The US banks collectively have slashed bad debt provisions by 50% from $0.60 per $100 loan to just $0.30. In the late 1980s the level was around $6 per $100.
With all the money sloshing around and the outright greed now prevalent in the markets $0.30 per $100 loan seems like a ludicrously small amount and one that many bankers will no doubt come to regret.
Perhaps the bankers though aren’t as stupid they seem because they know full well that any personal money they make is theirs to keep while losses racked up by the company are the shareholders problem. So why be prudent today if its not going to be your problem when things turn nasty?
Whatever the case when the cycle does turn bad for the banks expect far more pain than is first perceived.
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