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Hello M.,
I don't know what the default rates are but it doesn't matter. if
you have money and have several things you can do with it (lend it to
A, lend it to B, invest it, put it in a mattress) you will do whatever
you think is "best". I suggest best is defined differently for each
"agent" but the banks in general must all look at the options and be
concluding something makes more sense from a risk/reward than
commercial lending. Otherwise, you are implying that banks should
lend to commercial borrowers regardless of their assessment of
risk/reward.
You can't blame the banks (unless they are doing something illegal).
As it stand they are simply participating in a free economy like all
of us. Now one could fault the policy makers/legislators for allowing
banks to move into other areas of finance. You asked before "what
function do they perform?" Seems to me their function is to use the
assets they have in the best interests of their stakeholders (owners,
employees, etc.) the question you might ask is "why is a function
going unperformed in this economy?" Banks are under no legal or moral
obligation to perform a function just because you may feel it should
be performed. I think changes in legislation has allowed banks to
perform other functions which they apparently see as in the better
intersts of their stakeholders.
Best regards,
Jim Johnson mailto:jejohn@xxxxxxxxxxx
--
Tuesday, September 10, 2002, 6:44:41 PM, you wrote:
MS> But are the DEFAULT RATES that high statistically ?
MS> I had always thought they were in the 5-10% range...no ?
>> -----Original Message-----
>> From: Jim Johnson [mailto:jejohn@xxxxxxxxxxx]
>> Sent: Tuesday, September 10, 2002 12:13 PM
>> To: M. Simms
>> Subject: Re[4]: [RT] Money supply charts
>>
>>
>> Hello M.,
>>
>> I have a feeling those borrowers have already maxed out their credit
>> cards. Somebody is paying that price for money. Says to me the risk
>> premium in lending is very high. that's why they call this
>> "sub-prime" lending. would you lend me money at say 3% over your cost
>> is you thought the chances were 50/50 I pay it back? 60/40? etc. So
>> its about supply (seems to be money around), demand (don't know but I
>> assume there are willing borrowers), and terms. its the latter that
>> is the sticking point. I don't see it as greed or avarice as Ira
>> suggests. It's just prudence. Am i greedy because I won't take out a
>> long position in the NDX with half my wealth? No. its an imprudent
>> risk that my stakeholders (me, wife, kids) won't stand for.
>>
>>
>> Best regards,
>> Jim Johnson mailto:jejohn@xxxxxxxxxxx
>>
>> --
>> Tuesday, September 10, 2002, 11:50:10 AM, you wrote:
>>
>> MS> With an inflation rate of 1-2% and long term rates at 4-5%,
>> MS> that 16% is analogous to Mafia extortion rates of the 1930's.
>>
>> MS> I see no advantage compared to credit card rates of 18% that
>> don't require
>> MS> that collateral....
>> MS> am I missing something here ?
>>
>> >> -----Original Message-----
>> >> From: Jim Johnson [mailto:jejohn@xxxxxxxxxxx]
>> >> Sent: Tuesday, September 10, 2002 10:16 AM
>> >> To: M. Simms
>> >> Subject: Re[2]: [RT] Money supply charts
>> >>
>> >>
>> >> Hello Mark,
>> >>
>> >> In theory (as in Michael Porter) if there was less-risky profit to be
>> >> had in business lending someone would quickly fill the void. As it
>> >> stands they apparently see profit with less risk in other areas. Many
>> >> businesses have shown themselves to be less than great bets--big
>> >> plans, fancy accounting, bubble-driven optimism all around. Would you
>> >> lend money to a business right now? Or at what rate and at what
>> >> level of collateral? Met a guy at the gym the other day. He lends to
>> >> small businesses--takes mortgage on the house at 16%, collateralizes
>> >> every piece of personal property. That's the picture of risk/reward
>> >> today in commercial lending I guess.
