主题：【讨论】Too big to fail? 转一段分析 -- aokrayd

以前我推荐过HUSSMAN的分析。这一段关于Too big to faiL的分析我觉得尤其尖锐，所以转一下。简单地说，作者清楚地指出了这一论点的荒谬和它的实际本质，即BOND HOLDER以国家权力换取经济上的利益。全文在这里。作者文中还有一段关于经济数据的讨论以及欧洲EFSF的讨论也很精辟，有兴趣的朋友可以看一看。

Recession, Restructuring, and the Ring Fence

http://hussmanfunds.com/wmc/wmc111003.htm

我这里只转帖一段。其中有作者少见的一段冷嘲热讽。另外他还有一篇An Imminent Downturn: Whom Will Our Leaders Defend? 以此现象分析得更为详尽。

http://hussmanfunds.com/wmc/wmc110905.htm

Think of restructuring this way. U.S. stocks just lost $2.5 trillion last quarter. Why should the public bail out the bondholders of financial institutions when the assets of these companies are far beyond what is needed to cover their liabilities to depositors and customers? The problem for banks, of course, is that they are leveraged, so even a drop of a few percent in their assets wipes out much of their own capital and threatens to make them insolvent. That should be a major concern for the lenders who have allowed the managements of those banks to leverage their bets with increasing lack of transparency (thanks to the FASB). But "failing" institutions can be restructured without any loss to depositors or counterparties. When banks become insolvent, my view is that receivership and restructuring is exactly what should happen, and swiftly.

Look at Bank of America's balance sheet, for example. Reported assets are $2.261 trillion. Against that, liabilities to depositors amount to less than half that, at $1.038 trillion. Add in $239 billion for securities that they are obligated to repurchase, $129 billion in trading account and derivative liabilities, and $155 billion for accrued expenses. Now you've covered counterparties, as well as vendors or others who might have invoices outstanding. Even then, and you're still only up to $1.561 trillion of the liabilities. The remaining 31% of Bank of America's liabilities represent obligations to its own bondholders and equity of its own shareholders. This is well beyond what is sufficient to buffer any loss that the company might take on its assets, while still leaving customers and counterparties completely whole. To say that Bank of America can't be allowed to "fail" is really simply to say that Bank of America's bondholders can't be allowed to experience a loss.

What "failure" really means is that bondholders lose money, and the operating part of the institution is taken into receivership, sold for the difference between assets and non-bondholder liabilities, and recapitalized under different ownership. Often the only thing that customers and depositors notice is that there is a new logo on top of their statements.

Now take a look at Citigroup's balance sheet. Reported assets are $1.956 trillion. Against that, liabilities to depositors again amount to less than half of that, at $866 billion. Add in $204 billion in repurchase obligations, $209 billion in trading and brokerage liabilities, and $73 billion in other liabilities, and you're still only up to $1.352 trillion. The remaining 31% of Citigroup's liabilities, again, represent obligations to its own bondholders and equity of its own shareholders. And again, to say that Citigroup can't be allowed to "fail" is really simply to say that Citigroup's bondholders can't be allowed to experience a loss.

You can do the same calculations for nearly every major financial institution in the world. The amount of bondholders and equity coverage varies somewhat, but in virtually every case, bondholder and shareholder capital of these institutions are more than sufficient to absorb any losses without the need for public funds, provided that the objective of government policy is to protect the people and the long-term viability of the economy, rather than defending the existing owners, bondholders, and managements of these institutions. Make no mistake - that choice is what the oncoming crisis is going to be about (See An Imminent Downturn - Whom Will Our Leaders Defend? ).

But who are those bondholders? They include corporate investors, pension funds, endowments, mutual funds and ordinary investors. And all of them willingly take a risk in order to reach for return. As do stock market investors. And if the risk doesn't work out, none of them should look to the government to fire teachers, lay off social workers, underfund the National Institutes of Health, cut Medicaid, and print money (because until the Fed sells its Treasury and GSE holdings, it has indeed printed money), just because they take their risk in a different type of security.

My impression is that the scare-mongering of self-serving financial "experts" on Wall Street is shortly about to become deafening. It would be catastrophe, utter catastrophe, no, Armageddon, to let the global financial system collapse - collapse! - because the world as we know it will indeed collapse, as day follows night, if bondholders, who knowingly and voluntarily take risk and invest at a spread, are actually allowed to lose anything! We cannot, in a thinking society, allow losses to befall risk-takers who make reckless loans and bad investments. We must, must at all costs, divert money away from health, education, and welfare, in order to save these companies from failure, because neither health, nor education, nor welfare are even possible unless we save the financial system from unthinkable meltdown. We have no choice. No choice at all. They are too big to fail, and we cannot hesitate - they must be saved, for the sake of our children, for our children's children, for our freedom, for the flag, and to honor the legacy of our forefathers, so that these Champions of Disfigured Capitalism can continue to do their vital work with impunity, unbound by any of the incentives or consequences that actually allow capitalism to work in practice.

His weekly letter is some good resource for understanding economics, which I would recommend. His analysis of some common mis-understanding is particularly good.

Normally the assets on the balance sheet is much less than liquidation value, unless it is mostly cash. The author overestimated the value of assets in case of bankruptcy.

He also ignored the chain actions in the case of a large institution failure. When one big bank has to sell everything to pay bond holders, the stock prices would be very depressed causing assets value of others shrink a lot.

The biggest problem is ignoring the chain reaction. But his point is clear. The bankruptcy is not the end of the world, financially it can be fully covered without putting a huge unrest into the society. The too big to fail is simply an excuse to refuse loss to the bond holder, the government has clearly stands with them and let the society bear the loss. His another letter which I also had the link in the post made the point even more obvious.

By allowing the loss to be socialized and then to cut budget to compensate the loss will exactly trigger the following depression. That is happening right now. The loser must loss, that's the principle to allow the whole system to regain health.

但是虽然道理上正确，可是仍旧无法避免既得利益者的垂死挣扎。而他们可能失去的越多，则其挣扎的力度越大，但这又将导致他们失去的更多。这种疯狂的负循环，不是第一次在人类历史上发生了。

When it failed, the loss to bond holders was insignificant compared to the impact it brought to the rest of market. Many people now think the market would be better if Lehman Brothers had been bailed out too.

Without concrete data to show what the chain reactions would be, the author over simplified the consequence of big bank failure by only looking at the loss of bond holders.

This is basically saying any big financial institute can't be allowed to fail, but this is true. Sweden had nationalized their banks and they do fine, Japanese were forced to bankrupt their banks and that's not the end of Japan. Lehman should be bankrupt, they just need to do it orderly. Think Wuma and Wichova, they both bankrupt and what's the problem?

The author also cited FDIC comment, and that comment clearly showed the real intention of the government action.

There will always be chain reaction, be huge loss, but instead of the loser loss, the society lost, that's the whole point.