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  • Banks Over Reserved Over Capitalized And Under Valued

    If you think the economy is improving keep reading....if you don't skip this blog.

    Currently banks in my state are holding unprecedented levels of capital and reserves. In some cases 300% more of each. They are also being valued on the stock market today at 75% book where at times in the past they got up to 200% of book.

    What happens now? Has this ever happened before?

    Do you really think these banks can all triple their balance sheets and apply the capital? No they can't? Do you think any board is going to merge and give away this capital at less than par. No way.

    So what happens?

    I bet share buy backs.

    I wish the government would De-Tarp these banks.

    I wish the shareholders could return these excess funds tax free. But they can't so watch for share buy backs. Watch for mergers where by one bank uses the other banks capital and reserves to buy out the stupid shareholders who get out at these prices. Wall street merger advisors where are you when these banks need your advice. Let's get creative and help these bankers spend their money. They have too much in my opinion.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Nov 30 12:08 PM | Link | Comment!
  • Read Kevin Villani

    He has a different take on the crises. Let shorts short

    "markets can become unbalanced, but they generally correct themselves"

    and get the GSE'S out of the market.

    "public protection and the associated prudential regulation had trumped market discipline"

    Rates will go up, commercial banks will grow market share, China will move there money and home ownership rates will drop.

    www.cato.org/pubs/pas/PA679.pdf

    Jun 06 9:40 PM | Link | Comment!
  • The United States Needs A Massive Privatization Effort
    "Crowding Out Theory" is real.

    Please pay careful attention to this. This is the cause of our counties output gap and it can be fixed.

    The Fed came in a grabbed 10% of the economy to keep it going for 2 years.

    Now that we are back on our feet.

    Give it back.

    The United States needs a massive privatization effort, whereby the Fed assets are distributed to the States and private business.

    I am talking about the good stuff on the Fed balance sheet. Give it to the States so they can fix their budgets. Then give the good stuff and Freddie and Fannie Farm credit etc, back to private banks so they can make money again.

    If we are worried about the transfer payments above, this is the best way to keep this going. Mathematically the private sector must grow faster than the public sector in the long run. We all know this.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 02 4:28 PM | Link | Comment!
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