tag:blogger.com,1999:blog-5882645467378797266.post3880675245355538639..comments2023-07-17T11:55:51.363+02:00Comments on ObservingGreece: The Miraculous Conversion of Bad Loans Into Good Loans!kleinguthttp://www.blogger.com/profile/12491174042954678023noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5882645467378797266.post-87163378342765898202014-10-03T20:58:29.553+02:002014-10-03T20:58:29.553+02:00In Germany FAZ and Die Welt quite often published ...In Germany FAZ and Die Welt quite often published texts explaining the difficulties of all PIGS countries: Portugal, Italy, Greece, Spain. <br /><br />Now, Portugal and Spain seem to be on better ways, but France is shown to be on the down road.<br /><br />Every competent analyst knows that the problems of Greece could be paid by the northern countries because the sums are much smaller than in Italy and France.<br /><br />The future of the Euro imho will solely depend on the results in Italy and France within the next few years.<br /><br />H.Trickler<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-66401950806362854962014-10-02T14:13:37.421+02:002014-10-02T14:13:37.421+02:00What i write
http://klauskastner.blogspot.gr/2014...What i write<br /><br />http://klauskastner.blogspot.gr/2014/09/ecb-stress-tests-piraeus-bank-et-al.html#comment-form<br /><br />(...)<br />"In relation to ECB stress tests and Drachi ABS plan:...<br />(...)<br /><br />77 b are npl.<br />42 b business loans, 25 b mortages and 10 b consumer loans.<br />Around 44 b are asset backed securities, which is arount 10-15% of total assets in 4 banks. Classification of those loans is different.<br />But Greek banks ---until now--- did not have the right to use ABS as collateral in ECB refinancing operations, short and long term, only they use them as a collateral for short-term repos transactions.<br />ECB by minimising eligibility criteria for ABS is giving the opportunity greek banks to use ABS as collateral for refinancing operations for long term, which is the key.<br />So greek banks may gain access to longer term funding.<br /> <br />The ABS market might start growing if hedge funds find investing opportunities.<br /><br />German stance is inconceivable, for Drachi's efforts, even 1 or 2 austrian banks, Klaus, have issues to resolve.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-29106349450383640702014-10-02T09:22:05.213+02:002014-10-02T09:22:05.213+02:00"History repeats itself, first as tragedy, se..."History repeats itself, first as tragedy, second as farce". Let's pool all the money (debt) and share them equally, It's bloody ironic that the quote is from Karl Marx. No wonder people start reading Ayn Rand again.<br />LennardAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-77051112109165288182014-10-02T08:12:58.784+02:002014-10-02T08:12:58.784+02:00The whole mentality behind asset securitization is...The whole mentality behind asset securitization is that bank-customer relationships don't really matter. Now that is perfectly ok when a large corporation issues a bond. That corporation knows from the start that its lender is anonymous, that there is no 'account manager' of the lender with whom one can maintain a personal relationship of trust and confidence.<br /><br />Borrowers really don't 'need' the trust and confidence of a bank in good times. All banks will run after them. But when clouds appear on the sky, most borrowers would like to have a banker they 'can talk to' and who 'understands and helps them with their problems'. <br /><br />When the selling of loans became popular in the early 2000s in Germany, many Mittelstand companies got scared. They might one day wake up and find that their lender is no longer the supportive local or regional bank but, instead, some stranger who had other motives than supporting his customer. Rightfully, there was a rush to insert clauses into loan agreements that the loan could not be transferred to a third party without the borrower's consent. That is a clause which I would recommend every borrower to include in loan agreements. If the bank tells me that this is not acceptable, then I would tell the bank that it is not acceptable to me to work with a bank which may not want to remain my bank.<br /><br />I remember the mid-1980s when I was workiong for an American money center bank which had a tradition of corporate lending. We were routed through seminars to learn the 'new banking'. To sum it up: traditional lending means putting a loan on the books and leaving it there. That's for the boring bankers who have no creativity. The balance sheet is far too valuable a place to fill it up with loans which stay there. Corporations make their profit by turning their assets all the time. If banks don't do the same, they don't deserve to earn a profit. Thus, we were to think of loans as assets which must be turned. The balance sheet was only a 'temporary parking place' for those assets. We would no longer lend the bank's money but, instead, we would 'originate' those assets and 'distribute' them in the market at market prices. That way, we would free the balance sheet, generate loads of fee income and increase the return on assets phenomenally. Sounded great! To us; the customers were not asked...<br /><br />To be sure: asset securitization can be a very valueable instrument for certain purposes. Examples would be: accounts receivable, car loans, other 'mass loans', etc. In short: for financings where the bank-customer relationship is really of no relevance. But where the bank-customer relationship is of relevance and where a third party decides to do away with it. then it can lead to very undesireable results.kleinguthttps://www.blogger.com/profile/12491174042954678023noreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-74113348146295654152014-10-01T21:02:11.351+02:002014-10-01T21:02:11.351+02:00All this sounds in some way familiar, like the ele...All this sounds in some way familiar, like the elements of a new edition of the subprime crisis. Someone has to be found who guarantees (or seems to guarantee) a lot of paper that is to a large degree worthless. Whether this will be the ECB or the European gouvernements who are supposed to take over the risk in a sort of anticipated bailout, in the end it can be expected that the losses will again land with the European taxpayers. <br /><br />There is a further element that is similar to the subprime crisis: When the original creditors have passed on the risk to others, they will lose any interest in reducing the risk (e.g. by intervening early on when risks become apparent or by restructuring loans when insolvency can still be avoided).<br /><br />It is hard to believe that the ECB proposes this as a solution.Anonymousnoreply@blogger.com