A crazy idea

This is just off the top of my head and probably crazy.

The current liquidity crisis is caused by a lack of informaiton. Imperfect information about counterparty risk has brought banks with strong balance sheets into the same storm as those under genuine threat of insolvency.

So why doesn’t a bold bank board chairman start ringing around others and find out who would be willing to open up their books to each other in an effort to provide the required confidence.

It would effectively single out the bad risks and cause faster failure for them, but could be a way to avert the systematic failure that is the real problem here.

It wouldn’t require tax payer bailout, losses would be taken by shareholders and top tier capital holders.

It’s a nice idea, but you’re assuming there are banks with balance sheets that are still strong under scrutiny.

Now you’re scaring me. :open_mouth:

judging by this idea of yours, Im not surpised you didnt learn much from watching Farenheigh 9/11…

dont you think they would do that if their postitions were good

It is crazy

the reason they don’t trust the other banks is becausee they know how bad their own books look.

the answer could be shit we’re all insolvent.

they won’t show anyone jack because it would make it worse if we all knew how bad stuff is.

Risk departments that used to be concerned with what the possible exposure if certain scenarios were to happen are now solely concerned with understanding their current exposure now the worst has happened and trying to unwind their positions by dumping them in someone else’s lap.

As one person who I know has access to such information regarding a major international bank said to me.

“we think we will survive, but we can’t be sure until we actually unwind this crap. we know how much trouble we’re in and we also know we’re one of the conservative ones”

All the savings are in China and India.

welcome to a polar switch between the east and west.

It is not the first thing that would occur to them - showing market sensitive information to competitors. It might even be illegal due to competition concerns, but maybe the authorities could be brought in.

It is no more extreme than a Prime Minister committing his taxpayers to compensating all comers.

Look at it this way… name a European (not just an Irish) bank that is not stuffed with residential and commercial property loans OR find somewhere where land and property prices are not going to go down in a recession OR find a bank that satisfies either of those criteria and see that it doesn’t have off-balance sheet investment vehicles or ownership of a bank in a bubble market.

People will say that German property prices are not going to fall because there was no boom. That is a logical fallacy. They are assuming a ground level for prices that doesn’t exist.

Would you suggest poker players reveal their hands then keep playing as if nothing had happened?

If you that its game over.

What is the lowdown on the Muslim banks, aren’t they supposed to have some moral rules governing banking / loans?

“moral rules” and “banks” in the same sentence - now there’s a laugh !!

Call me crazy, but I don’t think the banks actually understand their own books. I doubt any of them would be able to make anything of someone elses.


And thus consolidation was born, much the way two staggering drunks bind together for support on the trek home…

succinctly nput

there’s the problem in a nutshell.

no-one understands the banks books.

Bush put it better…

“Wall St got drunk” 8DD

not just wall street

all banks

bush put it best

“this sucker is goin down.”

With the ordinary taxpayers being the real suckers.