The Great Experiment Called ‘American Capitalism’ is Dead

If you are wondering why the market is down so much, look no further than American International Group, Inc. [[AIG]] . American capitalism, best known for its entrepreneurial spirit and industrious work ethic is dead, thanks to assholes in florescent green jump suits, who underwrote cdo’s and other egregious investment vehicles. Hence, U.S. equities no longer deserve premium multiples. Instead, they are being priced for death, rightly so.

Karl Marx predicted this would happen to the most overzealous capitalists, where greed and lack of proper oversight can lead to anarchy and extreme socialism. In one year, wall street has morphed itself from high powered brokers, doing deals, into fucktarded asshats with a box full of their belongings—because they’re out of a job.

While it’s true, there will be signs of light and glimpses of hope, things will never be the same. The gilded era of decadence for asshole ibankers is over, while the age of “The Fly” has only just begun.

I understand the market looks extremely oversold here. After all, the vix is at historical levels. But, understand the gravity of the situation and come to grips with the fact that silly homos in florescent green jump suits are about to get stomped the fuck out, yet again.

Top pick: short Legg Mason, Inc. [[LM]]

NOTE: I was up 14.5% today.

UPDATE: Bank Stocks in the danger zone include:

Allied Irish Banks, plc. (ADR) [[AIB]] , Morgan Stanley [[MS]] , Goldman Sachs Group, Inc. [[GS]] , UBS AG (USA) [[UBS]] , Banco Macro SA (ADR) [[BMA]] , Nomura Holdings, Inc. (ADR) [[NMR]] , Sovereign Bancorp, Inc. [[SOV]] , Wachovia Corporation [[WB]] , Och-Ziff Capital Management Group LLC [[OZM]] , [[LM]], Interactive Brokers Group, Inc. [[IBKR]] , Affiliated Managers Group, Inc. [[AMG]] , AllianceBernstein Holding LP [[AB]] , American Express Company [[AXP]] , Pzena Investment Management, Inc. [[PZN]] , [[DSL]] and Washington Mutual, Inc. [[WM]] [youtube:http://www.youtube.com/watch?v=kqtAzRNhTTY 450 300]

UPDATE: Via former Fed Governor, Wayne Angel, who is also an idiot, “The Fed’s balance sheet is infinite.” Wonderful. In other words, these assholes are just printing money at will. Our leaders are complete imbeciles. Shocker to see gold up nearly $100, no?

Do these people ever stop suckering the retail investor into stocks? I mean, all these assholes do is highlight the silver lining, which would be fine if it was a fucking baseball or soccer game. But, this is real life, assholes.

The fact of the matter is, things are NOT okay. It is irresponsible for these idiots to incessantly tout stocks, while the market does nothing but go lower.

I am sure, with the cast of morons featured on CNBC, they have cost the average or not so average investor billions of dollars in capital losses. If they would only set aside their fucking agendas and explain the risks and dangers of investing into the worst economy since the Great Depression, maybe people wouldn’t want to throw turkey sandwiches at them, while smoking aged Cuban cigars—banking egregious amounts of coin short what they recommend to buy.

NOTE: I made a mistake selling [[DIG]] and [[IEO]] this morning. However, with the proceeds, I did execute some good trades in Freeport-McMoRan Copper & Gold Inc. [[FCX]] , [[SKF]] and [[SRS]] .

I bought 3,000 Freeport-McMoRan Copper & Gold Inc. [[FCX]] @ $65.22.

Disclaimer: If you buy FCX because of this post, all of America’s broker dealers will go out of business. And, you may lose money.

I have sirens and red flashing lights going on in my office today, like some sort of nuclear submarine battle station.

Listen up and good: credit default swaps are scaring the shit out of everyone. Whether it should happen or not, people really do think the market will crash. From General Electric Company [[GE]] to Goldman Sachs Group, Inc. [[GS]] to Morgan Stanley [[MS]] , the market is thinking about putting them out of business. Without question, this is the most interesting market I have ever traded in.

Anyway, I sold all of my [[DIG]] and [[IEO]] , exercising some overdue discipline. I know I had a fucking thesis, as to why I was right going long oil: but I changed my mind.

In my opinion, there is no longer a reason to keep hedges or any long positions for that matter, with exception to being long 200% inverse etf’s.

With much of the proceeds, I loaded up on [[SRS]] , as previously outlined.

So, at the present, my position sheet looks something like this:

[[SKF]]

[[SRS]]

[[REW]]

[[SSG]]

[[TWM]]

[[FXP]]

[[EEV]]

Short Fifth Third Bancorp [[FITB]]

Short Marshall & Ilsley Corporation Marshall & Ilsley Corporation [[Mi]]

Short Vulcan Materials Company [[VMC]]

Short Legg Mason, Inc. [[LM]]

Short Pzena Investment Management, Inc. [[PZN]]

Short PacWest Bancorp [[PACW]]

Short [[FED]]

Short East West Bancorp, Inc. [[EWBC]]

Short AXA (ADR) [[AXA]]

Short Janus Capital Group Inc. [[JNS]]

Short Goldman Sachs Group, Inc. [[GS]]

Short General Electric Company [[GE]]

long Western Refining, Inc. [[WNR]]

long National-Oilwell Varco, Inc. [[NOV]]

long Freeport-McMoRan Copper & Gold Inc. Freeport-McMoRan Copper & Gold Inc. [[FCX]]

long Clean Energy Fuels Corp. [[CLNE]]

long other bullshit names that are losing me money today.

