Say it ain't so! My hero and Citigroup Slayer extraordinaire, Meredith Whitney, actually turning ever so slightly less negative, dare we say tactically bullish on the banks. What has the world come to. Citigroup recommending shorting themselves as I penned in my last post, and the woman who pulled back the curtain on the toxic sham that has become Wall St goes positive, Zut Alors! She actually may have a legitimate point. As those corporations and individuals of sound judgement and financial temperance are being fleeced in a grand way to prop up Zombie institutions like C and BAC, it is hard to see how they might not get a temporary pop on less than apocalyptic earnings. Being able to borrow at effectively 0% interest form the taxpayer, and lend at more, it is not hard to make some short term money. The bigger picture I am convinced is a lot uglier.
Not to oversimplify things, but institutions and individuals of every stripe and color bankrupted themselves in an orgy of debt fueled speculation. That capital has effectively gone to money heaven, it is a zero sum game. All the fancy sounding programs from the Fed and Treasury only serve to temporarily prop up corpse like individuals and corporations, at the expense of the prudent and sober. I believe and I am not alone by any means, that Commercial Real estate is the next cataclysm that is already unfolding. Bostons iconic Hancock Tower recently sold at a distress auction for a full 50% hair cut to what it sold for only 3 years earlier. As unemployment continues to rampage, business cut back, and retail suffers and heads into bankruptcy, the prospects for over leveraged mall and office property owners, in this capital constrained environment, is not pretty. After an almost un abated 25% run from the bottom of 666 on the S&P 500, prudence if not a strong tilt to the down side is in order.
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