Monday, September 19, 2016

How's That Workin' Out For Ya?

Well the banks brought us the sub-prime housing debt crises a mere nine years ago so the government - after saving their collective arses - has effectively regulated and/or fined them to the point of no profit.  Just ask Deutsche Bank how that's working out for them.

http://www.zerohedge.com/news/2016-09-19/deutsche-bank-extends-losses-near-record-lows-significantly-undercapitalzied-even-wi

Given their stock is trading at around a tenth of what it was back then, I am thinking not so well.  The stockholders, i.e. investors who "benefited" from these loans are not doing so well either.

But fear not, where banks fear to travel today (or are barred from doing so), others are happy to fill in the void.  I mean, with a third of the world's sovereign debt with negative-yields and stock markets at lofty valuations, where else is a hedge fund going to get any returns to justify their exorbitant fees than to step in where others will not go.  And so they are steering their clients' money into fun-filled commercial real estate loans.  Nope, no risk there.

http://www.bloomberg.com/news/articles/2016-09-19/shadow-lenders-step-in-for-banks-facing-u-s-property-warnings

Or high yield corporate debt is the place you oughta' be, so they loaded up the debt and move to Beverly.

https://mishtalk.com/2016/09/18/credit-spreads-widen/

Looks like there are going to be a lot more arses in need of help.  But if we bail them out too, who is the arse then?  Here we are folks, different debt, same old problem. 

September 20 Update

Just passing on a bit more about Deutsche Bank that I just ran across from Mish Shedlock.  More of the same:

https://mishtalk.com/2016/09/20/is-deutsche-bank-cooking-its-derivatives-book-to-hide-huge-losses/