02-09-2009, 04:53 PM
Grieve Wrote:I don't disagree about the fear, I'm saying that the fear is warranted.
What do you know that makes you sure they will survive? Or do you look on this as a calculated gamble?
Plus the real value of the banks is very difficult to ascertain, due to the unknown amount of losses they will take from bad assets. Many would argue they are effectively insolvent right now.
As for Wells Fargo in particular, here's a closer look at their balance sheet: http://www.minyanville.com/articles/index/a/20901
I don't know that they all will all survive, but I do know that the leaders will survive. Wells is a leader, GE, not sure -- it once was.
Think about this, Wells just bought Wachovia for 15 billion in stock. Before this crisis, the "market" valued Wachovia at 80-100 billion. Wells did exactly what any sane person would do, buy a huge asset for 85% off. That margin of safety along with Wells established track record is what gives me confidence. In a few years when things return to normal, even assuming normal means 50% of what they were in 2006, Wells ends up with 50 billion in value that cost it 15 billion. That's all putting aside Well's existing industry leading business and the effect it will have once fully integrated.
I'll look at that balance sheet analysis later.
"Hamilton is really a Colossus to the anti republican party. Without numbers he is an host within himself. They have got themselves into a defile where they might be finished but too much security on the republican part will give time to his talents and indefatigableness to extricate them. We have had only middling performances to oppose to him. In truth when he comes forward there is nobody but yourself who can meet him. His adversaries having begun the attack he has the advantage of answering them and remains unanswered himself. For God's sake take up your pen and give a fundamental reply to Curtius and Camillas" - Thomas Jefferson to James Madison