Treasures from the threads number 80 - What's there isn't!
Earlier I blogged a lighthearted look at the EU disaster, the following, a comment to an item linked here, is not:
Pater, what happens when they run out of collateral? Seems I recall the posting of collateral revolved around the credit rating of the outfit involved. I would suspect we would see another AIG incident, as there likely wouldn’t be a market to offset the position. My basic point is the sovereigns and banks are floating each other and all this other financial stuff as well and it appears they are both sinking in the abyss. There is a massive haircut coming. This is a lot bigger than subprime and Lehman. The governments of the USA and Germany aren’t exactly in fine fiscal shape and I don’t believe the QE’s and LTRO’s on the short term do anything other than facilitate the movement of bank liabilities. Maybe they allow JPM to buy back some more stock or buy some existing financial assets. The balance sheets have to remain intact or what appears to be there isn’t.
Pater, what happens when they run out of collateral? Seems I recall the posting of collateral revolved around the credit rating of the outfit involved. I would suspect we would see another AIG incident, as there likely wouldn’t be a market to offset the position. My basic point is the sovereigns and banks are floating each other and all this other financial stuff as well and it appears they are both sinking in the abyss. There is a massive haircut coming. This is a lot bigger than subprime and Lehman. The governments of the USA and Germany aren’t exactly in fine fiscal shape and I don’t believe the QE’s and LTRO’s on the short term do anything other than facilitate the movement of bank liabilities. Maybe they allow JPM to buy back some more stock or buy some existing financial assets. The balance sheets have to remain intact or what appears to be there isn’t.
posted by Martin at 3:13 PM
