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Re: Banking Crisis II

Posted: Sun Jul 19, 2009 12:05 pm
by TheFreakinBear
Ahem. . .

TFB. . .

Not Bear_B. . .

:cry:

Re: Banking Crisis II

Posted: Sun Jul 19, 2009 1:20 pm
by raptor
My apologies, noted & corrected. That is what happens when I do not have enough coffee in me.

Re: Banking Crisis II

Posted: Sun Jul 19, 2009 4:48 pm
by TheFreakinBear
raptor wrote:My apologies, noted & corrected. That is what happens when I do not have enough coffee in me.
There's no 'g' in my name but we cool. We cool. 8)

I've been following this thread for a while and it is good stuff. I just think every needs to calm down, relax a little and while it might be good to cut back on spending, spend within your means.

Re: Banking Crisis II

Posted: Sun Jul 19, 2009 5:31 pm
by raptor
TheFreakinBear wrote:
raptor wrote:My apologies, noted & corrected. That is what happens when I do not have enough coffee in me.
There's no 'g' in my name but we cool. We cool. 8)

I've been following this thread for a while and it is good stuff. I just think every needs to calm down, relax a little and while it might be good to cut back on spending, spend within your means.
Yes calm, cool logic is always useful.

Re: Banking Crisis II

Posted: Sun Jul 19, 2009 10:05 pm
by raptor
It looks like CIT Group Inc has reached a tentative deal with a bondholder group and may avoid bankruptcy. Obviously this is good news for CIT and the companies who are CIT loan customers

The bondholder group will provide $3 billion in new money which is securitized by all the remaining $10 billion unsecuritized assets (about 3.33 to 1 coverage ratio) so the new money should have adequate collateral. However this also means CIT has nothing else to pledge, therefore CIT is betting the farm on this working. I hope CIT is right.

http://www.reuters.com/article/ousiv/id ... 0020090720" onclick="window.open(this.href);return false;

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 8:43 am
by Kathy in FL
It's also dragging stock futures higher. Straight out of the shoot this morning everything in my portfolio jumped higher than it has in quite some time. We'll have to wait and see whether that momentum is maintained but ... it's something to make up the losses with short term. :?
raptor wrote:It looks like CIT Group Inc has reached a tentative deal with a bondholder group and may avoid bankruptcy. Obviously this is good news for CIT and the companies who are CIT loan customers

The bondholder group will provide $3 billion in new money which is securitized by all the remaining $10 billion unsecuritized assets (about 3.33 to 1 coverage ratio) so the new money should have adequate collateral. However this also means CIT has nothing else to pledge, therefore CIT is betting the farm on this working. I hope CIT is right.

http://www.reuters.com/article/ousiv/id ... 0020090720" onclick="window.open(this.href);return false;

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 10:41 am
by raptor
Kathy in FL wrote:It's also dragging stock futures higher. Straight out of the shoot this morning everything in my portfolio jumped higher than it has in quite some time. We'll have to wait and see whether that momentum is maintained but ... it's something to make up the losses with short term. :?
raptor wrote:It looks like CIT Group Inc has reached a tentative deal with a bondholder group and may avoid bankruptcy. Obviously this is good news for CIT and the companies who are CIT loan customers

The bondholder group will provide $3 billion in new money which is securitized by all the remaining $10 billion unsecuritized assets (about 3.33 to 1 coverage ratio) so the new money should have adequate collateral. However this also means CIT has nothing else to pledge, therefore CIT is betting the farm on this working. I hope CIT is right.

http://www.reuters.com/article/ousiv/id ... 0020090720" onclick="window.open(this.href);return false;
Up is always good for whatever reason. :D

That said IMO I am sure we will see a lot of movement but I think (just opinion no good basis) the DJIA trading range for the rest 2009 will be between 9,000 & 8,000. I will assume any sustained breakouts from these trading ranges will be a real sign of market direction. Time will tell though.

Don't get me wrong I AM NOT saying things are great and all of our bank problems, credit issues, unemployment issues are over. B of A and Citigroup while profitable also made these nice profits with the help of several one time profits. CIT will likely avoid bankruptcy but its business model remains flawed so it is not out of the woods. If CIT's business model is flawed then its chief competitor GE Capital has a similar problem and so on and so forth.

