Banking Doommongers - We're Doomed, We're Doomed!
 

The International Monetary Fund has just released an analysis that global banks need to refinance $4,000,000,000,000 over the next two years with many national economies (Ireland, Spain, Greece, etc) having no hope of being able to withstand such additional financial pressure.

The UK banks alone need to raise around a third of this.

Mind you this is the same IMF that gave mortgage securitisation its gold seal of approval in 2006 - mortgage securitisation being one of the single biggest drivers of the financial crisis.

Have they learned their lesson or is this just wild doomongering!!

They comment that with Basel III there is increased capital requirements for all banks - they talk about this bringing increased pressure - but omit to state that UK banks capital holdings already exceed the new limits by some margin!!

We're doomed I say

Should i take all my money out ,straight away ?

The banks are raking it in. Borrowing from central banks at 0.5% (max - less in the US) and buying government bonds which give many times that figure in return. For just being able to ....... And still they complain ....

Dave

I would - I would put it in a shoe box (several if you are rich) and bury it in the garden!


The one thing the IMF do not point out is the level of refinancing that is the norm.

Where are the banks complaining?

Also - borrowing from the Central Bank is a VERY BAD THING for a bank. Even the suggestion that Northern Rock wanted support from the BoE led to the collapse of that bank.

My question is do the banks have this money to loan? Or is it all paper figures? Which could end in disaster.

but you accept hutton_d's point


the banks are "shooting fish in a barrel"

It has been paper figures for the last two hundred years!

The vast majority of 'money' in the economy has been a number in a ledger (or database nowadays) for a very long time!

Its how the fair ground gypsies used to do it. A mate used to work for a firm building fair ground rides and the rides were always paid for in cash - absolutely sh1tloads of cash in shoe boxes.

I knew the banks were still fragile but didn't realise they'd need more funding. Investments have done really well over the last 18 months so I assumed that the banks would also be benefiting from this. Also, with the difference between base rate and what the banks lend to us I would have thought this would also help them - I assumed it was a driving force forthe BoE to keep rates low so the banks can rake it on the difference.

If they dish out bonuses then need more funding i truly hope we brits finally call time and stop rolling over.

I don't understand the complaining point which he was emphasising!

And I am not sure I really agree about shooting fish in a barrel either!

Banks always finance with each other - it is partly how the market works, a bit like bookies spreading their bets around.

What the IMF does not really pick up is how much of the refinancing is at normal levels and how much is abnormal.

The credit crunch happened because banks got nervous and stopped lending to each other - a bit like musical chairs - and when the music stopped there were quite a few less chairs!

The question they are really asking is whether there are enough chairs in place - the market recovery would seem to point in that direction. Current market conditions are controlled to enable banks to rebuild capital positions but this is a fraction of the level of refinancing in the interbank credit markets.

this is a true story re bankers


The parents of a very good friend mine were having a dinner party – amongst the guest were the parents of Chris Martin (from coldplay)

Soon the conversation reached offspring and what the various couple’s children did for a living

Chris Martin parents, when their turn came, said that they have 3 children, a daughter in PR and son in investment banking and the middle son was an international pop star

A short pause – and one old duffer leaned forward and asked – “what bank does you son work for again”

Ooops! Sorry, written in a hurry. Thinking of other things at the same time (multi-tasking ya know ... :D ). You're right, the banks are not complaining that I've seen .... they couldn't as they're making a mint out of the tax payer, both as I posted above and its customers who get bog-all on savings but get shafted on credit.

Dave

:lol1:

Doesn't that depend on the government remaining able to pay back the interest?

Les

... and guess where the government gets its money from ..... ! :wonder:

Daqve

It will be from Peter I imagine!

Les