exact amount they're required to hold is set by various capital adequacy requirements enforced by central banks. It's hard to say in general how much of a hit banks could take - you need to know what their current situation is to know how much they can lose before the amount of tier 1 capital will fall below the amount the regulators say they need to have - at that point they have to start selling things to raise cash or go belly up.

Looking at B&B as an example, they have something like GBP 1.5B in tier one capital which is 7-8% of their obligations. I think the minimum allowed is something like 4% so, as a rough estimate, a loss of 700-800M GBP would put them below that with dire, but unpredictable, consequences.

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Rumours abound, but I hear that Citi is particularly exposed (to be expected given their size) and RBS (to be expected considering their aggressiveness).

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What's with the gold fixation around here?

Some people think that our fiat currencies will quickly turn to worthless paper. I can see their argument but I think there are a couple of other stages first.

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Some people think that our fiat currencies will quickly turn to worthless paper. I can see their argument but I think there are a couple of other stages first.

I'm looking forward to the villagers running around with flaming torches stage myself.

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Gold only works in an inflationary market. If the fear is that cash is going to be hard to find being in gold may not be the solution if you can't find a buyer.

Discussed many times before: this is not correct (IMO). In a real deflation you have defaults so your cash might go up in flames, while gold won't do that. Furthermore, the cash of Asia & their Sovereign Wealth Funds won't just disappear even in a deflation (it is cash, after all, and not credit). Third, the Great Depression saw a rise of the gold prise (historic evidence). Sorry, I can't agree.

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Errr, do you have a paper or funny computer numbers fixation instead?

:) I try not to be fixated with anything in the general case, it's not good for my blood pressure.

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Some people think that our fiat currencies will quickly turn to worthless paper.

Fiat currencies are "worthless paper". By definition! If they had any significant intrinsic value, then they wouldn't be called "fiat", would they? :)

Although what I think you meant is that after so many years of uncontrolled money supply growth, many people are expecting rampant price inflation to take hold and significantly reduce the value of "the pound in your pocket". Gold can be seen as a potential haven from this inflation - but don't expect to get a clear and compelling answer as to exactly why and how this is the case! ;)

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Its growing, rapidly.

Surely these deals are no problem, after all the deals are sweet, they must be the investment banks are brokering them to sell off to investors, heck if they can't seell them on they should feel priviledged that they can keep hold of the loans and the ensuing profit themselves. :lol:

Wise words! What's good for the goose etc.... except in this case the goose is going to get stuffed and roasted good and proper.

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I'm looking forward to the villagers running around with flaming torches stage myself.

:lol: That would be so funny to watch wouldn't it. I think I might even join in with them for a laugh.

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I heard the other day that if you counted from 1 to 1 trillion, it would take 30,000 years.

don't know if it's true though...... i haven't tried it yet.

True, provided that you don't sleep and can say each number at the rate of 1 per second. Try saying nine hundred and eight seven billion, six hundred and fifty four million, three hundred and twenty one thousand seven hundred and eighty eight in a second, repeatedly and see if you think it is still possible. :unsure:

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Try saying nine hundred and eight seven billion, six hundred and fifty four million, three hundred and twenty one thousand seven hundred and eighty eight in a second, repeatedly and see if you think it is still possible. :unsure:

good job there aren't any fractions involved! :o

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