Frankenstein And Rodan Meet Godzilla - Godzilla Wins By Knockout
The latest? Wachovia is sold to Citigroup with government assistance. Ironically, Wachovia's CEO seemed quite bullish a week or so ago. Sale price? I believe without looking I heard $1 per share. This was really a bankruptcy kept from officially becoming one in hopes of stemming further erosions of confidence. Did the short sellers force Wachovia management to jeopardize the company, its deposits and its shareholder's equity? Again, those who don't understand the markets or want to divert attention from their own mistakes use the ruse of blaming short sellers.
How often have we said banking stocks have not bottomed? Wachovia stock dropped 95% in two days. Opinion, in oversupply, is worthless. Rational analysis of the data, in undersupply, is undeniable. It's apparent most analyists, mutual fund managers and other prognosticators making these bottom calls flunked their high school math classes. Last week Washington Mutual. This week Wachovia. Next week...........? (I'm pandering to the populist movement.)
National City, a super regional bank, is also seeing its stock moving down sharply over the last week. Draw your own conclusions. While a bottom is not in for banks what we do see is many big banks becoming bigger. Large deposits and investments fleeing weak institutions for the perceived safety of banks that the Federal Reserve will not let fail. Or who appear to have skirted catastrophically foolish mistakes so far. The key is so far as the target is a moving one as we have watched the virus spread over time. JP Morgan Chase is one of the darlings that apparently is considered safe for now. Is JP Morgan's success purely the result of free markets? The fact that JPM's CEO sits on the Board of the New York Fed (responsible for Wall Street) plays no role? Those terms on Bear and WaMu were based on market forces? And, I suppose that GE was added to the list of financial institutions that are on the banned short sale list has nothing to do with its CEO also sitting on the New York Fed's board? GE has a large financial services division but are its shares the target of potentially illegal activity? Are the dreaded short sellers threatening the future of GE as they are with Wachovia?
Maybe New York Federal Reserve Governor Geithner should make a public statement about these issues. Just to make sure we don't have any perceived cronyism or conflicts of interest since recent policy appears to lend that perspective. Maybe it's coincidental but in today's world of no transparency in the banking industry and government-corporate cronyism, it's a valid concern.
Ultimately, we would have most assuredly seen the failure of Wall Street's darling, Goldman Sachs, as well. But, the government saved Goldman for the time being by allowing them to become a bank holding company and to gain access the the Federal Reserve beyond today's temporary facilities. (In other words, they are now officially on the bailout list as opposed to on the "let the market decide" list.) Can you imagine the government letting the Treasury Secretary's creation, the current incarnation of Goldman Sachs, collapse? How much confidence would the American people have in a bailout plan created by a Treasury Secretary that would have been linked to the destruction of Goldman Sachs, the crown jewel of American finance? Instead we have a bailout plan created by a Treasury Secretary that is linked to the crony capitalism of allowing Goldman to be saved by the government while market-based forces drive millions of Americans, other banks and other businesses into bankruptcy. I feel so much better now. Now that Goldman has a reprieve so does Hank Paulson. And, now he can impart more of his wisdom on the American people through the deployment of the government's grand bailout plan. It looks like the verbage of that plan is being watered down from what was presented in the media yesterday. If that is the case, we could see a defeat in the House. What do politicians fear more than anything else? Losing their job. Every member of the House is up for election this fall. If the bill's language is watered down, ie, made less palatable to the sovereign, and I don't really know if it is beyond initial comments as such, we could be back to the drawing board. Frankly, that would be a very good thing in my estimation.
In a month, the market has literally dismantled Wall Street. I guess now we call it Wall cul-de-sac.........with a twist - the cul-de-sac is one way and that means there is no way out. Remember the Wall Street mantra? The market knows best. Indeed it does. The market knows Modern Finance is based on mumbo jumbo and it is dismantling it. The market knows without regulation, the end state is disarray. The market knows the Wall Street bleating that led to society's adoption of a finance-based economy is pure nonsense. The market knows cronyism is over. Indeed, the market is all knowing. Just not in the way society, Wall Street and the current incarnation of free-marketeers has been brainwashed into believing through their fallacious conclusions.
Godzilla (the market) has met Frankenstein finance (Wall Street's latest incarnation) in a rematch of the original bout fought in 1929. Not only has Frankenstein's defeat been even more brutal than the first bout but Frankenstein's tag team partner Rodan (Global finance) has been defeated as well. It's time to call the fight a knockout as Godzilla has torn Frankenstein and Rodan limb from limb. Once again Godzilla is still the undisputed champion. History books will write the fight of the century turned out to be pure hype. And, many who paid much of their life savings for a ticket to the bout of the century will be decimated. What can we learn from this? Never believe the hype of promotors.