Nevertheless I hope we finally have all of the "rats on the table" and hence surprises which is what the market suffered from last fall are less likely. If this is a valid assumption then the market will stabilize within a reasonable trading range.

BTW the CIT bondholder group got a 10.25% interest rate on the new money which while a good rate is not the premium I would have expected. Is suspect the collateral may have been the concession that got them such a good interest rate.

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 12:09 pm
by raptor
Although it is out of the scope of US Banking issues there was an interesting development in Iceland. The government of Iceland is going to inject $2 billion and recapitalize three failed banks and give control of them to creditors. The IMF will also agree to lend $10 billion to get these banks operating normally.

BTW here is a picture of Iceland's Prime Minister Johanna Sigurdardottir, right, with Ossur Skarphedinsson, the nation's foreign minister. Looks like they are laughing at an inside joke. I hope the joke is not on the IMF and Glitnir, Kaupthing and Landsbanki Bank creditors who are still owed more than $60 billion. :roll:

Image



Source:
http://www.nytimes.com/2009/07/21/busin ... c=linkedin" onclick="window.open(this.href);return false;

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 1:46 pm
by flyingredgoat
I thought the Icelandic government was bankrupt. Where are they getting the money?

K

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 1:48 pm
by phil_in_cs
flyingredgoat wrote:I thought the Icelandic government was bankrupt. Where are they getting the money?

K
Someone is loaning money to CIT; someone is buying US Treasuries, for that matter. There are lots of junk bonds out there.

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 1:58 pm
by raptor
phil_in_cs wrote:
flyingredgoat wrote:I thought the Icelandic government was bankrupt. Where are they getting the money?

K
Someone is loaning money to CIT; someone is buying US Treasuries, for that matter. There are lots of junk bonds out there.
Maybe they passed the hat and every Icelander came up with $6,666.00? More than likely they borrowed the money. Hey when you are bankrupt whats another $2 billion loan. That could be why those two are giggling.

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 7:02 pm
by phil_in_cs
Bailouts could cost U.S. $23 trillion
http://www.politico.com/news/stories/0709/25164.html" onclick="window.open(this.href);return false;

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 7:19 pm
by Valarius
flyingredgoat wrote:During a bank holiday, you can still write checks. They can't cash them. If it should happen, just postdate checks for a couple of days after the bank holiday. That way, your paychecks clear before your checks come due.
Dammit. I'm getting a paycheck from some temp work on Friday. Wells Fargo better not shut down then.

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 7:56 pm
by raptor
Valarius wrote:
flyingredgoat wrote:During a bank holiday, you can still write checks. They can't cash them. If it should happen, just postdate checks for a couple of days after the bank holiday. That way, your paychecks clear before your checks come due.
Dammit. I'm getting a paycheck from some temp work on Friday. Wells Fargo better not shut down then.
I doubt there will be bank holiday or Wells Fargo will close this week..or in August 2009.

phil_in_cs wrote:Bailouts could cost U.S. $23 trillion
http://www.politico.com/news/stories/0709/25164.html" onclick="window.open(this.href);return false;
Lets put that in perspective. The US GDP is $14 trillion. We will spend 1.64 years of the US GDP on this bailout crap. Then based upon US census numbers we have 305 million people. When you divide $23 trillion by 305 million people that means every person in the US would have to pay approximately $76,000 to pay for this spending.

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 9:28 pm
by flyingredgoat
raptor wrote: Lets put that in perspective. The US GDP is $14 trillion. We will spend 1.64 years of the US GDP on this bailout crap. Then based upon US census numbers we have 305 million people. When you divide $23 trillion by 305 million people that means every person in the US would have to pay approximately $76,000 to pay for this spending.
Hmm. I could buy a BOL with that.

K

Re: Banking Crisis II

Posted: Mon Jul 20, 2009 11:31 pm
by Chef
Hmm. I could buy a BOL with that.
You could spend it on yourself, but that would be greedy. You should give it to Goldman Sachs. You will give it to Goldman Sachs. Or else. It's the law.

