I came across this article in the Wall Street Journal last week which revealed another casualty of the credit crisis. The core finding of this article is reprinted below, in its entirety:

In the past several years, amid surging global demand for grain, farmers plowed up land at a feverish pace to plant soybeans, and roads were carved into the countryside to move the goods. Climbing grain prices through the first half of 2008 accelerated the growth.

In my first article published on Seeking Alpha, I made my case for the bear market.

Well, we're here. Now what?

On July 10, 2008, Dow Chemical (DOW) announced that it would be buying Rohm and Haas (ROH), an American chemical company, at 78 dollars a share, in cash. The transaction is scheduled to be consummated on January 15, 2009. However, because of the uncertainty in the financial markets, Rohm and Haas has been trading downward.

You can find the most recent spread on this deal getting done into double digit territory here. Why is the spread so wide? I can give you five factors off the top of my head.

On March 13, 1964, at 3:15 am, Kitty Genovese, a 29-year-old bar manager, was stabbed to death in front of her Kew Gardens building in Queens, New York. A newspaper article printed two weeks later suggested that her neighbors had heard her cries for help and yet remained unresponsive. In the case of Miss Genovese, rumors of her neighbors' unwillingness to come to her aid proved to be inaccurate. However, it is a more recent event in March of 2008 which is a better example of the "bystander effect", or the social psychological phenomenon of "diffusion of responsibility" - the Bear Stearns collapse.

In August of 1998, as a result of heavily leveraged trades in the currency markets, Long Term Capital Management was on the brink of collapse. The usual suspects on Wall Street banded together to discuss the systemic risk of allowing a large hedge fund to implode. All agreed that some sort of bailout or rescue package should be cobbled together despite the strenuous objection of Jimmy Cayne, chairman of Bear Stearns, who believed that LTCM should be allowed to fail and let the markets absorb the shock.

The Mortgage Asset Research Institute came out with its quarterly report which showed mortgage fraud is on the rise. This is curious, considering the heightened scrutiny that banks should be making during the "credit crunch". I just wanted to point out that the states which show the highest incidence of fraud are the same states which have eliminated the attorney and have substituted "settlement companies" staffed by non lawyers.

This would lead one to conclude that underwriters are still churning out loans to sell them into the secondary market to keep afloat, borrower representations and appraisal review be damned. The only difference is, the investment bankers who participated in the private market for these Mortgage Backed Securities [MBS] will no longer create or trade these ticking time bombs amongst themselves. Instead, underwriters now need Fannie Mae (FNM) and Freddie Mac (FRE) to pass along these tin nickels to some poor investor. Guess who is going to foot the bill to pass along these lemons?

Let me reintroduce myself. I'm a dirt lawyer. I don't work on Wall Street. I work in the outer boroughs of New York City. I deal with the dirt and the dead - real estate, criminal law, trusts and estates. I've worked at a Broker Dealer and I prefer the courtroom to the glare of the Bloomberg terminal. However, Warren Buffet is fond of saying that you should invest in what you are familiar with. Let me introduce you to my unique ground level perspective of our "positive GDP growth".

I worked as a bank attorney for mortgage refinances and advised purchasers and sellers of real estate in New York City during the "Golden Age" of the housing boom. Once home prices started to level off and the subprime lenders began collapsing, the refinances and sales dried up, but coincidentally, my landlord/tenant practice began to pick up. You see, many first-time homebuyers were given the "Big Kiyosaki" pitch, where owning multifamily properties would create "cash flow" and turn everyone into "Rich Dads".

The last articles I have posted on this site have been bearish towards equities and bonds, and I have been very critical of financial institutions in this current economic environment. In this article, I’d like to talk about my favorite bank, and why you should not buy their shares in the near future.

Dime Community Bancshares , Inc. (DCOM) is the parent company for the Dime Savings Bank of Williamsburgh, founded in 1864 and headquartered in Brooklyn, New York. The company has $3.74 billion in consolidated assets as of June 30, 2008, and has 22 branches located throughout Brooklyn, Queens, the Bronx and Nassau County, New York. For those of you who have a penchant for a huge mega-bank, this would be a good point for you to stop reading this article and go back to watching your stock holdings decline.

I received an email from a reader asking me if it was likely that Congress would ban Pro Shares Ultra Short Financials and other Exchange Traded Funds which seek to short the financial industry.

As of this writing, the ban on naked short sales of 19 protected financial stocks is set to expire in thirty days from July 21, 2008, so as of now, this is not a permanent ban. Furthermore, market makers in the exchanges where 19 stocks trade will be able to execute short sales without falling afoul of the rules. This article discusses the remote possibility of bans of short financial ETFs and the more likely development of a regulated electronic open market in conjunction with the Commodities Futures and Trading Commission which may provide some transparency which would lessen the uncertainty as to the total volume and how many short bets each market counterparty is holding which may stabilize current market volatility.

The initial press release for 2Q sounded great. It was only when you read the 10K filing that you saw that Wells Fargo (WFC) Financial (the consumer credit arm for near prime and subprime) suffered losses and they are getting out of the auto leasing game altogether because "the returns are unacceptable" which means they barely broke even.

The CEO states that they are going to keep lending money to their existing credit-worthy customers, which is banker talk for "we don't know who we can trust so we aren't taking any chances with new customers." Besides the fact that it's completely contrary to growth, the prime customers who enjoy the benefits of the Wealth Management, Mortgage and Retail banking are only one illness, job loss, or death in the family into slipping into the WFF division, where they will be treated like redheaded stepchildren.

I'd like to take a moment to explain why I am committed to my ProShares UltraShort Financials ETF (SKF) position and why I'm generally bearish on even owning any stocks or bonds for the near-term.

Four percent of SKF is short Bank of America (BAC). SKF has a lot of short positions and swaps for megabanks, I-Banks, Fannie (FNM) and Freddie (FRE), and every type of lending institution that makes up the index. But the bet on BAC is the biggest.