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TheBreeze
Participant[quote=davelj]
Because supporting deposit and creditor payments in banking isn’t generally about solvency, it’s about liquidity. So long as depositors and creditors believe that they’ll get paid – that is, once a run on the bank is taken off the table – even a struggling bank – technically insolvent – can meet its obligations. For a long, long time. And often until it’s no longer insolvent. (Back to the analogy of the insolvent surgeon out of medical school.) But I realize that this is an inconvenient fact vis-a-vis your world view.
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Whoah, whoah, whoah! I’ve seen some circular arguments in my day but this one takes the cake. The only reason the big banks can meet their obligations is because the short-term debt that has to be rolled over occasionally has been guaranteed by the government. Otherwise, creditors would not re-extend that credit and the big banks would be the very definition of insolvent — they couldn’t meet their obligations.
This is exactly what happened to Bear Stearns. I guess you would argue that Bear Stearns wasn’t insolvent, they just ran out of liquidity.
Participant[quote=davelj]
Because supporting deposit and creditor payments in banking isn’t generally about solvency, it’s about liquidity. So long as depositors and creditors believe that they’ll get paid – that is, once a run on the bank is taken off the table – even a struggling bank – technically insolvent – can meet its obligations. For a long, long time. And often until it’s no longer insolvent. (Back to the analogy of the insolvent surgeon out of medical school.) But I realize that this is an inconvenient fact vis-a-vis your world view.
[/quote]
Whoah, whoah, whoah! I’ve seen some circular arguments in my day but this one takes the cake. The only reason the big banks can meet their obligations is because the short-term debt that has to be rolled over occasionally has been guaranteed by the government. Otherwise, creditors would not re-extend that credit and the big banks would be the very definition of insolvent — they couldn’t meet their obligations.
This is exactly what happened to Bear Stearns. I guess you would argue that Bear Stearns wasn’t insolvent, they just ran out of liquidity.
Participant[quote=davelj]
Because supporting deposit and creditor payments in banking isn’t generally about solvency, it’s about liquidity. So long as depositors and creditors believe that they’ll get paid – that is, once a run on the bank is taken off the table – even a struggling bank – technically insolvent – can meet its obligations. For a long, long time. And often until it’s no longer insolvent. (Back to the analogy of the insolvent surgeon out of medical school.) But I realize that this is an inconvenient fact vis-a-vis your world view.
[/quote]
Whoah, whoah, whoah! I’ve seen some circular arguments in my day but this one takes the cake. The only reason the big banks can meet their obligations is because the short-term debt that has to be rolled over occasionally has been guaranteed by the government. Otherwise, creditors would not re-extend that credit and the big banks would be the very definition of insolvent — they couldn’t meet their obligations.
This is exactly what happened to Bear Stearns. I guess you would argue that Bear Stearns wasn’t insolvent, they just ran out of liquidity.
Participant[quote=davelj]
Because supporting deposit and creditor payments in banking isn’t generally about solvency, it’s about liquidity. So long as depositors and creditors believe that they’ll get paid – that is, once a run on the bank is taken off the table – even a struggling bank – technically insolvent – can meet its obligations. For a long, long time. And often until it’s no longer insolvent. (Back to the analogy of the insolvent surgeon out of medical school.) But I realize that this is an inconvenient fact vis-a-vis your world view.
[/quote]
Whoah, whoah, whoah! I’ve seen some circular arguments in my day but this one takes the cake. The only reason the big banks can meet their obligations is because the short-term debt that has to be rolled over occasionally has been guaranteed by the government. Otherwise, creditors would not re-extend that credit and the big banks would be the very definition of insolvent — they couldn’t meet their obligations.
This is exactly what happened to Bear Stearns. I guess you would argue that Bear Stearns wasn’t insolvent, they just ran out of liquidity.
Participant[quote=Chris Scoreboard Johnston]Dave
I for one appreciate your summaries on these issues due to the fact that I do not have the depth of knowledge that you do in these areas, and do not pretend to be a paper champion like so many who read a few things then start challenging you. That is generally embarassing to the challengers.
[/quote]Yes, it’s best to leave these things to the ‘experts’ as that has worked out so well over the last nine years. I have to laugh at Dave when he tries to add weight to one of his arguments by saying something like ‘and all my banker buddies agree as well’.
Back in 2005, all of the banking establishment agreed that making 110% loans to illegal immigrants based on stated income of $300K per year was a good idea. That worked out real well.
Participant[quote=Chris Scoreboard Johnston]Dave
I for one appreciate your summaries on these issues due to the fact that I do not have the depth of knowledge that you do in these areas, and do not pretend to be a paper champion like so many who read a few things then start challenging you. That is generally embarassing to the challengers.
