Banks Don’t Need To Auction Their Rare Books, Yet
Let’s say you had an asset, like a rare book, in your basement. You paid $XXX.
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You used the value of that book, as collateral. You borrow money, with the value of the rare book at $XXX.
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The reality is that you do not necessarily know what $XXX is TODAY. You have NO IDEA what someone else will pay for your book, when they know that you MUST sell.
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Now, you need to raise money, FAST. You cannot sell your rare book, because the internet has crushed the demand for all books, so it is not worth $XXX, but it is worth 80% of $XXX. You cannot actually raise 80% x $XXX either.
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The Fed and Treasury Department basically ensures that you don’t have to sell your rare book. Yet.
The world is now scrambling to assess their risk, and to locate what/where/when the next situation arises. Note that at the end of last year, I shared my thoughts on the subscriber site.
