Ed Huntress wrote:
"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"Wes" wrote in message
...
"Ed Huntress" wrote:



Our financial system is just like that right now Ed.
What I haven't had anyone explain in terms of the underlying
fundamentals is
why Citi, AIG, BofA and all of our other publicly traded banks and
financial
institutions aren't trading where they ought to be - at ZERO.

Because investors are confident they'll be bailed out.

That was true as recently as last August but not today.
Investors, and the public, can see that the programs in place are expiring
and the government supports withdrawn.

That's part of
what's keeping interest rates low for large-corporation bonds and
loans. Moral hazard at work, helping to stimulate investment.

What is keeping interest rater low is the tremendous pool of liquidity
pumped into the system that's otherwise idle.
IOW, supply and demand.



Even at the paltry sum of $3.50 per share, Citi is overvalued. They
aren't worth a thing.
AIG ought to be paying anyone stupid enough to want their common
equity and
the list just goes on and on.
Pretty funny. Go ahead, point and laugh.
That situation, not sovereign debt debacles, is about to end. It had
to be so and it will.
Gravity and Mother Earth are about to intrude and no amount of arm
flapping
will prevent it.
S.P.L.A.T.
The first gasp came in the form of a preemptively defensive $9
million dollar bonus payment.

I suspect that Treasury and the Fed are trying to accomplish a gradual
unwinding and liquidation, without killing the host. The trick is to
allow things to collapse in smaller steps. That's what the bailouts
are about.

Chinese water torture is the actual result, however.
What's happened is the creation of a conviction that there is no real
bottom.
The steps have been to small. Investors are becoming convinced that one step
forward, followed by two back, has become a permanent feature of economic
and financial life.

Whether it will work is an open question. If it doesn't,
we'll be right back where we were in late 2008, which would have
caused a complete collapse of the worldwide credit system if they
hadn't been bailed out.

We'll never return to late 2008 Ed.
What is becoming increasingly obvious at large, and what I've always
believed, is that nothing was actually "saved".
The collapse had occurred. What didn't happen, and what I'd expected, was a
reckoning with that reality.
I'd thought that the purpose of this delaying tactic was to allow a
restructuring of the mechanisms to deal with that collapse in an orderly
manner. Clearly, on the evidence, I was mistaken.

The tactical retreat made isn't being followed up with either a regrouping
or counter attack.

--
John R. Carroll