Originally posted by Matthew Gil:
Banks are WAY to tight now. To the point that they are being compared to 1990's Japan.
Banks MUST stop hording their deposits and start lending again. Otherwise, we are going to have a 15 year economic slowdown (see Japan).
Can't do it. We're Japan 1990 deflation scenario (Nikkei down 80% to date) except our consumers don't have the savings.
Bernanke / Paulson are not fools, they would have adapted Sweden 91 plan if all the banks were not completely INSOLVENT. Remember Merril sold their MBS holdings for $0.22 on the dollar, and that was when the getting was good.
Bank deposits are but a fraction of their exposure (because of leverage / fractional banking) - they are and will continue to hoarde money and hold on for dear life. There will be no recover short of:
1. US default on debt
2. Massive depreciation of USD
3. Renegotiation of Bretton Woods
I think 3-4 year time frame is a bit early, I would be looking for acquisitions in 2012.