Saturday, September 13, 2008

"Lacks Sufficient Capital"

"Recent developments highlight the extent to which the banking system as a whole lacks sufficient capital to comfortably navigate this period of sharp deleveraging."

Mohamed El-Erian, co-CEO of Pacific Investment Management Co (Pimco).


El-Erian was referring to the urgent talks going on to prevent Lehman Bros. from going under.

I don't know about you, but when the chief of the largest fixed-income asset manager in the world ($812 billion) says things like that I tend to get really, really concerned. The amplitude and frequency of the waves in the financial pond are both increasing, causing the keepers of the public purse (Paulson, Bernanke & Co.) serious nausea. It is time to "get off the boat" and let some big names flat-out fail.

Yes, the prospect of a domino effect is very real but this can be a great benefit, a la Cold War MAD nuclear doctrine (Mutual Assured Destruction). The fear of a total wipeout should bring people to their senses, sharply reducing their demands and expectations for what they will be left with after the ongoing credit contraction.

23 comments:

  1. That comment by Mr. El-Erian seems like a belated acknowledgment of that Fed graph showing Non-Borrowed Reserves going from ~$45B(pos) to more than $100B(neg). Maybe now that a mainstream figure is openly airing the issue some serious analysis of it can be pursued.

    What does it mean when the banking system as a whole has negative reserves on the order of more than $100B. To me that sounds like the number and size of healthy banks is woefully outweighed by the zombie banks awaiting a formal death certificate.

    ReplyDelete
  2. Ike just may be the trigger that takes the whole financial complex down. I have already heard estimates of a 1 trillion dollar loss.

    ReplyDelete
  3. Were is the saving glut when you need it!! another illusion gone, along with Santa and the tooth fairy.
    This is the big difference between the U.S. deflation and Japan-saving or the lack of it here in the U.S. We are quickly reaching a limit as to what the gov't can do to prevent it's nightmare but my take is that deflation has arrived but like cancer it can spread without the host understanding the extent of damage that has been done. The patient will be taken to surgery and will require extensive long term rehab.

    ReplyDelete
  4. Hellasious,

    3 posts in such a short time? You are spoiling us!

    -Lone Gunman

    ReplyDelete
  5. "Ike just may be the trigger"

    Didn't look too bad on CNN this morning. It simmered down to Cat 2 which seems to be within structural engineering tolerances.

    "the banking system as a whole has negative reserves on the order of more than $100B"

    Doesn't appear to be within financial engineering tolerances...

    ReplyDelete
  6. Anything that could arrest the MAD doctrine, stop it dead in its tracks would come as a welcome surprise, not to mention relief.

    It wasn’t until 1914 when the British were basically financially (as well as morally) bust that the military imperium, i.e. the Empire began unravelling. As then former Prime Minister Harold Macmillan remarked in a lengthy radio interview in 1976, Britain at the close of WW1 was forced to liquidate nearly the whole of it’s North American interests to the paying off of it’s then war debt and half way through WW2 it was subsisting on Lend Lease.

    The German Imperial Army in 1918 was actually winning the war on the Western Front as well as every other front upon which they were engaged and then suddenly Germany went bankrupt and the war was effectively over. The Allies didn’t win, the Reich went bust.

    America will fare the same

    ReplyDelete
  7. Hell, while I agree, I do keep wondering (worrying?)about corporate payroll deposits...

    If Mish is correct, 38% of all deposits in the US banking system ($2.6T) are uninsured and at risk of loss. Since almost all of this money is thought to be for things like corporate payroll, how would we handle the potential loss of these monies?

    A run on these assets would bring the entire banking system down instantly.

    (It is not just fat cat savings that are at risk).

    Or are you suggesting:
    1. "It is what it is" yet we still can't risk the dollar trying to protect these depositors

    or

    2. It won't happen

    or

    3. Something else I am missing...

    ReplyDelete
  8. These bailouts are intended to prevent the big derivative-melt-down.

    They are in total panic mode.

    This whole system is going to collapse in October-November and we get a new world.

    BOOK IT!

    Joe M.

    ReplyDelete
  9. Hell, you must be an woman - so unpredictable.

    ReplyDelete
  10. If he were a woman he would never admit to having a 38" waist.

    ReplyDelete
  11. Didn't Mellon say something like that in 1930? "Purge the rot from the system" or something. I think the gov't should let a few of 'em fail, but we don't need another Great Depression.

    ReplyDelete
  12. I am just a housecat, but why the hell am I not rich?

    "system lacks sufficient capital". Who ever would have thought that?

    Next they'll be telling me that Enron lacked profits and water is still wet.

    ReplyDelete
  13. Remember, the election is not until the first Monday after the second Wednesday in December. 156 electors have cast their votes for someone other than the official winner they were supposed to vote for. If the dollar drops 90% in the middle of November, all bets are off on who wins the election, whatever the totals on the voting machines.

