... is that there is literally no bid out there. assume there
are only a dozen people in the world who would buy a
ferrari gto of 1965, you have one and all of a sudden
the other eleven buyers are busy with something else
and do not bid for the car, is it worth 0 then?
from a market perspective definitely YES. but there is
more to it if those other eleven buyers would love to
buy at a certain price, but are not allowed to. this is
what is currently happening. nasty stuff was written off
and that was quite right. but in the course of that it
happens with too much stuff that everybody knows
is not as bad as it is priced (if it is priced at all ...). that
is why this crisis is a liquidity crisis.
i think it is about time to think of going long the banking
sector. if we have eight weeks with no news like bear the
crisis could well be over. since liquidity will return all
of a sudden and books will clean up immediately.
are only a dozen people in the world who would buy a
ferrari gto of 1965, you have one and all of a sudden
the other eleven buyers are busy with something else
and do not bid for the car, is it worth 0 then?
from a market perspective definitely YES. but there is
more to it if those other eleven buyers would love to
buy at a certain price, but are not allowed to. this is
what is currently happening. nasty stuff was written off
and that was quite right. but in the course of that it
happens with too much stuff that everybody knows
is not as bad as it is priced (if it is priced at all ...). that
is why this crisis is a liquidity crisis.
i think it is about time to think of going long the banking
sector. if we have eight weeks with no news like bear the
crisis could well be over. since liquidity will return all
of a sudden and books will clean up immediately.
