Posted on 10/23/2009 2:17:06 PM PDT by blam
Possible Credit Dislocation: Be Warned
Friday, October 23. 2009
Posted by Karl Denninger in Musings
I have reason to suspect that the "monetary transmission mechanism" is full of rocks (again), and we are about to have another instance of what could colloquially be called "fun." (Yes, that's sarcasm.)
Here's what we know and what I can deduce from it:
* JP Morgan's "cash position" was analyzed by a writer who published on SCRIBD, which showed that actual cash held has deteriorated radically. By more than half in the last year. The deterioration is continuing, not slowing.
* I am hearing repeated anecdotes from multiple areas that foreclosed property held by banks with multiple full-price offers that include a financing requirement are being sold instead to people with actual cash at radical reductions from that price. This implies that these financing contingencies are regarded as not only potentially no good but factually no good, as if the banks know for a fact that the credit pipeline will (not might), within weeks or months (in the time required to close), disappear. There is no other rational explanation for this behavior.
[snip]
Foreclosure lists in East Tenn. are lengthening rapidly
It’s the obama economy, but as long as he can take AF1 on his play dates, everything is all right....
Earlier conversations: http://www.freerepublic.com/focus/f-news/2369506/posts
Includes a good interpretation for non-financial people...
Closed all of my Chase accounts months ago and warned my friends.
How do you unwind over 90 TRILLION in derivatives exposure?
Not good. Karl is one smart fellow. Think I will buy an extended cab pickup tomorrow at the best terms I can get. GMC or Chevy.
We are in for some deep doo-doo
Thanks for putting that link in. I found it very informative.
Today’s failed banks:
Flagship National Bank, Bradenton, FL
Hillcrest Bank Florida, Naples, FL
American United Bank, Lawrenceville, GA
Partners Bank, Naples, FL
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.