    ReplyDelete
  14. .
    Here in France all the press relates the end of Lehman and the difficulties of AIG. Most of them speak about the domino effect. But I wonder if they understand the real danger as none of them explains exactly what will happen in the next days/weeks.

    Fortunately as I read this Sudden Debt blog from the beginning, I can now explain better that these journalists what will happen.

    Lehman's liquidation and AIG's note downgrade will now trigger automatic large scale sales of hundreds of billions of dollars of assets and hence everyone will be hit by the fall of value of these assets. That means more devaluations and Basel ratio degradation, even for all of our banks who say that they are not exposed to Lehman Brothers.
    .

    ReplyDelete
  15. At heart this entire crisis is due to a lack of oversight from the SEC which under the oligarchic system present in the US, has been in bed with the federal government and allowed the wall street firms to run loose. In fact the whole problem with the economic system in the US is that corporations are the ones really running the federal government, ie big business in bed with big government. It's easier to bribe one big entity than 50 different ones at the state level.

    ReplyDelete
  16. Hey brother can you spare a dime?

    Somebody is looking for cash. Have you guys see the TED spread today?

    ReplyDelete
  17. And in the meantime, while all this financial mumbo-jumbo distracts us from other things- don't forget stuff like this can happen.

    Now how cool is that?

    ReplyDelete
  18. thinks for share.

    http://www.MakeChineseFood.com - learning how to make chinese food, Chinese Food Recipes, Chinese cuisine, low carb、 low fat、low calories and healthy Chinese food cooking recipes.

