Comments on: America’s Mark-to-Model (Level 2) Banking System

By: Ronin

Ronin — Tue, 14 Oct 2008 18:31:38 +0000

I did a little more research.
IMO this spread sheet cannot represent total residential real estate mortgage debt.

You have to subtract commercial real estate, government bonds, cold hard cash, physical assets the bank owns (ie furniture,buildings…etc) … and maybe a few other categories before you can come up with the total dollar amount of residential real estate. And at that point I’d make the guess you’d still have to subtract the number of “good” debt, (ie non toxic mortgages) before arriving at the true dollar amount of all the bad toxic sludge that is out there.

According to wikipedia the total mortgage loan and consumer debt was 11.4 trillion in 2005, how can it be then that roughly around 7.3 trillion of that is toxic sludge? OK, so maybe that number was an old number quoted back in 2005 but still… doesn’t seem to make much sense to me.

Someone *please* stop me if I’m wrong.

By: Ronin

Ronin — Tue, 14 Oct 2008 05:37:25 +0000

Nice chart.
But I have a few questions: (Please forgive me for my stupid questions)
It seems the assumption are that all the level 1,2,3 are all bad mortgage debt.

What level does the banks commercial real estate assets fall into? How much of a banks assets are tied into commercial real estate?

How about mortgages that aren’t toxic? Like those mortgage debt made before this whole bubble began? What level does that fall into?

I’m not sure about how the numbers on this chart are supposed to be read. Could someone help clarify things a bit? Thanks!!

By: jimbo

jimbo — Mon, 13 Oct 2008 12:51:57 +0000

I really don’t understand what it means to say “the treasury doesn’t have the financial capacity to handle” this. The treasury can write a check for any amount of dollars it wants. There are no financial constraints. Anyone who thinks otherwise doesn’t really understand the system. Now, if you’re a banking system like Iceland (that owes a lot in foreign currencies), or the Euro countries (which don’t have currency sovereignity, and so can’t write the check either), it’s a different story, but its important to maintain the distinction.

By: VacantHomes

VacantHomes — Sun, 12 Oct 2008 02:28:55 +0000

Mr. Mortgage — Great stuff. A very useful extra column to add to your spreadsheet would be the liabilities (such as customer deposits) that each bank is liable for. That might give us a rough idea of assets versus liabilities.

By: mark

mark — Sun, 12 Oct 2008 00:55:34 +0000

think iran may be feeling this with crude now at 75 bucks

for now i plan to stick with my accts in banks and bd’s….all now below fdic and spic limits.

like art cashin sez….how do you price in the end of the world???

By: Viv

Viv — Sat, 11 Oct 2008 05:19:29 +0000

Puts things in perspective. That 700 billion figure is going to have to go up times 5! To just recapitalize the banks and than to have them lending again is going to be something else.

By: od

od — Fri, 10 Oct 2008 21:05:41 +0000

France, Spain, Iceland (obviously), Germany, Belgium, Netherlands, Italy,UK, and the USA, are all broke.

It’s kind of Ironic how Iran is sitting pretty right now.

By: michaela

michaela — Fri, 10 Oct 2008 20:56:39 +0000

Milt,
I know that Germany has some major problems. My mother there is getting really worried.

By: Milt

Milt — Fri, 10 Oct 2008 20:51:42 +0000

A year ago, or maybe even further back then that, Marc Faber said there is a world wide real estate bubble. I’ve read that Spain has problems with falling real estate prices. What I wonder is: aren’t all banks in trouble in the developed world with unrealized losses in their mortgage debt assets?

Has anyone come across an article covering this topic?

By: Stu

Stu — Fri, 10 Oct 2008 18:25:21 +0000

You would get 1/3 of the numbered coupon at the voting station to match up with the one at the bank and Fed. They would write your name and SS # on it to match up with the voter registration paperwork and ultimately the banks to follow-up with a 3 way match to assure accountability…

I don’t know how many Millions (? Voters x $? = $ Total Sum for Region / Sate / City or Town) this would place into banks and ultimately consumers pockets, but I feel it would do a heck of a lot more than a “Bail Out” bill for bad assets, plus we would get two benefits from the same money!!!

The Amount of the coupons is not yet clear for their eventual worth, but we can figure that out by how many voters turn out pretty quickly ($700 Billion / Total Voters = Total Amount per coupon).