Misha

Simon Johnson on the Wall Street Oligarchs

I used to be long banks, buying at the bottom, after Citi’s conversion agreement. My original thesis was this agreement indicates that the government will not allow big banks to fail, which removes uncertainty and was thus positive. I have since sold my position for over 100% profit and went short banks yesterday and again today on the opinion that upward move was overdone and the possibility of the similar conversion for BAC and other banks as reported by NYT and others is a negative. My short position is of a trading kind right now, as I weigh the possibility that things will get worse for banks. You are obviously bearish too, so tell: Given an apparent commitment of the government to support banks no matter what, what are, in your opinion, near term triggers that would lead to bank sell-off?