sleepless_on_wall_street

A Tale of Two Banking Worlds

Does anyone want to offer some analysis (or even opinion) about why I should consider buying C? I have read some commentary the past couple of weeks recommending C as good investment, but I didn't bookmark anything so I don't where these comments might have been. I don't understand how a bank that appears to be undercapitalized (if you believe the stress tests) and is losing many billions quarter after quarter from operations can have any prospects other than selling off assets until it goes out of business.

Anybody want to enlighten me?

Thinking the Impossible: Could Bank of America Go to Zero?

Harry Tuttle,

You wrote: "By the way, I have no position in BAC. I am, however, an American taxpayer."

I say you (and I) do have positions in BAC, as do all taxpayers. Our positions are counterparty to stock and bond holders and the only question remaining is which party is going to pay the other.

Turning Japanese: The Audacity of Reality (Part 3 of 3)

James Quinn,

As usual, an excellent article filled with relevant data.

I would pick one factor as most important for the Japanese malaise: failure to clean out insolvent banks. Those banks sucked up monetary liquidity for over a decade and the after effects still persist today. This Japanese failure was widely criticized by economists and U.S. government officials throughout the 90's. With some of the same economic policy makers returned to Washington with Obama, we will not make the same mistake, right? So far, wrong, wrong, wrong. Paulsen and company started a process to "save the financial system" by saving the banks. Obama's team seems committed to following the same path.

STOP!!!!!

We can not save the forest by saving the dead trees. These are just fuel for the forest fire that will destroy the entire forest. CLEAN OUT THE DEADWOOD!!!!

I fear a problem is that the policy makers confuse saving their friends at C, BAC, AIG, etc. with saving the U.S.A.

Mr. Quinn, you are doing a great job. Thanks.

Is Nationalization Contagious?

Felix, a great question.

It might effect them negatively. That is a worry. It might be argued that they could also be supported to the extent that the implication could be that they would not be allowed to go to zero. I don't know how much that would help them because having an implied guaranteed price floor of, say, $5 for a stock currently at $15 or $20 may not provide that much support. If the price goes below $10, the implied support would have much more effect.

As far as wealth destruction is concerned, another $100B or so seems trivial compared to what has already happened. And thinking about that statement really scares me.

The Obama Inauguration Rally Begins

Admittedly, short-term stocks look oversold. On a valuation basis, they look over valued. I find it interesting that the author did not hazard a guess about how long the Obama rally might last.

Looking at the details in the article, it seems that the only real rally identified is in oil stocks and precious metals and related stocks. That would be way too narrow a rally to get me excited.

Finally, Some Disclosure from Companies That Received Bailout Funds

I should know:

You are right about the blah, blah, blah. However the article is very entertaining and this is Christmas, the time when we need a little entertainment befor we waken to grim reality tomorrow morning.
I appreciate Mr. McDuffy's efforts here.