I told you all along, the CDO’s on the balance sheets of our glorious banking institutions are worthless. All of the “writedowns” taken was just PR to placate the helpless employees and long term shareholders. These banks will be “writing off” their toxic paper, like [[MER]], over the next few months. Again, the underlying asset behind the paper has depreciated beyond repair. The CDO’s are worth nothing.
MER is reporting a sale of their CDO’s, but they are financing that sale! After it’s all said and done, they got 5 cents on the dollar or a punch in the nose (with brass knuckles). Rewind a few weeks to the Bloomberg sale, you will find MER financed that deal too. WTF!
What’s the point of selling shit, if you are the one giving the other guy the money to buy it? Does that make sense?
All of the banks, from [[LEH]] to [[MS]] to [[GS]] need to write off assets.
Most importantly, they (banks) are killing shareholders, via dilution.
Listen to me, don’t you understand that in order to get back to where they were, market cap wise, the stock needs to climb to ridiculous valuations, due to all the new shares in the float? Shares of WM or LEH will never get back to their all-time highs, in my estimation.
Finally, I hear all of this talk about the housing market bottoming. For those people, I ask you this:
Who is going to buy the homes?
After all, if you are interested in buying a home right now, you need to put a down payment of 30-35%, depending on your situation. If you’re lucky, you will find a local bank that will accept 20%. However, for the most part, banks are not lending.
So, if banks are not lending, due to lack of capital, how will all that inventory move?
In closing, I would not touch the banks here. Instead, I’d take advantage of any spike to sell them. In addition, if you’re short steel stocks, get out. Numbers out of [[X]] will likely buoy the sector for a few days. And, I concede, oil is broken here. [[DUG]] looks decent, up to $40.
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