How Bad Is Finance’s Cockroach Problem? We Are About to Find Out. (NYT)
“Shortly after Tricolor cratered, something similar happened to First Brands, a company primarily known for making car parts. Its investors discovered roughly $2 billion in loans not on its balance sheet. When a lawyer for the company was asked to state how much of that money he could account for, he wrote “$0.”
That’s when things started getting scary. Fifth Third, a regional bank, said it had lent Tricolor $200 million, nearly all of which it now expected to write off as a loss. Same at JPMorgan Chase, which reported it was out $170 million that it will presumably never see again. At Barclays the figure is nearly $150 million. They’ll survive the loss, but the incident cast into sharp focus a risk that had otherwise lurked in the shadows, growing year by year: a cascade of bankruptcies that triggers a widespread financial crisis.”
And some fascinating comments below You know, the same old investing rules apply … Til they don’t. It’s like a pilot friend of mine described flying … Hurtling a metal can thru the air works perfectly, until it doesn’t. I listened with horror the other day to a customer at work exclaiming that now is a great time to invest in AI stocks.
I’m glad I have a lot of cash but not glad that I’m retired (and so dependent on it).
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WearyTravelers.net 