jstratt

The Decline of Credit Cards

Excellent viewpoint!

Unfortunately most of the people that I see today are unable to control themselves.

Old thinking: Expensive Cars, boats, motorcycles, RV's or huge homes... prosperous

New Thinking: probably broke

The Coming Consequences of Banking Fraud

I am humbly able to see parts of the manipulation of markets that Kim sees. I thought it was interesting that GS had their code stolen and immediately announced how dangerous it could be in the wrong hands.

However Kim could make alot more money if he tried to be another Oliver Stone.

The truth is markets are manipulated to create a better world economy. It serves the world to allow the US to recover faster, or to help Europe or to help the 3rd world to grow at this point for the greater good of all.

In short the world economy is managed. Now go make money!

John Paulson Buying Citigroup Shares?

This article was probably written with good intentions. Unfortunately it would appear to be just a classic pumping of a stock based on rumor.

Private Equity Releverages with a Vengeance

Outrageous again!

Regulatory Tightening: Remember Chuck Prince!

You make a good point!

Regulation will come... just not when it could jeopardize the economy as much as it could at the moment.

A Summary of Q1 Bank Earnings: World, You Just Got Hustled

I appreciate the authors many fine points. When someone provides lots of rationale for their conclusions I listen closely.

At the same time the history of banking crises suggested to me that many of the things mentioned above would happen. Down through history similar steps although not the exact steps have occurred.

It is not in the interest of any country to have a great economic calamity. The world financial leaders seem to have once again stepped in and continue to be prepared to intervene as required to stabilize international trade.

I am not suggesting a boom lies ahead. At the same time $15000 gold and a world economic freefall is not likely.

Betting on the Big Banks

On the morning of 3/9 I bought several banks including JPM, USB, BK after seeing a list of the Worlds strongest banks here on Seeking Alpha. I intended to hold those banks for the long term.

Unfortunately the banks have more issues to come. If you take a list of the people who know the most and or have the best track record through this period there is a uniform consensus that banks have much farther to go.

After concluding that I sold all of the above about 10 days ago. My purpose for commenting is that banks are a dangerous investment. They may drop 50% of their gain from the lows now, or they may get crushed in July or October.

Unfortunately bank investments seem likely to get squished again in the future. Kind of like putting a juicy orange in a juicer.

Citigroup's Horrible Conference Call

Thank you Felix!

In Dec after a bailout I thought C at 5 sounds good. I sold when it hit 7 in what turned out to be a great move.

I had Mar 9 off and that morning I bought the financials on the 50 strongest banks list that had just been published. Then I added BAC, RF and GE. I thought hard about C thinking that at $1 it would be a great buy and the government was going to protect it. It would have been a super great buy! But I decided that I just didnt like what C had done and I didnt want to own it regardless.

I have sold all of those financials at least doubling my investment. If I had bought C I would have quadrupled my investment. But I am glad I didnt. C is a piece of ***** and will probably get bailed out 2 or 3 more times. Each time right after the bailout it will be a good buy... but not I.

It will be a continued transfer of wealth from citizens to Wall Street. It is my hope that Citi gets broken up into manageable pieces. It doesnt deserve to live... just save as many jobs as possible.

Banks No Longer in Crisis Mode

I must disagree with the writer of this article. To come to my conclusion I referenced the best sources of information possible.

Bernanke - 4/17 "the collapse of US lending will probably cause long lasting damage to home prices, household wealth and borrowers credit scores."

IMF - The downturn will be prolonged and the recovery shallow

Roubini - 3.6 Trillion losses from US institutions before it is over.

Buiter - 1.5 Trillion more needed for banks

Meredith Whitney - .5 Trillion of capital removed in 4Q

Mike Mayo - huge writeoffs to follow

An initial sale of CDOs I believe brought 3 cents on the $ and banks are carrying them at 70 cents.

I would suggest the adoption of this authors logic could be disasterous.

