Monday, April 14, 2008

When you sell stuff, you always need a buyer

So everyone is freaking out about the huge debt sell-offs. My thoughts on the issue are that while some banks were not properly positioned for the current economic climate, in no way does that mean the economy itself is tanking. For when banks sell off their debts to generate liquid cash, there is a buyer out there willing to shell out those billions of dollars, betting that the economy is not tanking, and that the borrowers, whose loans they have just purchased, will be paying the loans back in the future.

But the dollar still will tank much further. Gold, oil, and food prices will increase substantially. But that's neither here nor there. I was just sayin'.
Deutsche Looking to Sell Private-Equity Debt
Following Citigroup's bid to dump the broad array of troubled debt weighing down its balance sheet, Deutsche Bank is trying to "sell as much as $20 billion of debt related to leveraged buyouts to a collection of investors that include private-equity firms," people familiar with the matter tell The Wall Street Journal. But unlike Citi, "which is looking for buyers of a $12 billion package of loans and bonds, Deutsche Bank is selling off its debt in parcels," the Journal reports. Separately, Wachovia, fifth-largest U.S. bank, "which barreled into adjustable-rate mortgages with the huge acquisition of Golden West Financial near the peak of the housing market, could announce as soon as today that it is getting a capital infusion of several billion dollars from outside investors," the Journal adds, citing people familiar with the matter. In exchange for $6 billion to $7 billion in cash, the investor group would get shares in Wachovia priced at about $23 to $24 apiece, a 15% discount to Friday's closing price.


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