TGIF

Let me get this straight. The greatest banking collapse in history is the secondary story on the CNBC news ticker. Washington Mutual depositors went to sleep last night feeling a little anxious about their savings, and this morning wake up to find all is well, and they are now doing business with JP Morgan. A seamless transition. Where was the Armageddon?

The $700 billion dollar giveaway program so sharply opposed by Main Street, and so widely embraced by Wall Street is on the ropes, thank goodness. Make no mistake, the banks have money, they just aren’t willing to lend, and that problem dictates a different solution, and there are other solutions. Those other solutions will be found sooner rather than later. After all the events of yesterday, the media is conspicuously not discussing Bill Gross’s (Pimco CEO) most recent statement on the bailout bill. Pimco buys more treasury paper than any other company in the world; therefore, he is the man to be listened to. He also benefited corporately and personally by the Fannie and Freddie takeover (several billion dollars), but that’s another story.

Beyond the $700 billion rescue (giveaway plan), Gross said the banking system, and the investment banking system in total, really requires about $500 billion more. Where that comes from, it’s still up in the air. Why isn’t anyone talking about that?

Today is an opportunity to take some shorts off the table. Specifically, financials. Because when the deal is done, probably over the weekend, a huge, and I mean huge relief rally could ensue. There will be time to re-load the shorts. Why? Because the economy, earnings, and the consumer will be back in the cross-hairs. This could be ugly.

Till next time,

Bill


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