Re: Banking Crisis II

Posted: Tue Jul 21, 2009 2:13 am
by flyingredgoat
Chef wrote:
Hmm. I could buy a BOL with that.
You could spend it on yourself, but that would be greedy. You should give it to Goldman Sachs. You will give it to Goldman Sachs. Or else. It's the law.
But spending it on myself would stimulate the porn, er economy. :mrgreen:

K

Re: Banking Crisis II

Posted: Tue Jul 21, 2009 9:57 am
by raptor
flyingredgoat wrote:
Chef wrote:
Hmm. I could buy a BOL with that.
You could spend it on yourself, but that would be greedy. You should give it to Goldman Sachs. You will give it to Goldman Sachs. Or else. It's the law.
But spending it on myself would stimulate the porn, er economy. :mrgreen:

K
Remember not all of this bank bailouts it is also "stimulus spending". That phrase "stimulus spending" sounds like some kind of porn.

Re: Banking Crisis II

Posted: Tue Jul 21, 2009 4:50 pm
by raptor
Looks like CIT is not be out of the woods just yet.

CIT’s “existing liquidity” isn’t enough to repay the $1 billion of floating-rate notes maturing on Aug. 17, the New York-based lender said today in a regulatory filing.

http://www.bloomberg.com/apps/news?pid= ... 7C0i89gyZs" onclick="window.open(this.href);return false;

This is a nasty surprise considering the last $3 billion infusion took all of their remaining good assets as collateral.

Re: Banking Crisis II

Posted: Tue Jul 21, 2009 9:34 pm
by flyingredgoat
raptor wrote:Looks like CIT is not be out of the woods just yet.

CIT’s “existing liquidity” isn’t enough to repay the $1 billion of floating-rate notes maturing on Aug. 17, the New York-based lender said today in a regulatory filing.

http://www.bloomberg.com/apps/news?pid= ... 7C0i89gyZs" onclick="window.open(this.href);return false;

This is a nasty surprise considering the last $3 billion infusion took all of their remaining good assets as collateral.
Sounds like somebody is ahem banking on the economy recovering. The other posibility is that they now qualify for federal bailout. Somethings afoot for sure.

k

Re: Banking Crisis II

Posted: Tue Jul 21, 2009 9:51 pm
by raptor
flyingredgoat wrote:
raptor wrote:Looks like CIT is not be out of the woods just yet.

CIT’s “existing liquidity” isn’t enough to repay the $1 billion of floating-rate notes maturing on Aug. 17, the New York-based lender said today in a regulatory filing.

http://www.bloomberg.com/apps/news?pid= ... 7C0i89gyZs" onclick="window.open(this.href);return false;

This is a nasty surprise considering the last $3 billion infusion took all of their remaining good assets as collateral.
Sounds like somebody is ahem banking on the economy recovering. The other posibility is that they now qualify for federal bailout. Somethings afoot for sure.

k
I agree something is afoot... forgeting about $1 billion coming due in month does not sound like a credible excuse.

Re: Banking Crisis II

Posted: Wed Jul 22, 2009 4:15 pm
by razi
Chef wrote:
Hmm. I could buy a BOL with that.
You could spend it on yourself, but that would be greedy. You should give it to Goldman Sachs. You will give it to Goldman Sachs. Or else. It's the law.
...or Goldman Sachs will pay back the loan with heavy interest.

http://www.cnbc.com/id/32085279/site/14081545
In June, Goldman Sachs repaid the U.S. Treasury's investment of $10 billion, and during the eight months of the investment, the firm paid $318 million in preferred dividends. We are pleased that the payment of the dividends and the redemption of the warrants, which total $1.418 billion, represent an annualized return of 23 percent for US taxpayers.
Though after reading this...

http://www.rollingstone.com/politics/st ... _machine/1

where will GS & Co's fat hands be next? that article suggests green energy. I'm going to health care into the hat.

Re: Banking Crisis II

Posted: Thu Jul 23, 2009 9:53 am
by raptor
Interesting CIT development. Looks like the bondholders who loaned CIT $3 billion will push a CIT restructure via a bankruptcy.

http://www.reuters.com/article/innovati ... EB20090723" onclick="window.open(this.href);return false;

Re: Banking Crisis II

Posted: Thu Jul 23, 2009 11:14 am
by flyingredgoat
raptor wrote:Interesting CIT development. Looks like the bondholders who loaned CIT $3 billion will push a CIT restructure via a bankruptcy.

http://www.reuters.com/article/innovati ... EB20090723" onclick="window.open(this.href);return false;
I don't understand. Bankruptcy is relief of debt by canceling it. Why would the people loaning money suggest canceling the debt? :?:

k