Everyone has read the standard “economic model in cows” analogy. If you haven’t, where have you been?! But this is a new, very specific, entry: ROYAL BANK OF SCOTLAND VENTURE CAPITALISM You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a

"Almost one-third of all U.S. households have no mortgage. If you adjust for that, the 70-80 percent debt-to-equity ratio suddenly becomes a major challenge because it means that the two-thirds who do have a mortgage already face a debt-to-equity ratio in excess of 100%. Even worse, once the mean reversion has run its course, two-thirds of US households will be facing a debt-to-equity ratio of 120...

NVM alerts me to an article entitled Insolvent Banks: Why a Debt-for-Equity Swap Won't Work. The author has at least used the real life example of Citigroup, which appears to be deeply in the mire. He points out that if assets were written down by 20% (a reasonable guess), not only would all bonds have to be converted to equity, but (1) some ordinary deposits as well, which would of course tr...

Dear Chairman, As a customer of long standing, I am concerned at your declining credit ratings . As a responsible customer, I am no longer able to maintain my credit surplus facility in the bank's favour. You will notice I have been buying Krugerrands instead. Please get in touch with me if you are having trouble managing your debt portfolio; I am happy to offer the bank free advice on debt m...

I've just had a letter from my credit card company advising my that my credit limit has been increased by roughly 30 per cent; obviously I had not requested this increase, nor do I need it (I've never paid a penny of interest on credit card debt, ever). I use my credit card solely as a means of payment where my debit cards (Maestro and charge cards) are not accepted and the full outstanding

Commenting on today’s Credit rating agency Standard & Poor’s estimates, which estimates that up to 1.7 million people could find themselves in negative equity if prices continue to fall, Liberal Democrat Shadow Chancellor, Vince Cable said: "When I warned of this degree of negative equity a few months ago I was accused of excessive scaremongering. "But the idea of nearly two million ho...

I've stumbled across this blast from the past illustrating how debt-for-equity-swaps work in real life: In a move to dramatically strengthen its balance sheet, cosmetics company Revlon has brokered agreements with fund managers Fidelity Investments and MacAndrews & Forbes to swap bonds for company shares. After years of surviving on emergency cash infusions from financier Ronald Perel...

Prof. William Buiter, 21 September 2008: To get new capital into the banks, and to reduce leverage dramatically at the same time, I propose a mandatory debt-for-equity swap for all US financial institutions. For the most junior debt (subordinated or tier one debt), 100% could be swapped for equity. For more senior debt, the share of the notional or face value of the debt that is subject to compuls...

OT, but how about a running total of the value of "equity" raised in debt-for-equity swaps now that plenty of companies are getting in on the game. Would be useful to know how much taxpayers money ISN'T being wasted on Gordon buying equity.

Union leaders and MPs have reacted angrily after it emerged that the private equity group CVC is considering a bid for a minority stake in Royal Mail. CVC, which has stakes in three European postal services, is at the early stages of working on a bid. Its other investments have included the Debenhams store chain and Formula One sports rights. The potential involvement of a private equity company h...