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Hi Guys,

If this makes sense(it does to me), now what?

The likelihood of the banks doing an earnings workout of their current solvency crunch does not look good. With a Goldilocks scenario, with everything going right, would take 8 – 12 years. Talk about another lost decade? It is possible. A weak recovery scenario with the economy returning to a “new normal”, operating at less than the levels of the past 60 years, gives us a lost 1/3 of a century!
As discussed in the introduction, “actuals” seldom are realized as projected by hypotheticals.

But if the hypothetical scenarios form brackets (the very best scenario and a reasonably pessimistic scenario), the possible outcome limits may be defined. The conclusion here is that trying to let the banks do a workout using future earnings would take between 8 and 38 years. Even the best hypothetical gives an unsatisfactory result.

The second rationalization described at the beginning of the article needs to be adopted. It is not too late to start to define “the restructure the system” scenario.

rk (bank bagholder)
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