theword is right once again

I tried to tell you all - should have sold when I told you.

RHG is out of business. They were never going to be able to survive when they couldn't place their old debt and only had $1m of net assets to tide them over.

They had no capacity to write new business, no assets to sustain them through a commercial paper and MBS buyer's strike.

RHG are, to all intents and purposes, now out of business!!!

If you all don't sell out today, there is every chance you will lose the lot. RHG's only business now is trying to find a home for their existing loan books. They will need to place the $6bn of commercial paper and all of the other debts which they have taken on. Notice that Westpac didn't want that garbage.

As I have said repeatedly, lending long and borrowing short works well when the market is going up and credit conditions are loose. But, it is deadly during a credit crunch.

IMHO, you should get out for whatever you can. RHG's next move will be the appointment of liquidators, IMO. They now have: a book of mortgages paying them interest over a long-term; billions of dollars of borrowings with short terms (which they presently cannot find a home for); a very nervous auditor who will be looking to see how they can possibly avoid insolvency, given that $6bn will fall due for renewal in a few months time and they still haven't been able to find a home for it; $4bn worth of "warehouse" funding which is (in all likelihood) of an even shorter duration than the commercial paper.

How many days before one or more of the warehouse funders pulls the plug? If they don't, how long before the auditors/ASIC/APRA do so?

Tick...tick...tick...

commodorecontrarian - where are ya? Oh, knowledgable one? You were 100% wrong.

TheWord was 100% right!!!

Ehehehehehhaaaaaa!!!!!!!