Will these NPA’s be effectively sold on later packaged in the same way? 😯
Err… No. There is no chance any investor would buy repackaged property debt, they would be liable for it – that’s why its called toxic debt – no ability to define its liability/value.
I think Logan might be on to something here.
And certainly the Bank of Spain is covering up this activity, which has to be the case, it happened in the early 90’s and is the only way the banks today can actually manage the situation, by converting to non performing asset status what they hold.
And actually, it is probably the soundest and best way to do this, under the circumstances because the consequences of not doing so, will bring about another mother of all collapses and Greece’s problems will be a mere ripple in comparison.
They have no choice, and one assumes that each year they will write down the value of the non performing asset, until such time it is a performing / disposable asset, and perhaps before then, many an institutional investor may take a view that it is worth buying in a bundled package, and they might also be right in those circumstances and at that moment in time.
Very good link Logan, I know this is going on, but it is nice to find something that explains the issue in simple terms to those like me who become ‘seriously bewildered’ at some financial speak. And I know it is what is taking place, again though from my simple view isn’t it the only sensible thing they can actually do right now?
Much as the only thing Gordon Brown could do was print money and pour it into the British economy, not what he should have done in a right minded world, not what he ever would have imagined having to do, but did it all the same, cos that’s what saved the day, love him or hate him.
And in using all our money to buy the bank stock, what was he supposed to do, let the banks fail? We all lose our money anyway? And with the increase in bank shares, are we all not eyeing the potential for the government to sell it to us as individuals now, and make a profit on the sale to boot and return those funds to the pot from which they came and reduce the deficit one presumes?
Why shouldn’t the Bank of Spain allow the creation of a vehicle to protect the banks? Or do we all want to allow Gordon to act like Mugabe but deny Spain a way to save another world collapse?
Am not the best at the big money, government decision stuff I have to say, and this is a rare venture for me onto a financial thread, bit wary that I have stepped on an upturned rake and going to take one full in the kisser any second, but hey nothing ventured nothing gained.
And I like, liking something Logan has posted!!