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Investment in Stocks - Forum for sharing info about stocks and options.
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Posted by phil scott on November 30, 2007, 4:47 pm
Ahh..No problem with the banks...its just 4.5% of assets in default.
Well that's not entirely it. 4.5% loss is over half of gross profits
in many cases, and even a greater percentage of the net. The hell
you say...still profitable.
Well not actually. You see their 'profits' are out on loan, to other
banks, and in stocks etc. and about 100 to ratio in support of
trillions and trillions of dollars in 'derivitives'... now that gets
hairy.
Here is how and why.
Ones profits are on paper, as paper declines in actual value profits
disappear, and not just profits but the base business and actual
assets of the bank decline in value, rendering it vastly more debt
than it can ever repay... and its depositors ...errr. Screwed.
All on a '4.5%' loss. When Parmalat (Italian dairy products) went
under a while back, direct losers were 7 billion or so... derivative
losses estimated close to a trillion. Not an opininon.
Search google with the term 'derivitive, losses, trillions' for a
range of white papers, govt and university studies on the magnitude of
the disaster.... it goes to hundreds of trillions of dollars.... some
of course offsetting, about half not offsetting.
the economic chaos that ensues of course is not offset.
So how do you tell when such a mess will land on its ass...and when it
can be doctored along like a case of ghonorhea?
its like this, the chickens dont come home to roost when one is young
and perky... they come home to roost when ones ass has gotten fat and
ugly... and the money has all been spent. so you look for those
indicators.
Phil Scott
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