All in all, I am up a staggering 10.5% as I write this.

Hence the phrase: “it was the best of times, it was the worst of times.” applies.

Flashback UPDATE: Ron Paul

I bought 10,000 [[SRS]] @ $86.82. And, I bought 1,000 [[SKF]] @ $131.25.

UPDATE: I bought another 10,000 SRS at $90.

Disclaimer: If you buy the above stocks because of this post, Doug Kass will actually make an accurate market call. And, you may lose money.

And I am not talking about the garden variety type. How can so many people get the market wrong, so consistently?

Answer: You’re all idiots.

You people should be shining my shoes for what I bring to table. Lo and behold, the market is coming around to my way of thinking—oil up, banks down. Fucking shocker.

Hey, I got an idea. How about some of you charting analysts go chart the credit default swaps on Morgan Stanley [[MS]] and Goldman Sachs Group, Inc. [[GS]] ? Tell me what they say and then give me your market diagnosis. While you’re at it, go check the cds’s for General Electric Company [[GE]] . I wonder how the market would do on a GE bankruptcy? Shall we try to find out?

Both Goldman and Morgan are in trouble here. I know the assholes from SEC are reinstating that ridiculous short sale restriction rule tomorrow; however, that will not solve the underlying problem, which is confidence. There isn’t any.

From what I understand, following the Lehman Brothers Holdings Inc. [[LEH]] bankruptcy, auditors were shocked at what they saw on the Lehman books, with regards to transparency. Actually, there wasn’t any. CDO’s were marked far too high and their commercial backed paper was priced for dot com boom times. Can you say “jail”?

So, where should a lowly investor, such as yourself, put his money now?

For starters, get long some commodity stocks, as the Federal Reserve and Treasury actively deplete and loot the country for all of its IOU’s. There is a long term price to pay for all of this spending and it doesn’t equate to a stronger dollar or fun and gleeful times.

With my money, I am shorting more GS. It’s going to book value ($99). And, I am buying more [[DIG]] and Freeport-McMoRan Copper & Gold Inc. [[FCX]] . Just in case you were wondering, I am holding my WNR for higher prices (I had to say that).

Oh, I almost forgot: Bill Miller from Legg Mason, Inc. [[LM]] still sucks.

UPDATE: I changed my mind. I am selling all of my DIG and IEO, but leaving FCX. I will now lever myself for a downside move, without hedges.

UPDATE: As per Gov. Patterson aka degenerate blind guy. On all this fun talk of depression, let’s go buy some fucking stocks—boo-fucking-ya. Shall we start with some insolvent banks? How about a fresh look at the homies or retail names? They’re all the rage.

Off to do a few lines of baking soda with small pieces of ham.

Inside of two weeks, the U.S. Government has nationalized the country’s largest mortgage participant and insurance company. I don’t give two fucks and a gay fiddle what the market says, this is HORRENDOUS news.

Take this opportunity to undermine the financial integrity of America.

Down low UPDATE: Money market fund in trouble.

The announcement was made by the Primary Fund, which had almost $65 billion in assets at the end of May. It is part of the Reserve Fund, a group whose founder helped invent the money market fund more than 30 years ago.

The fund said that because the value of some investments had fallen, customers now have only 97 cents for each dollar they had invested.

Poof. Your bullshit host, “Fly,” is gone—off to have his staples removed.

-Merlin

As soon as the Fed announced that they were going to clown rape you [[UYG]] dip buying motherfuckers, my television went offline.  I find that to be fishy.

Anyway, the Fed is not here to help, gentleman. I suppose the republicans have finally remembered their laissez faire ways, and is making wall street pay for its sins.

Fair enough. I can live with that.

I just bought a small truckload of [[SKF]] , [[SRS]] and shorted 3,000 Legg Mason, Inc. [[LM]] .

NOTE: Stop dip buying, assholes. Credit default swaps are through the roof. Down we go.

For you banking lovers, you must go pray that American International Group, Inc. [[AIG]] gets a nice big government block of cheese. For bears, it’s time to sit back and watch events unfold, while lining up some good shorts.

Either way, this mess will not end nicely.

On the top of my list is AXA (ADR) [[AXA]] . They have so much exposure, in so many different asset classes; I cannot envision their shares going on any substantial rally.

Also, for some reason California based banks are running. I guess the theory is FIFO (first in, first out). But, that is assuming the housing market has bottomed in California and banks are flush with cash.

I’ll take the opposite side of that trade. I will look to sell short [[FED]] , PacWest Bancorp [[PACW]] , East West Bancorp, Inc. [[EWBC]] and Wells Fargo & Company [[WFC]] .

God willing, Vulcan Materials Company [[VMC]] will continue its dive lower. I think it is a good short, right here, or anything over $65.

And, if the market rallies, asset management stocks should go higher. My favorite death spiral shorts are Legg Mason, Inc. [[LM]] and Pzena Investment Management, Inc. [[PZN]] , with a little Janus Capital Group Inc. [[JNS]] for good measure.

Finally, expect to see the market rally today. Line up your shorts, while placing your hedging longs.

As you know, personally, I like the energy complex as a hedge against the banks. In that space, I like National-Oilwell Varco, Inc. [[NOV]] , Western Refining, Inc. [[WNR]] , [[DIG]] and ConocoPhillips [[COP]] .