Gaucho

Barron's Goes Bullish on Banks, Again

When Barrons is Pumping the big boys are dumping. This rally is caused by limited short selling. After the initial squeeze then you will see a return to the slide. The fundamentals have not changed.

WFC was mentioned as a great investment but looking at their financials you see that they CHANGED THEIR ACCOUNTING method for writing off loans delinquent from 90 days to 120 days. They would have missed earnings by 4 cents instead of beating by 8 without this trick. Another trick to raise share prices was to raise the dividend. For a company in financial distress this was a stupid posturing move. Watch the dog and pony show next quarter.

City Bank has 330 billion in off the books VIEs that when marked to market are worth about 1/3 that price. With just this one category they need to write off 210 billion and given that they have 90 billion in share holder equity they are sunk. Now add the SIVs and the CDOs and the XYZs etc and you get the picture.

Many banks have miraculously 'reduced their exposure' to this toxic crap. While doing so they have written down a small fraction of that amount. This is done by moving it off the books. Any one hear of a company called Enron.

Who is that man behind the curtain?? Now click you heels together three times and repeat the banks are screwed, the banks are screwed, the banks are screwed and come back to reality.