Monday, April 7, 2008:
* The financial industry has "booked" more than $230 billion in writedowns and losses
* Banks and brokers are under pressure from both rating agencies and debt holders to reduce their debt and reduce their so called "leverage" overall. The best way to be credible in Wall Street these days is to raise capital, even if this extra equity dilutes shareholder value for the existing shareholders, or to demonstrate that the financial institution has sufficient available cash.
* The financial industry has "booked" more than $230 billion in writedowns and losses
* Banks and brokers are under pressure from both rating agencies and debt holders to reduce their debt and reduce their so called "leverage" overall. The best way to be credible in Wall Street these days is to raise capital, even if this extra equity dilutes shareholder value for the existing shareholders, or to demonstrate that the financial institution has sufficient available cash.
Note: Is this a great opportunity for sovereign wealth funds and other cash rich "players" around the world?
* Does the credit crunch require government intervention at a “global” level?
Is there a rationale for more “support” to be offered, in addition to the banking sector, to the securities market and the housing sector?
Are we moving from the policy concept of the central banks just providing access to extra cash, to to a concept of intervening on odd occasions and now thinking of formal overall intervention in the markets?
* Which (oddly?) reminds me of a few excerpts from RFK's speech at the City Club of Cleveland, in Cleveland, Ohio on April 5, 1968, 40 years ago, ".....too often we excuse those who are willing to build their own lives on the shattered dreams of others...... Some look for scapegoats, others look for conspiracies, but this much is clear: violence breeds violence, repression brings retaliation, and only a cleansing of our whole society can remove this sickness from our soul.
For there is another kind of violence, slower but just as deadly destructive as the shot or the bomb in the night. This is the violence of institutions; indifference and inaction and slow decay. This is the violence that afflicts the poor, that poisons relations between men because their skin has different colors...".
For there is another kind of violence, slower but just as deadly destructive as the shot or the bomb in the night. This is the violence of institutions; indifference and inaction and slow decay. This is the violence that afflicts the poor, that poisons relations between men because their skin has different colors...".
What do the above have to do with the subprime affair? Nothing directly, but undirectly, maybe. And the socio-economic dynamics in the US and the world nowadays. And those who build their own lives on the shattered dreams of others. And those who look for scapegoats (eg the immigrants) for the economic hardships of the era, or the fans of all sorts of political and socio-economic conspiracy theories, and the "violence" of institutions.
Quite philosophical, and metaphorical, I know.
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