Is the Crystal Ball Clearing? | 148 comments (147 topical, 1 editorial, 0 hidden)

Re: A shift in expectations (none / 1)

But that involves lags and risks that buying an existing asset doesn't have.

Also, if you buy the existing asset on credit, the existing asset acts as collateral. If you borrow to build, there's no collateral until the thing is built.

Therefore, the banking sector has a bias against lending for capital formation and for lending towards asset bubbles.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Mar 13th, 2012 at 04:42:56 PM EST
[ Parent ]

Re: A shift in expectations (none / 0)

But that involves lags and risks that buying an existing asset doesn't have.

True. Which is why people talk about risk-adjusted returns, and why choosing the highest risk-adjusted return is what you should, given that the absolute level of risk is something you can stomach.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue Mar 13th, 2012 at 06:06:54 PM EST
[ Parent ]

lending for construction (none / 1)

is what project finance is about.
And - again, it works, it's quite safe, but it's also quite a bit of work. Which may be the problem...

(Also - project finance bankers do not get million-dollar bonuses)

Wind power

by Jerome a Paris (etg@eurotrib.com) on Wed Mar 14th, 2012 at 08:48:21 AM EST
[ Parent ]

Re: lending for construction (none / 0)

I have been wondering, how much of banks lending is project financing and how much is based on existing assets?

Ball-park figures is what I am looking for really.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Mar 14th, 2012 at 09:07:23 AM EST
[ Parent ]

Re: lending for construction (none / 0)

most bank lending is still to corporations, and it is impossible to tell if that money is used for investment (and if so, in what) or for other purposes.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Wed Mar 14th, 2012 at 01:08:52 PM EST
[ Parent ]

Re: A shift in expectations (none / 0)

Still, a a lot of non project-finance new construction projects are done by established actors, not startups, which actually have collateral available to pledge.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Mar 14th, 2012 at 10:44:01 AM EST
[ Parent ]

Is the Crystal Ball Clearing? | 148 comments (147 topical, 1 editorial, 0 hidden)

Top Diaries

Owning Brexit

England Herd Immunity Stage 2.0

Shaming us all?

Brexit for slow learners Part III

Biden, Sanctions and Republican Foreign Policy

Will the EU punish the UK for its Brexit dealbreaking?

Brexit for slow learners part II

Brexit for slow learners

Recent Diaries

European Defense 4 Freedom

U.S. Joe Biden Will Defend Taiwan

Polluting Nations Undermine IPCC Report

England Herd Immunity Stage 2.0

Owning Brexit

Biden, Sanctions and Republican Foreign Policy

Biden Reset of Diplomacy Solely with Allies

Shaming us all?

Brexit for slow learners Part III

Pure Capitalism Winning In The Netherlands

Uyghur Freedom Fighters and Kunduz Mosque Attack

Energy Event:MIT Materials Day:Role of Materials in...

No Exit Strategy - Dismantling of the European Union

Brexit for slow learners part II

EU-27 to Tackle Economic Powers US and China

The Leveler: Build Back Better

ICIJ: Pandora Papers Treasure for EU Politicians

Brexit for slow learners

Will the EU punish the UK for its Brexit dealbreaking?

AUKUS: Choice for a Chaotic Boris Is Striking

Occasional Series