Worth repeating.
Y’know, I continue to be gob-smacked by the outlandish hope and ignorance on Wall Street with respect to the banking sector.
All anyone has to do is read their 10K/10Q’s. Run down the balance sheets and ask “What the f*(&(*^ is THIS?!”
All the fancy SIV’s, conduits, structured products - the whole freakin’ lot of it - all now highly suspect, IMO. And the more complicated it is, the further they move it away from “real accounting” or a real valuation.
All of these issues are signs for me that there’s a lot more dirty laundry to be brought out into the fresh air for everyone to see.
Then we have the regional banks, who have over-lent their balance sheets into construction loans. Oh, yea, that’s going to be a well-performing class of debt going forward, with the housing market continuing to tank and diesel fuel going skywards. Riiiight.
The banks have done it to themselves and to us, the taxpayers of the US. Bernanke’s Fed is slowly learning more about how the banks are run and as they do, getting increasingly contentious in their meetings as to whether it is right for the Fed to bail these clowns out.
The more I look at the aftermath, the more I think they should have allowed Bear to go under. It would have forced a much faster “come-to-Jesus” confessional among these over-levered banks. Sure, the market would have gone down hard and fast - but we’d get this mess cleaned up faster.
As it is, with the twin demons of insolvent banks and high fuel prices — there is nowhere for the economy to go but down. It will be starved for capital and excess cash that was sitting around is being flung into fuel expenses.