Reading the FT this morning, a few articles suggest hedge funds are desperately trying to deleverage, this being on of the main reasons for the flight to cash in the commodities and stock markets.
Paul Mason suggests there will be a greater emphasis by the banks on small business and mortgage lending stability.
This is an assumption, but surely there must be several private equity deals financed by the recently nationalised banks, and hedge funds who are still geared on RBS (for example) loans.
So the pressure from the government / public to call this money from these gearing engines will almost certainly result in a greater move to cash, causing further falls in these markets as these institutions desperately look for businesses and stock to sell.
Interesting times ahead if this is the case. Then magnify this across the other regions of the world where banks are being nationalised. Is this the beginning of the end of the middle of the beginning of Monte-Carlo capitalism? (Excuse the highly geared time frame ;) )
“Cash Must Not Be Made the Scapegoat”
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