"The toxic assets will just be transferred to the balance sheets of public and private entities. So sure the banks might start lending again, but what's to stop them making more stupid loans? It's the same greedy management teams that got us into this mess, and it'll be the same stupid consumers who recklessly borrow to buy junk they can't afford."
depthtrader these assets when put on the public/private partnerships will be at what is deemed fair value between the parties, Pimco and Blackrock already wanting in as they view in a few years that these assets may have growth in them.
As for the banks lending recklessly let's hope not. But if this mess isn't fixed sooner rather than later the hurt you talk of will become reality. I have a mate very high up in one of our main 4 banks telling me that nearly every week they are telling Huge Corporates and Developers that their risk assessments will not allow lending to them anymore. His time is filled with visiting clients to see how they can recoup payment as they no longer fit the NEW criteria. This will break companies and in turn create mass unemployment, unemployment that could be avoided if banks would lend to business again.
I have a few clients that have been forced to cut staff simply because of overdraft (used for employee pays) limits being reduced significantly. These companies have alway had to wait 120 days+ for large order payments but now the banks are tightening the screws and good companies are having to reduce cost (employment) to compensate and re-model cash flows.
As for the Greatest Depression ever, well we are in such different times I doubt we will see anywhere near the hardships that were seen back then. That is not to say that some people will be highly affected, I think about that and them a lot.
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