本文发表在 rolia.net 枫下论坛去年六七月，忙着一个USD 700 mm high yield bond private placement deal. 一切就绪，七月十六号周一sales force launched the sale, 周二S&P宣布review all morgage-related securities, and possible downgrading many of them. 市场一片哗然，融资成本急剧上升,client 和 我们最终不得不取消这次融资。现在回过头来看，当时如果get deal done, 不管market pricing 多么高， 完全好于现在完全没有liquity 的市场， no matter how credit-worthy your client is. Consider Canadian Big 5 banks borrowing spread is now 200 bp over 5 year gov't bonds, v.s. 50 bp spread a year ago.
From a perspective of history review:
(Irresponsible borrowing + irresponsible lending) -->subprime morgage crisis --> defaults + foreclosures --> housing prices slump --> Morgage-backed securities MBSs & CDOs priced down --> Mark-to-Market accounting rule forced banks to write down assets dramatically ---> substantial losses and everyone in desperate need to raise cash and shore up Balance Sheet --> no credits, no liquidity, financing closed to everyone --> bankruptcies --> damage to real economy and on edge of recession.
简单的说，最根本的是housing markets. 什么时候房价到了底，stablize 了，才到经济看好的时候。美国人民习惯了house equity=提款机, 而美国经济又是消费主导，一旦consumer 弱了demand, 麻烦就长久了。
现在的financial crisis, 直接的根源是financial institutions 不停的write down assets & report losses. Regulation 对financial institutions 有capital requirements. 融不到资，就是死路一条。解决的办法有两个，1。 change accounting rules. No mark to market any more but historical prices. 2. take toxic assets away from financial institutions' B/S. 两种方法都能避免write down.
但是方法1行不通。用 Ben Bernanke 的话说，不再mark-to-market 对investor confidence 打击太大, 市场需要rely on instituions best estimates of their assets. 用 Jeff Robin (CIBC's chief economist) 的话说，you can't change the rule while the game is in the middle of the play.
那么政府700 billion的 bail-out plan 就能理解了: 政府把所有的toxic assets 都拿走，留给finnaical institutions a clean balance sheet. No further write downs/losses, markets will stablize over time.
Bail out 的作用肯定是有的，至少不会再有大的financial institutions file for Chapter 11. GS and MS will likely survive (Buffet 10% dividend deal is just unbelievably rich). 但是感觉是治标不治本，副作用还挺大。(别的不说，inflation 肯定是上去的，print 那么多的money, Fed has to tight soon, which on the other hand hurtseconomy)。Root cause 还是在housing markets. 怎么让经济好转，人民有钱，房价起稳，才是良药。
就像发高烧的人，仅仅在额头上贴冰块是不行的，还是要找到良药下肚。从美国政府的角度来讲，financial industry 烧得奄奄一息了，还是赶快加冰块降温保命（bail-out plan)，至于良药治病(housing), 现在管不着了，慢慢来吧。
个人的一点随想随写，赶紧睡觉，还要上班。。。更多精彩文章及讨论，请光临枫下论坛 rolia.net
From a perspective of history review:
(Irresponsible borrowing + irresponsible lending) -->subprime morgage crisis --> defaults + foreclosures --> housing prices slump --> Morgage-backed securities MBSs & CDOs priced down --> Mark-to-Market accounting rule forced banks to write down assets dramatically ---> substantial losses and everyone in desperate need to raise cash and shore up Balance Sheet --> no credits, no liquidity, financing closed to everyone --> bankruptcies --> damage to real economy and on edge of recession.
简单的说，最根本的是housing markets. 什么时候房价到了底，stablize 了，才到经济看好的时候。美国人民习惯了house equity=提款机, 而美国经济又是消费主导，一旦consumer 弱了demand, 麻烦就长久了。
现在的financial crisis, 直接的根源是financial institutions 不停的write down assets & report losses. Regulation 对financial institutions 有capital requirements. 融不到资，就是死路一条。解决的办法有两个，1。 change accounting rules. No mark to market any more but historical prices. 2. take toxic assets away from financial institutions' B/S. 两种方法都能避免write down.
但是方法1行不通。用 Ben Bernanke 的话说，不再mark-to-market 对investor confidence 打击太大, 市场需要rely on instituions best estimates of their assets. 用 Jeff Robin (CIBC's chief economist) 的话说，you can't change the rule while the game is in the middle of the play.
那么政府700 billion的 bail-out plan 就能理解了: 政府把所有的toxic assets 都拿走，留给finnaical institutions a clean balance sheet. No further write downs/losses, markets will stablize over time.
Bail out 的作用肯定是有的，至少不会再有大的financial institutions file for Chapter 11. GS and MS will likely survive (Buffet 10% dividend deal is just unbelievably rich). 但是感觉是治标不治本，副作用还挺大。(别的不说，inflation 肯定是上去的，print 那么多的money, Fed has to tight soon, which on the other hand hurtseconomy)。Root cause 还是在housing markets. 怎么让经济好转，人民有钱，房价起稳，才是良药。
就像发高烧的人，仅仅在额头上贴冰块是不行的，还是要找到良药下肚。从美国政府的角度来讲，financial industry 烧得奄奄一息了，还是赶快加冰块降温保命（bail-out plan)，至于良药治病(housing), 现在管不着了，慢慢来吧。
个人的一点随想随写，赶紧睡觉，还要上班。。。更多精彩文章及讨论，请光临枫下论坛 rolia.net