Wall St. Banks Bracing For More Enormous Write-Downs

WiseOne · Feb 19, 2008

Wall Street banks are bracing for another wave of multibillion-dollar losses as the crisis that began with subprime mortgages spreads through the credit markets.

In recent weeks one part of the debt market after another has buckled. High-risk loans used to finance corporate buyouts have plummeted in value. Securities backed by commercial real estate mortgages and student loans have fallen sharply. Even auction-rate securities, arcane investments usually considered as safe as cash, have stumbled.
The breadth and scale of the declines mean more pain for major banks, which have already written off more than $120 billion of losses stemming from bad mortgage-related investments.

The deepening losses might make banks even more reluctant to make the loans needed to prod the slowing American economy. They also could force some banks to raise more capital to bolster their weakened finances.

The losses keep piling up. Leading brokerage firms are likely to write down the value of $200 billion of loans they have made to corporate clients by $10 billion to $14 billion during the first quarter of this year, Meredith Whitney, an analyst at Oppenheimer, wrote in a research report last week.
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Read More Here >> The New York Times

WiseOne's Comments, how can this keep going like this? It CAN'T! What amazes me is that the stock markets are still rocking along with, apparently one eye closed and the other squinting, and eventually both eyes will open, reality will set in, and watch out then! It's amazing...1929 was acting the SAME way until reality set in! That's what scares me. I just hope the markets come down, where they should be, SLOWLY and not crash! Anyone, with a brain, had better brace for some tough times IMHO. IF you think we can keep on and on and on like this, you are foolish.

Baack · Feb 19, 2008

1929 was totally different
There is a basis for the value of our market, to some extent
In 1929 through margin speculation and a market run based on easy stock trades, artificial growth. It was partly fluff and partly cascading fear.

Yes we will have Tuff times ahead!!!!!!

lobshot · Feb 19, 2008

It aint exactly like 1929 but something isnt right. There is no rational reason why the stock market should be going up right now. All the arrows on the graphs are pointing the wrong direction. Our massive debt to China seems to be bothering no one. Consumers have historically high debt. Oil is at all time highs. The housing industry (and all the businesses associated with it) is teetering near the edge of calamity (and a lot of that was caused by house pricing speculation)...............and the market is still going up? I sure dont get it..........but something doesnt smell right.

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