credit mkts recovering as per target, page-8

The governor of the BoE agrees with me:

In a note submitted to the UK Parliament's Treasury Committee last week, Bank of England governor Mervyn King says:

that while it is more protracted than many expected, the hoarding of liquidity that is at the core of the process cannot go on indefinitely. When banks have completed transferring the assets of "conduit" securitisation vehicles that they support back onto their balance sheets, the demand for additional liquidity will ease, and interbank lending rates will fall.

Banks will swallow about $US1 trillion of exposure as they import conduit loans from securitisation associates, including about $25 billion in Australia, but King says the international banking system can handle the load comfortably.

He also says liquidity will rebuild in the markets as debt prices are re-based at lower levels - and the strongest institutions will lead the process, because they have an incentive to declare their exposure fully and obtain first-mover advantage and market-share gains. There are opportunities to make money "for those who can assess and value instruments and eventually repackage and reissue them," King says.

Before christmas RHG will have refinanced.