It is my opinion that we will see at least 2 more waves much like the waves we saw in July, Oct and Jan. It takes time to deleverage.

Right now the government is offering money for 0% so banks are recovering. Wait until they writedown CDOs and Commercial RE etc.

Banking is almost certainly still in a crisis mode.

Stay Cautious on Financials

Good Advise!

After investing through a financial crisis the first time, I realized how quickly things change. One minute all is good and then boom another wave hits. The news is managed or orchestrated in my opinion.

Banks are being given breathing room. Take money at 0% and loan it out at 5% sounds awefully profitable. In the background the best analysts I hear from suggest 30 trillion in problem assets to writedown.

The government now knows where we are in this process. It will be very interesting when they release the stress test data. I can predict that all of the big banks will pass. If that does not happen a bank or two will be taken out quickly and resolved.

As for me, I am betting on at least two more waves of bank selling in 2009. Probably not to drop below the March lows.

Financials Have Run Too Hard and Fast: Tread with Caution

I agree with the statement to watch out on financials.

We have more issues to come by all accounts. Sold off most of the rest of my financials today. I never did intend to hold them through earnings season. However I had forgotten how hard it is to sell big winners.

We may not breach the lows of early March for financials though I wouldnt bet heavily on that either. Listening to Meredith Whitney today I learned several things and suggest anyone who missed it try to find her interview with Maria on CNBC.

Did not realize 500 billion in credit card access was removed in 4Q 2008. She has been harping about Credit cards for a while but I was a little dismissive.

Some articles on Commercial Real Estate helped me quantify that we wont squeeze past those issues either.

On the positive side
-banks have had some great moneymaking months.

Banker CEOs Lied to Congress

Excellent article and comments!

Thanks for shining the light in dark corners. I am sure congress will be aware of these mistakes but not sure they will do anything about it.

Credit Card Crunch: Creating a New Generation of Subprime

I dont buy all of Meredith Whitney's arguments on credit cards. She is very talented and called many things right in 2008.

I agree that credit card losses will occur. However the losses up to 15% will be fees and charges rather than loss of capital. Losses will sound bad because they already booked the profits.

The biggest loser is the post office which is losing 2 billion credit card applications being mailed.

The poor people who have been fleeced by credit card companies will be better off without credit cards. Unfortunately I think they will still be able to get them.

Loan sharks like real sharks are going to be amazing survivors.

Big Banks: Pulling Off the Ultimate Bait and Switch

Some thoughts to consider or disregard as you see fit.

1) Dont hold financial stocks going into earnings season.
2) The big bldg in Boston selling for 50% of its previous sale price is a bad oman
3) It would be a profitable time for banks with cost of funds low and loan spread high if not for asset impairment
4) Unfortunately it is not just the US that is highly indebted. It is the whole world.
5) Geithners comments about some banks needing a whole lot of capital should be an eye opener
6) Bank CEOs will be replaced after we get through the worst of this crisis. Now is not the time for most to fall on the axe
7) When the President calls Bank CEOs to the White house for a meeting - watch out!

I thought on Mar 6 and 9 I was seeing the bottom and perhaps we did. Bought a lot of Financial issues and rode them up. Thought we had turned the corner for a few weeks. With what I see I had to change direction. Sold riskier financials on Friday and the rest today.

Why Big Banks Should Be Smaller

I appreciate the authors perspective.

However the seperation between banks and brokerages seemed to work well for a long time. Also if a bank is so big that it has additional systemic risk, then perhaps it should pay a higher rate to the FDIC.

Given the critical role of banks in our economy perhaps they should be restricted from contributing $5 billion to our politicians. The money may overwhelm politicians and the risk is that a huge transfer of taxpayer money gets siphoned off.

Banks are important to our economy and need to be saved. We seem to have crossed the line however where it isnt convenient to allow anyone to fail. When the government steps in as it should, the bondholders dont get punished and poor management decisionmaking gets rewarded. All this seems to come at the expense of taxpayers.