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Get Ready to Short the Banks

This bonus payout is an absolutely criminal act - and these bankers should be looking at jail time instead of new Maseratis.

Having been short anticipating all of the things you cite above, I have had my arse handed to me. You are fighting the fed who will do whatever it must, anything, to preserve the pretense of stability in the banking system. No matter how Orwellian it may seem, the big banks, will not fail, unless the entire system fails. Period.

The Fed's Ponzi Scheme Has Run Out

You're dead on - but with this latest drop, TLT will spike and TBT will drop substantially, perhaps to its all time lows. after that, you and I are in agreement. For more juiced returns try the options on these.


On Oct 01 10:27 AM Mad Hedge Fund Trader wrote:

> qit Reviewing the current political and monetary landscape, I would
> beremiss, irresponsible, even negligent, if I didn’t revisit one
> of myfavorite ETF’s, the Proshares Ultra Short Treasury Trust (seekingalpha.com/symbo...).
> This isthe 200% leveraged bet that long Treasury bonds, the world’s
> mostovervalued asset, are going to go down. While the Fed is going
> to keepshort rates low for the indefinite future, it has absolutely
> no directcontrol over long rates. The only political certainty we
> can count onis the continued exponential growth in the supply of
> government bondsof all maturities. Like all Ponzi schemes, their
> eventual collapse isjust a matter of time. It’s simply a question
> of how many greater foolsare out there (sorry China). Look at how
> they are trading now. Wecurrently have the greatest liquidity driven
> market of all time, andthe ten year is only eking out a 3.40% yield,
> pricing in near zeroinflationary expectations. The average yield
> on this paper for the lastten years is 6.20%, a double from the current
> level. Get the yield backup to 5%, a distinct possibility in 2010,
> and that takes the TBT fromthe current $45 to $70. Sure, we may get
> a sideways grind in yields fora few months, which will be expensive
> due to the mathematicidiosyncrasies of the 2X ETFS. But a security
> that is unchanged if I amwrong, and doubles if I am right is the
> kind of risk/reward ratio thatI will take all day. And I believe
> that in my lifetime Treasuries maylose their vaunted triple “A” rating
> and be priced closer to subprime(warning: I am old). That could enable
> the TBT to deliver the holygrail of trades, your proverbial ten bagger.

Banking Industry: How to Buy Friends and Alienate People

This is the kind of stupid move that gets industries regulated out of existence or should be, were it not for their political arm, the Democrat party, being well funded.

Not another dime for them until they pay off their $1T my kids now have to pay on their behalf.

The Pfizer-Wyeth Deal: Experimenting with Taxpayer Dollars?

Wouldn't short Wyeth be a better idea if the deal falls apart?

Fast Money Recap - Who Cares about the Citi Rally? (11/24/08)

Did anyone catch in the Citi announcement that with the infusion their tier 1 capital is at 9%? 9%? That's it? that STINKS!!! A break up is still better - but at least the top dogs will get their bonuses.

Subprime: Not All Bad News About Smaller Banks [Housing Tracker]

For those interested in the regional banks perspective the CEO of BB&T Bank Allison, has an open letter to politicians on the bailout, the impact on regionals and a multipoint strategy for remediating the problem. Google Allison CEO Bailout BB&T and you'll find it. A good read.

Banks on the Verge of a Nervous Breakdown

LOL! Fantastic - love the no crappy bank left behind program - well put or more correctly, well shorted...

Banks Scramble to Refinance Their Long-Term Debt

And I thought it would be WAMU that goes under, looks like its AIG.

Counterparty Risk Management: How Could So Many Be So Wrong for So Long?

Internal auditors? are you serious? The notion that regulators and internal auditors, bear even a portion of blame on this, is laughable. They operate at too detailed a level to address the potential risk of one of a myriad of products. Maybe, the regulators could have caught it, but given the "sophisticated" or perhaps more correctly, intentionally deceptive design, of the products I doubt it.

Had they raised such an issue of such exposure, it would have been ignored as chicken little in the face of the piles of money the banks were making, they probably would have been fired. What would that assertion look like "If housing prices fall, Audit Committee, we're in deep kim chee?" You can't present speculation as audit evidence, as a result, that function is always "backward" looking, no matter how hard they try.

Your assertion exposes an important misconception which is that the governance structure actually works. My friend, the governance structure is completely broken. If such a report ever got to the audit committee, they would not have wanted to hear it either for the very reason of limiting their own potential liability!

So the CFOs have a dual motivation to prevent this kind of information from coming out 1) to protect themselves, and 2) protect their board members who truly just want to collect their checks, enjoy their meetings and head back to their mansions...

Until these board members are jailed or lose their life savings, NOTHING will change...and it won't be the internal auditors that make it happen.

Bottom Line: Chris C above has the right idea, new structured products should require the financial equivalent of FDA approval where these types of scenarios can be vetted independently outside the reach of the bankers, and in the bright light of day, which dims significantly when boards convene.

Financials Future Still Uncertain

top may be in today on the IYF and IYF (and UYG at $24.76). Looks like the financials may be turning since their up move seems a bit exhausted...

Dividend Yields Soar

truthininvesting, now that's a portfolio for the long haul. Good choices. Add in MCD and a booze/beverage (RIP BUD) stock and you can sleep beautifully.

Writedowns and Capital Raised by Financial Firms

I might agree with squash...It could also mean that the firms on the right side of your graph haven't been as forthcoming with their writedowns as others and may just be the other shoe that drops late in the year.

Subprime Not Over For Banks [Housing Tracker

Many of these banks have standby facilities with their clients who have the VRDOs outstanding. What will happen to the banks balance sheets when their clients start to use the facilities to "guaranty" their VRDOs to stabilize their rates?

Debt Datapoints of the Day

I agree with the lottery/policy idea of privatizing the fund flows of the very people that provide them, to save them from themselves.

But why would a state government ever want to do that when there are nice suburban schools that need new electronic chalk boards? Recall that the great "tobacco settlement" was supposed to provide healthcare and counseling for these same poor addicted masses, and instead, those funds typically were transferred to the general funds of the state coffers in return for "tobacco bonds."
Taxpayers ought to look at this money for what it is, an end run way to tax the poor and stupid on a voluntary basis and transfer it to middle and upper class. Privatize them, and let them issue dividends instead, just like the toll roads.

Absurd Accounting Rules and $5 Trillion Off Bank Balance Sheets

Very well said. Long SKF.