Comments on: Banks Writing off Bad Debts http://www.economicshelp.org/blog/economics/banks-writing-off-bad-debts/ Economics Blog - current events and economics essays Thu, 11 Mar 2010 12:11:41 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: tejvan http://www.economicshelp.org/blog/economics/banks-writing-off-bad-debts/comment-page-1/#comment-1207 tejvan Wed, 02 Jul 2008 18:10:12 +0000 http://www.economicshelp.org/blog/?p=596#comment-1207 Thanks for helpful comment James Thanks for helpful comment James

]]> By: James Cormack http://www.economicshelp.org/blog/economics/banks-writing-off-bad-debts/comment-page-1/#comment-1205 James Cormack Wed, 02 Jul 2008 11:27:45 +0000 http://www.economicshelp.org/blog/?p=596#comment-1205 I also am a bit sketchy here, though I find this subject to be especially interesting. I guess another way to look at this is to consider how these banks may not need to remain very profitable to stay in business anyway! Sovereign wealth funds are huge state-owned collections of cash, financial 'instruments' (stocks, bonds etc.) and property with trillions of dollars to invest, with the aim of making profit from their investments in future. These funds have provided billions of dollars to many of the large investment banks damaged by the credit crunch (wikipedia mentions Citigroup, Morgan Stanley and Merrill Lynch), in return for a share of ownership of the company involved. I suppose this shows that these firms may only need to attract large investors to stay in business, at least in the short-term. And considering that these banks are likely to receive government support to prevent their collapse anyway (as the financial system is essential to the economy, by allowing people to have access to credit and thus investment) I suspect they will be very able to attract investors, now that their share price has fallen and they perhaps become a bit of a 'bargain' in the eyes of some. Further reading: http://www.economist.com/opinion/displaystory.cfm?story_id=10533866 The Economist, "The invasion of the sovereign-wealth funds", Jan 17th 2008 (quite an old article though; there will be newer ones out there). I also am a bit sketchy here, though I find this subject to be especially interesting.

I guess another way to look at this is to consider how these banks may not need to remain very profitable to stay in business anyway!

Sovereign wealth funds are huge state-owned collections of cash, financial ‘instruments’ (stocks, bonds etc.) and property with trillions of dollars to invest, with the aim of making profit from their investments in future. These funds have provided billions of dollars to many of the large investment banks damaged by the credit crunch (wikipedia mentions Citigroup, Morgan Stanley and Merrill Lynch), in return for a share of ownership of the company involved.

I suppose this shows that these firms may only need to attract large investors to stay in business, at least in the short-term. And considering that these banks are likely to receive government support to prevent their collapse anyway (as the financial system is essential to the economy, by allowing people to have access to credit and thus investment) I suspect they will be very able to attract investors, now that their share price has fallen and they perhaps become a bit of a ‘bargain’ in the eyes of some.

Further reading: http://www.economist.com/opinion/displaystory.cfm?story_id=10533866 The Economist, “The invasion of the sovereign-wealth funds”, Jan 17th 2008 (quite an old article though; there will be newer ones out there).

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