Saturday, January 02, 2010

COTD: Banker's Guide

clipped from

The banker's guide to owning it all

Become majority lender in an economy of people with assets you want.

Encourage indebtedness by loaning generously while securing on assets of interest.

Loosen lending standards until the assets you seek to capture are attached. (this makes the economy debt dependent)

Once debts are significant for the bulk of the population, sharply tighten lending standards. <-- Economic shock - Onset of deflation

Backstop losses with public guarantees if possible. This is gravy if one can get it. (Fannie and Freddie guarantees, for example)

Permit default 'without risk' on the assets you wish to sieze to maximize wealth transfer. (stall foreclosure, stay repossession orders etc)

Stall the economy to maximize default positions and deplete private liquidity. <--