Here and there 13/05

1.      Quote of the day

In the short run, people are underestimating the impact that these global synchronized stimulus might have as well as how far it could run; while in the long run, we might also be underestimating how prolonging that this resession and its ensuring slow recovery is going to be.

 

2.      PPIP vs. FDIC (See chart 1 FDIC)

On major banks balance sheets, as indicated by the proposal of PPIP, they are marking their commercial real estate loans, both non-performing and performing ones, between 80c - 90c of a dollar.

However, the fact is, the average auction clearing price on the 331 loans the FDIC sold in January and February was49.3%. In March, the number of loans FDIC sold in various auctions increased almost four-fold to 1,328, for a total of $470 million in book values of sales, with the average price dropping even more: the latest being at 46.4%. 

And for those who claim that this price is distorted because it includes several non-performing loans, pls check out the details on chart 1.

 

3.      When banks are all raising capital…

They are now all declaring that they do that aiming to return the TARP fund. However, as said before, even though they do not have to mark those loans on the book to the market, for now. It is still their biggest concern as to the write down of those loan values, while their earning power fades after these great government momentum trade runs out. So if you are as cynical as me, will you think they would rather be returning the money and then come back later to ask for more in case needed, or will it be better off to raise the capital in the name of returning TARP fund, but keep it on your hand when it comes to the hard time?

 

4.      An interesting Chinese P2P student loan website

Basically it is like a Student Loan Alibaba, while students who wants to borrow to pay for their tuition fees and living cost, can actually post out their intended rate and the amount needed, to wait for being matched if there is another side. The website is helping out with the credit history due diligence by conducting a background check on the borrowers.

http://www.qifang.cn/index.htm Can choose the language on the top.