tag:blogger.com,1999:blog-53246864840716464.post1368985941263243937..comments2024-02-29T00:46:38.800-08:00Comments on Washingtons Blog: Instead of Deleveraging, Companies are INCREASING Leverage, Putting the Economy at Heightened RiskUnknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-53246864840716464.post-65245435430203616782009-08-28T06:03:18.056-07:002009-08-28T06:03:18.056-07:00Tim,
In addition to the great corrective comments ...Tim,<br />In addition to the great corrective comments above, the "problems the banks are grappling" with, among other things, are that they DO NOT TRUST EACH OTHER. They know that they are insolvent, and worry that other banks, unwilling to reveal their off-book holdings, may be just as insolvent. JPMorgan, for example, has 70 Trillion in derivatives, the true value of which it is concealing, with the aid of the FED/Treasury. There is at least one trillion in losses hidden in that 70 Trillion.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-53246864840716464.post-51549881600311309232009-05-01T14:35:00.000-07:002009-05-01T14:35:00.000-07:00Tim,
Credit is not the fuel for economic expansio...Tim,<br /><br />Credit is not the fuel for economic expansion, capital is. Capital cannot come from credit created out of thin air, it must come from savings. Your solution of more consumption is what created this mess to begin with. Instead, people need to cut spending, close the credit spigot and save.<br /><br />Propping up our phony economy with more credit, only prolongs and worsens the bubble we've created. This leads to more severe problems down the road and even more money taken away from actual productive entities. Once overleveraged companies are allowed to fail this will make way for productive, well-managed companies to pick up production. That's the only way to really expand an economy.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-53246864840716464.post-70736733504803340822009-05-01T02:50:00.000-07:002009-05-01T02:50:00.000-07:00Freescale was an LBO from 2006 and its leverage is...Freescale was an LBO from 2006 and its leverage is measured on a cash flow basis, debt/ebitda. Therefore, leverage has gone up because ebitda has fallen, not because of "government officials" <br /><br />Also, the government is trying to make sure that credit is available, not encouraging increased leverage. Credit is the fuel for economic expansion. Without it, the economy melts down. Securitization markets are essentially shut and the "shadow banks" like SIVs, conduits and CDOs provided a tremendous amount of credit to the economy. We need to replace a portion of the credit they created to allow consumers and companies to get the credit they need. Only Government has the capacity to fill that role since traditional banks are grappling with their own problems.Timnoreply@blogger.comtag:blogger.com,1999:blog-53246864840716464.post-74560958200879037222009-04-30T16:34:00.000-07:002009-04-30T16:34:00.000-07:00It's becoming more difficult to accept that the ba...It's becoming more difficult to accept that the banksters and government officials are making the economic situation worse merely out of stupidity. No one could be that stupid.Anonymousnoreply@blogger.com