Welcome to a special jumbo edition of Dos Hombres: Two guys, two opinions...and a few minutes.
Matt Nesto got us started by noting that Moody's (MCO), one of the American ratings agencies at the heart of the mortgage crisis, warned 14 UK banks of potential downgrades due in part to a potential lack of future state-sponsored bailouts of the group. In Nesto's estimation, the problem to which Moody's is pointing isn't an issue with the financial system as it currently stands but a function of the banks getting stuck holding the bag from the debt left over from the financial crisis.
The bad debt didn't just disappear into money heaven, Nesto observes. The debt was simply diced, sliced and repositioned under other names. Now that the public's sense of urgency regarding the crisis is gone, so is the public's willingness to pick up the tab for backstopping the institutions. By implication, the vaunted "austerity measures" of the UK in the EU are essentially a jam-job, leaving whoever holdsRead More »from Dos Hombres: Bad Debt and Big IPOs