    ReplyDelete
  19. 仓库货架|中量A型货架 仓储货架|中量B型货架 库房货架|横梁式货架 塑料托盘|栈板 钢托盘|钢制托盘 折叠式仓储笼|仓库笼 仓储笼|仓库笼|折叠式仓储笼 托盘|钢托盘 托盘|塑料托盘 周转箱|塑料周转箱 托盘|纸托盘 料箱|钢制料箱 工具柜|工具车|抽屉柜 工作台|工作桌 刀具柜|刀具车|刀具架 手动液压托盘搬运车|电动托盘搬运车 手动液压堆高车|手动叉车 仓储笼 仓库笼 南京仓储笼 常州仓储笼 无锡仓储笼 苏州仓储笼 徐州仓储笼 南通仓储笼 镇江仓储笼 连云港仓储笼 泰州仓储笼 扬州仓储笼 盐城仓储笼 淮安仓储笼 宿迁仓储笼 轻量型货架|角钢货架 中量A型货架 中量B型货架 货位式货架 横梁式货架 阁楼式货架|钢平台 悬臂式货架 贯通式货架|通廊式货架|驶入式货架 辊轮式货架|流利条货架 压入式货架 移动式货架|密集架 模具货架 抽屉式货架 汽车4S店货架 汽配库货架 自动化立体仓库货架 托盘|钢托盘|钢制托盘 托盘|塑料托盘 托盘|塑料托盘 托盘|塑料托盘 仓储笼|仓库笼|折叠式仓储笼 手推车|铁板手推车 手推车|静音手推车 置物架|工业置物架|家用置物架 堆垛架|巧固架 挂板架|物料整理架 登高车 物流台车|载物台车 料箱|钢制料箱 搬运车|手动液压托盘搬运车|电动托盘搬运车 堆高机|堆垛机|手动堆高机|电动堆高机 叉车|电动叉车|内燃叉车|叉车厂 货架 货架 仓储货架 仓储货架 仓库货架 仓库货架 货架厂 货架厂 货架公司 货架公司 托盘 钢托盘 铁托盘 钢制托盘 塑料托盘 仓储笼 仓库笼 折叠式仓储笼 折叠仓储笼 仓储货架|仓库货架|库房货架 南京货架|横梁式货架|中型货架 钢托盘|塑料托盘|纸托盘 仓储笼|仓库笼|折叠式仓储笼 钢制料箱|工具柜|工作台 手动液压托盘搬运车|手动液压堆高车 仓库货架|中量A型货架> 仓储货架|横梁式货架|货位式货架 托盘|塑料托盘|钢制托盘|纸托盘 仓储笼|仓库笼|折叠式仓储笼|蝴蝶笼|储物笼 手动液压托盘搬运车|手动液压堆高车 仓库货架|中量A型货架 仓储货架|横梁式货架|货位式货架 托盘|塑料托盘|钢制托盘|纸托盘 仓储笼|折叠式仓储笼|仓库笼|蝴蝶笼|储物笼 手动液压托盘搬运车|手动液压堆高车 仓储货架|仓库货架|库房货架 南京货架|中型货架|横梁式货架 钢托盘|钢制托盘|塑料托盘|纸托盘 仓储笼|仓库笼|折叠式仓储笼 钢制料箱|工具柜|工作台 手动液压托盘搬运车|手动液压堆高车 仓库货架|中量A型货架 仓储货架|中量B型货架 库房货架|横梁式货架|货位式货架 钢托盘|钢制托盘|铁托盘|栈板 托盘|塑料托盘|栈板 纸托盘|栈板 仓储笼|仓库笼|折叠式仓储笼|蝴蝶笼|储物笼 钢制料箱|钢制周转箱|网格式料箱 搬运车|手动液压托盘搬运车|电动托盘搬运车 仓库货架|中量A型货架 仓储货架|中量B型货架 库房货架|横梁式货架|货位式货架 钢托盘|钢制托盘|铁托盘|栈板 塑料托盘|塑料栈板 纸托盘|栈板 仓储笼|仓库笼|折叠式仓储笼|蝴蝶笼|储物笼 钢制料箱|钢质周转箱|网格式料箱 手动液压托盘搬运车|液压搬运车 仓储货架|>仓库货架|库房货架 南京货架|中型货架|横梁式货架 钢托盘|钢制托盘|塑料托盘|纸托盘 仓储笼|仓库笼|折叠式仓储笼 钢制料箱|工具柜|工作台 手动液压托盘搬运车|手动液压堆高车 仓库货架|中量A型货架 仓储货架|中量B型货架 库房货架|横梁式货架|货位式货架 钢托盘|钢制托盘|铁托盘|栈板 塑料托盘|塑料栈板 纸托盘|栈板 仓储笼|仓库笼|折叠式仓储笼|蝴蝶笼|储物笼 钢制料箱|钢质周转箱|网格式料箱 手动液压托盘搬运车|托盘搬运车 货架|仓储货架|仓库货架|库房货架 南京货架|上海货架|北京货架 轻型货架|中型货架|搁板式货架 重型货架|横梁式货架|托盘式货架 托盘|木托盘|纸托盘|木塑托盘 托盘|钢托盘|塑料托盘|钢制托盘 仓储笼|仓库笼|折叠式仓储笼 手推车|静音手推车|铁板手推车 物料架|整理架|挂板架 料箱|钢制料箱|钢制周转箱|网格式料箱 手动液压托盘搬运车|电动托盘搬运车 手动液压堆高车|半电动堆高车|手动叉车 塑料周转箱|物流箱|塑料化工桶|塑料卡板箱 工具柜|上海工具柜|南京工具柜|抽屉柜 工作台|工作桌|南京工作台|上海工作台 刀具车|刀具柜|刀具架|刀具座 货架 货架厂 货架公司 仓储货架 仓库货架 库房货架 南京货架 上海货架 托盘 钢托盘 钢制托盘 货架|轻量型货架|角钢货架 货架|中量型货架|次重型货架 货位式货架|横梁式货架|重量型货架 仓储货架|阁楼式货架|钢平台 仓储货架|悬臂式货架 仓储货架|贯通式货架|通廊式货架|驶入式货架 仓库货架|库房货架|抽屉式货架|模具货架 仓库货架|库房货架|汽车4S店货架|汽配库货架 货架厂|货架公司|南京货架|上海货架|无锡货架|苏州货架 货架厂|货架公司|北京货架|天津货架|沈阳货架|大连货架 货架厂|货架公司|广州货架|深圳货架|杭州货架 托盘|钢托盘|钢制托盘 托盘|塑料托盘 仓储笼|仓库笼|折叠式仓储笼 置物架|多功能置物架|卫浴置物架 料箱|钢制料箱|钢制周转箱 手动液压托盘搬运车|不锈钢托盘搬运车|电动托盘搬运车 手动液压堆高车|半电动堆高车|电动堆高车|堆垛车 货架 仓储货架 仓库货架 货架厂 货架公司 托盘 钢托盘 铁托盘 钢制托盘 塑料托盘 仓储笼 仓库笼 折叠式仓储笼 折叠仓储笼 货架 货架 货架 仓储货架 仓储货架 仓储货架 仓库货架 仓库货架 货架厂 货架厂 货架公司 货架公司 托盘 钢托盘 铁托盘 钢制托盘 塑料托盘 仓储笼 仓库笼 折叠式仓储笼 货架 货架 货架 仓储货架 仓储货架 仓储货架 仓库货架 仓库货架 仓库货架 货架厂 货架厂 货架厂 货架公司 货架公司 货架公司 托盘 钢托盘 铁托盘 钢制托盘 塑料托盘 仓储笼 仓库笼 折叠式仓储笼 折叠仓储笼 托盘 塑料托盘 钢托盘 钢制托盘 铁托盘 货架厂 仓储笼 仓库笼 折叠式仓储笼 折叠仓储笼 南京货架 货架公司 货架厂 仓库货架 仓储货架 货架 货架

    ReplyDelete