[/quote]Yes, it’s best to leave these things to the ‘experts’ as that has worked out so well over the last nine years. I have to laugh at Dave when he tries to add weight to one of his arguments by saying something like ‘and all my banker buddies agree as well’.
Back in 2005, all of the banking establishment agreed that making 110% loans to illegal immigrants based on stated income of $300K per year was a good idea. That worked out real well.
Participant[quote=Chris Scoreboard Johnston]Dave
I for one appreciate your summaries on these issues due to the fact that I do not have the depth of knowledge that you do in these areas, and do not pretend to be a paper champion like so many who read a few things then start challenging you. That is generally embarassing to the challengers.
[/quote]Yes, it’s best to leave these things to the ‘experts’ as that has worked out so well over the last nine years. I have to laugh at Dave when he tries to add weight to one of his arguments by saying something like ‘and all my banker buddies agree as well’.
Back in 2005, all of the banking establishment agreed that making 110% loans to illegal immigrants based on stated income of $300K per year was a good idea. That worked out real well.
Participant[quote=Chris Scoreboard Johnston]Dave
I for one appreciate your summaries on these issues due to the fact that I do not have the depth of knowledge that you do in these areas, and do not pretend to be a paper champion like so many who read a few things then start challenging you. That is generally embarassing to the challengers.
[/quote]Yes, it’s best to leave these things to the ‘experts’ as that has worked out so well over the last nine years. I have to laugh at Dave when he tries to add weight to one of his arguments by saying something like ‘and all my banker buddies agree as well’.
Back in 2005, all of the banking establishment agreed that making 110% loans to illegal immigrants based on stated income of $300K per year was a good idea. That worked out real well.
Participant[quote=Chris Scoreboard Johnston]Dave
I for one appreciate your summaries on these issues due to the fact that I do not have the depth of knowledge that you do in these areas, and do not pretend to be a paper champion like so many who read a few things then start challenging you. That is generally embarassing to the challengers.
[/quote]Yes, it’s best to leave these things to the ‘experts’ as that has worked out so well over the last nine years. I have to laugh at Dave when he tries to add weight to one of his arguments by saying something like ‘and all my banker buddies agree as well’.
Back in 2005, all of the banking establishment agreed that making 110% loans to illegal immigrants based on stated income of $300K per year was a good idea. That worked out real well.
Participant[quote=davelj]
Have any of the big banks stopped making payments to creditors or depositors? Even without the TARP funds they would still be current on such payments, although dramatically undercapitalized.
[/quote]LMFAO! How the hell can you know that the big banks would still be current without all this government support? And it’s not just TARP, it’s TALF, AIG-FP, FDIC-guaranteed bank debt and all the other benefits that the government has forced taxpayers to provide. If the big banks can so easily make their payments, why did the FDIC need to step in and guarantee $1.4 trillion in bank debt?
Participant[quote=davelj]
Have any of the big banks stopped making payments to creditors or depositors? Even without the TARP funds they would still be current on such payments, although dramatically undercapitalized.
[/quote]LMFAO! How the hell can you know that the big banks would still be current without all this government support? And it’s not just TARP, it’s TALF, AIG-FP, FDIC-guaranteed bank debt and all the other benefits that the government has forced taxpayers to provide. If the big banks can so easily make their payments, why did the FDIC need to step in and guarantee $1.4 trillion in bank debt?
Participant[quote=davelj]
Have any of the big banks stopped making payments to creditors or depositors? Even without the TARP funds they would still be current on such payments, although dramatically undercapitalized.
[/quote]LMFAO! How the hell can you know that the big banks would still be current without all this government support? And it’s not just TARP, it’s TALF, AIG-FP, FDIC-guaranteed bank debt and all the other benefits that the government has forced taxpayers to provide. If the big banks can so easily make their payments, why did the FDIC need to step in and guarantee $1.4 trillion in bank debt?
Participant[quote=davelj]
Have any of the big banks stopped making payments to creditors or depositors? Even without the TARP funds they would still be current on such payments, although dramatically undercapitalized.
[/quote]LMFAO! How the hell can you know that the big banks would still be current without all this government support? And it’s not just TARP, it’s TALF, AIG-FP, FDIC-guaranteed bank debt and all the other benefits that the government has forced taxpayers to provide. If the big banks can so easily make their payments, why did the FDIC need to step in and guarantee $1.4 trillion in bank debt?
Participant[quote=davelj]
Have any of the big banks stopped making payments to creditors or depositors? Even without the TARP funds they would still be current on such payments, although dramatically undercapitalized.
[/quote]LMFAO! How the hell can you know that the big banks would still be current without all this government support? And it’s not just TARP, it’s TALF, AIG-FP, FDIC-guaranteed bank debt and all the other benefits that the government has forced taxpayers to provide. If the big banks can so easily make their payments, why did the FDIC need to step in and guarantee $1.4 trillion in bank debt?
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