apples,
i said that the market is pricing a MASSIVE risk of liquidation. This is no indication necessarily of what I believe. I'm going on the record right now:
1. I work for a large Australian Bank (I'm not in a position where I hold market sensitive information).
2. Many many people who work in banks have absolutely no personality. As a result they are very predictable.
3. I have said repeatedly that any booking of provisions would have been done already if it was going to happen.
4. Bankers high up won't want back to back provisions of this magnitude.
5. The banks are in a catch 22 as of now. Call in loans from a client that's servicing debt. Get bugger all, book a big-ass provision for the entire amount as would be required under accounting standards, recoup the 10% of the money after 5 years and in the mean time facilitate the largest corporate collapse in australian business history and make all of your other Large Business clients nervous (very bitter pill for the banks believe me).
5. OR----take on a hybrid arrangement, recapitalise their balance sheet in accordance with Basel II, rollover the rest of the debt that matures, go to capital markets and fund this rollover and slightly higher cost of funds (much much easier)
This is essentially where I stand. I could be wrong. But I'm holding.
P.S. I have never ever put 1 single coin into a poker machine. I don't gamble. The house always wins.
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