How often have we said banking stocks have not bottomed? Wachovia stock dropped 95% in two days. Opinion, in oversupply, is worthless. Rational analysis of the data, in undersupply, is undeniable. It's apparent most analyists, mutual fund managers and other prognosticators making these bottom calls flunked their high school math classes. Last week Washington Mutual. This week Wachovia. Next week...........? (I'm pandering to the populist movement.)
National City, a super regional bank, is also seeing its stock moving down sharply over the last week. Draw your own conclusions. While a bottom is not in for banks what we do see is many big banks becoming bigger. Large deposits and investments fleeing weak institutions for the perceived safety of banks that the Federal Reserve will not let fail. Or who appear to have skirted catastrophically foolish mistakes so far. The key is so far as the target is a moving one as we have watched the virus spread over time. JP Morgan Chase is one of the darlings that apparently is considered safe for now. Is JP Morgan's success purely the result of free markets? The fact that JPM's CEO sits on the Board of the New York Fed (responsible for Wall Street) plays no role? Those terms on Bear and WaMu were based on market forces? And, I suppose that GE was added to the list of financial institutions that are on the banned short sale list has nothing to do with its CEO also sitting on the New York Fed's board? GE has a large financial services division but are its shares the target of potentially illegal activity? Are the dreaded short sellers threatening the future of GE as they are with Wachovia?
Maybe New York Federal Reserve Governor Geithner should make a public statement about these issues. Just to make sure we don't have any perceived cronyism or conflicts of interest since recent policy appears to lend that perspective. Maybe it's coincidental but in today's world of no transparency in the banking industry and government-corporate cronyism, it's a valid concern.
Ultimately, we would have most assuredly seen the failure of Wall Street's darling, Goldman Sachs, as well. But, the government saved Goldman for the time being by allowing them to become a bank holding company and to gain access the the Federal Reserve beyond today's temporary facilities. (In other words, they are now officially on the bailout list as opposed to on the "let the market decide" list.) Can you imagine the government letting the Treasury Secretary's creation, the current incarnation of Goldman Sachs, collapse? How much confidence would the American people have in a bailout plan created by a Treasury Secretary that would have been linked to the destruction of Goldman Sachs, the crown jewel of American finance? Instead we have a bailout plan created by a Treasury Secretary that is linked to the crony capitalism of allowing Goldman to be saved by the government while market-based forces drive millions of Americans, other banks and other businesses into bankruptcy. I feel so much better now. Now that Goldman has a reprieve so does Hank Paulson. And, now he can impart more of his wisdom on the American people through the deployment of the government's grand bailout plan. It looks like the verbage of that plan is being watered down from what was presented in the media yesterday. If that is the case, we could see a defeat in the House. What do politicians fear more than anything else? Losing their job. Every member of the House is up for election this fall. If the bill's language is watered down, ie, made less palatable to the sovereign, and I don't really know if it is beyond initial comments as such, we could be back to the drawing board. Frankly, that would be a very good thing in my estimation.
In a month, the market has literally dismantled Wall Street. I guess now we call it Wall cul-de-sac.........with a twist - the cul-de-sac is one way and that means there is no way out. Remember the Wall Street mantra? The market knows best. Indeed it does. The market knows Modern Finance is based on mumbo jumbo and it is dismantling it. The market knows without regulation, the end state is disarray. The market knows the Wall Street bleating that led to society's adoption of a finance-based economy is pure nonsense. The market knows cronyism is over. Indeed, the market is all knowing. Just not in the way society, Wall Street and the current incarnation of free-marketeers has been brainwashed into believing through their fallacious conclusions.
Godzilla (the market) has met Frankenstein finance (Wall Street's latest incarnation) in a rematch of the original bout fought in 1929. Not only has Frankenstein's defeat been even more brutal than the first bout but Frankenstein's tag team partner Rodan (Global finance) has been defeated as well. It's time to call the fight a knockout as Godzilla has torn Frankenstein and Rodan limb from limb. Once again Godzilla is still the undisputed champion. History books will write the fight of the century turned out to be pure hype. And, many who paid much of their life savings for a ticket to the bout of the century will be decimated. What can we learn from this? Never believe the hype of promotors.
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