Monkey See, Monkey Do!
Several weeks ago,it appeared that the U.S. financial sector was taking on water. NCC Last Price: $6.03 Change: -2.30 (-27.61%) reported that it had a massive amount of write-downs, and BCS Last Price: $10.39 Change: -0.17 (-1.61%) was facing out-right bankruptcy. Since then, new banks have announced losses and future write-downs of what we can easily term as "non-performing assets." WB Last Price: $26.43 Change: -0.81 (-2.97%) placed itself over the barrel last week, and it appears that BAC Last Price: $37.61 Change: -0.95 (-2.46%) is in a similar state of affairs. In a dog-eat-dog world of finance, we might expect the law of Natural Selection to take over. After all, in the wild only the strong survive. The weak and stupid are consumed by those who are stronger and more intelligent. That would have been the case 75 years ago. Business was business. However in 2008, the Fed has made itself a lender of last resort, and has done almost everything possible to prop up financial markets that are otherwise in need of a good old-fashioned beating. If the Fed is there to back-up institutional bailouts, then it must be safe right? Not that I truly want to see anyone lose their job, or wide spread financial panic but, heck who would be there to bail one of us out if we ever fell upon hard times? Unfortunately, there will more than likely be a part two to this story. (1)
Our British cousins, who maintain the closest of relations with the United States, is also suffering from a bit of a credit crunch as well. Things have gotten so bad between banks that many of them are outright LYING about the rates on inter-bank loans known as LIBOR. (2) With the tremors of the U.S. meltdown fresh in the minds of London, the Bank of England announced today that it is extending up to $100 billion dollars in loans to British banks. It was once said that the British Pound was the envy of the world. Or that the British Pound was as "Good as Gold." I'm sure whoever said that would be rolling over in their grave today. In essence, the Bank of England said they will be the backers of loans, and sell bonds to off-set the institutional loans it will make. It sounds as though the printing presses in England will be working over-time as well...printing out British Pound notes, and deflating their currency as well.
Golden opportunities lie in shorting the British Pound at this juncture. Find the right vehicle to do so is now the key. I am open to suggestions.
Ron Paul
Ron Paul is still running for President of the United States. With the gutsy style of a Ross Perot, he has not folded in his campaign yet. Ron Paul (while not always right) at least engages Americans on some of the "real" issues at hand. I think it is amazing when a candidate who has no BIG BUSINESS types is able to speak his mind as opposed to pandering to the special interests. Hopefully, Ron Paul will be involved in this election process to the end. George Washington and the rest of our Founding Fathers would have wanted it that way! (3)
TRIBE TALK
Byrd pitched a gem of a game yesterday. The bullpen lost the game...I guess. But the offense needs to come alive to support the team when push comes to shove. I am looking for Casey Blake to come roaring out of his slump any day now. When C.C. gets out of his Funk, and the rest of the starters pitch like they have WATCH OUT!
1. http://www.moneymorning.com/2008/04/21/rising-tide-of-level-3-assets-a-disaster-waiting-to-happen/
2. http://www.moneymorning.com/2008/04/18/libor-sends-another-shaky-signal-to-the-global-financial-markets/
3. http://www.ronpaul2008.com/
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