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Fast Money Recap - Has Ben Gone Nuts? (12/17/08)

Fast Money traders are good at making money selling short. Certainly, they don't like the measures that will be successful to turn the economy around.

When Ben is trying to say, "Investors, take risks, you'll be paid nothing if you hide in money market funds." In addition, low interest rates will spur housing activities to help counteract the tightening lending requirements.
It will help banks to replenish capital quickly, and eventually will help banks to relax their lending standards.

Ben still needs the securitization of car, credit card, student loans and private-label mortgages.

The SEC also needs to take away the tools that short sellers can kill any stock at will by re-instating the uptick rule, banning naked short-sales completely (no two-day grace period.)

The FASB accounts also need to modify the FAS 157 and other accounting rules to help the preparers to manage their assets effectively and at the same time requiring them to disclose more exit prices about their assets without endangering their own companies. The financial institutions then would be more aggressive in making loans.

JPMorgan Chase: Poisoned by Bear's 5,000 Counterparties

JP Morgan needs to disclose the cash flows on the level 3 assets plus all the statistics regarding delinquencies, foreclosures, net charge-offs, interest rates, insurance, maturities, geographic concentrations, single issuer concetrantion, and average lives, etc. These data will help to allay fears and uncertainties. Not all level three assets are toxic.

Henry Paulson Could Have Done Better

Paulson and Bernanke just hit a home run!

The model they used to save Citi is fantastic. It's better than purchasing the troubled assets. The strategy used very little money. In the purchasing strategy, there is a problem that sellers do not want to sell assets that are still generating good cash flows, even though the assets have bad marks.

The market should understand the logic.