just.a.guy

Four Reasons We're Headed Even Higher

When considering the government's "investments" in C, BAC, AIG, et al, you have to include the value of loan guarantees lower in the capital structure that are propping the whole edifice up.

What good is a few billion on the top of the captial structure in equity warrants and dividends when tens and tens of billions just might be leaking out the bottom?

Until the government has FULLY exited these financial positions, and it is made very clear that they won't intervene this way again, then none of the bailed-out financials' valuations (equity or debt) can really be trusted, because they have printing press value built into them.

It astonishes me how many commentators (including the author) miss this fundamental point.

The Stress Test Cliff Notes

The so-called "stress tests" are really a PR exercise to cause enough of a rally in bank shares for them to sell more stock, and give up more ownership without control -- to keep the inmates in charge of the asylum while having the numbers balance (for now).

I'm not sure where they'll find the next set of suckers though, as they've already burned pension funds, hedge funds, sovereign wealth funds from Dubai to Singapore... when will these guys realize their game is over and there aren't any suckers left?