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Mommy...what does it mean when credit spreads "blow out"?


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2022 Jul 10, 10:01pm   383 views  4 comments

by Misc   ➕follow (1)   💰tip ($0.10 in tips)  

That's what happens when lenders realize that the entities they loaned money to are nothing but big ponzi schemes.

The "Great Recession" happened because lenders in the US made about $1-2 trillion dollars worth of housing loans that could not be paid back under the terms given the borrowers.

Today, the wizards of Wall Street have about $1 trillion in junk bonds and about $6-7 trillion in bonds one step above junk.

There is also about $1 trillion in private equity. The value of which is based on the models of the financial institutions' that sold the investments.

That is here in the US. In Europe it is even worse.

Ditto for Asia. China is even worse off.

You can also add about $15 trillion in dollar denominated debt owed by foreign entities.

I expect that pretty much everything will be nationalized coming up. Who gets what and Why will need to be decided somehow.

Comments 1 - 4 of 4   

1   Tenpoundbass   2022 Jul 10, 10:32pm  

Misc says


The value of which is based on the models of the financial institutions' that sold the investments.


Yes 90% of Wall street's value was based on the economy or the illusion of such, as it was pre Covid. Before the notion that Fauci could close down the world, and administrative branches could just arbitrarily decide who gets to produce and who doesn't.

It's like watching a little league team in an NFL arena taking on the Super bowl winning team.
2   1337irr   2022 Jul 11, 1:08am  

Misc says

That's what happens when lenders realize that the entities they loaned money to are nothing but big ponzi schemes.

The "Great Recession" happened because lenders in the US made about $1-2 trillion dollars worth of housing loans that could not be paid back under the terms given the borrowers.

Today, the wizards of Wall Street have about $1 trillion in junk bonds and about $6-7 trillion in bonds one step above junk.

There is also about $1 trillion in private equity. The value of which is based on the models of the financial institutions' that sold the investments.

That is here in the US. In Europe it is even worse.

Ditto for Asia. China is even worse off.

You can also add about $15 trillion in dollar denominated debt owed by foreign entities.

I expect that pretty much everything will be nationalized coming up. Who gets what and Why will need to be decided somehow.

I think there will be less appetite for this this time around. So, I'm not expecting a bailout because a lot of the Tea Party movement is still in office and we got midterms coming up by the time this malaise hits the fan. There is no way the Democrats will vote for bailouts before things hit the fan.
3   Al_Sharpton_for_President   2022 Jul 11, 3:51am  

And the bundling of these terrible mortgages into securities (MBS) that were fraudulentyly rated, the bundling of MBS into even more bogus securities, and the bankrupting of the bookie, AIG, that was supposed to make "insurance" payments to the holders of this dreck, and also to mere gamblers who did not own the underlying securities.

Hank Paulson knowlingly poisoned AIG by overloading the company with "insurance" claims, and when he became the US Treasury Secretary, had taxpayers make good on the bookie's obligations.

And the band played on.



4   cisTits   2022 Jul 11, 6:32am  

1337irr says

So, I'm not expecting a bailout because a lot of the Tea Party movement is still in office


No they are not. TPINOs, if any.

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