>> >>
>> >>
>> >>
>> >>
>> >> Best regards,
>> >> Jim Johnson mailto:jejohn@xxxxxxxxxxx
>> >>
>> >> --
>> >> Tuesday, September 10, 2002, 9:43:39 AM, you wrote:
>> >>
>> >> MS> This is interesting.....since Banks aren't lending anymore
>> >> for businesses to
>> >> MS> expand, what function do they perform ?
>> >> MS> Man, this really smacks of a "just like Japan" condition.
>> >>
>> >> >> -----Original Message-----
>> >> >> From: Daniel Goncharoff [mailto:thegonch@xxxxxxxxxx]
>> >> >> Sent: Tuesday, September 10, 2002 12:32 AM
>> >> >> To: realtraders@xxxxxxxxxxxxxxx
>> >> >> Subject: Re: [RT] Money supply charts
>> >> >>
>> >> >>
>> >> >> Actually, the lack of CP issuance says more about the level
>> of fear of
>> >> >> more corporate surprises. Remember that with CP, the bank that
>> >> >> underwrites it has the default risk. These days, who is
>> going to take
>> >> >> that risk?
>> >> >>
>> >> >> For the historical perspective that the collapse of Penn
>> Central in the
>> >> >> early 70s (IMS) nearly brought down Goldman Sachs.
>> >> >>
>> >> >> Regards
>> >> >> DanG
>> >> >>
>> >> >> "M. Simms" wrote:
>> >> >> >
>> >> >> > Wow - Commercial Paper activity......lowest in more than a decade.
>> >> >> > That kind of says it all as far as overall business activity.
>> >> >> >
>> >> >> > > -----Original Message-----
>> >> >> > > From: Terry B. Rhodes [mailto:trhodes3@xxxxxxxxx]
>> >> >> > > Sent: Monday, September 09, 2002 11:40 AM
>> >> >> > > To: realtraders@xxxxxxxxxxxxxxx
>> >> >> > > Subject: Re: [RT] Money supply charts
>> >> >> > >
>> >> >> > >
>> >> >> > >
>> >> >> > > > We haven't seen an update of your money supply chart on
>> >> >> > > realtraders in awhile. Could you publish an updated
>> chart? Thanks.
>> >> >> > > >
>> >> >> > >
>> >> >> > > You can view money supply charts here
>> >> >> > >
>> >> >> > > http://www.martincapital.com/charts.htm
>> >> >> > >
>> >> >> > > regards,
>> >> >> > >
>> >> >> > > tbr
>> >> >> > >
>> >> >> > >
>> >> >> > > To unsubscribe from this group, send an email to:
>> >> >> > > realtraders-unsubscribe@xxxxxxxxxxxxxxx
>> >> >> > >
>> >> >> > >
>> >> >> > >
>> >> >> > > Your use of Yahoo! Groups is subject to
>> >> >> http://docs.yahoo.com/info/terms/
>> >> >> > >
>> >> >> > >
>> >> >> > >
>> >> >> >
>> >> >> >
>> >> >> > To unsubscribe from this group, send an email to:
>> >> >> > realtraders-unsubscribe@xxxxxxxxxxxxxxx
>> >> >> >
>> >> >> >
>> >> >> >
>> >> >> > Your use of Yahoo! Groups is subject to
>> >> >> http://docs.yahoo.com/info/terms/
>> >> >>
>> >> >>
>> >> >> To unsubscribe from this group, send an email to:
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>> >> >>
>> >> >>
>> >> >>
>> >> >> Your use of Yahoo! Groups is subject to
>> >> http://docs.yahoo.com/info/terms/
>> >> >>
>> >> >>
>> >>
>> >>
>> >>
>> >>
>> >>
>> >> MS> To unsubscribe from this group, send an email to:
>> >> MS> realtraders-unsubscribe@xxxxxxxxxxxxxxx
>> >>
>> >>
>> >>
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>> >> http://docs.yahoo.com/info/terms/
>> >>
>> >>
>> >>
>> >>
>> >> To unsubscribe from this group, send an email to:
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>> >>
>> >>
>> >>
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MS> http://docs.yahoo.com/info/terms/
>>>
>>>
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