Bazooka Man and the House of Pain

July 16, 2008
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Hank Paulson rolled in to Capital Hill all strapped on with dynamite and his plunge protection team bazooka to give Senators “the word”. That would be, “Give me all the power and money to run this Fannie and Freddie operation or else.” Oh sure some Senators were critical of all the “crisis management” and all the weekend emergency meetings, but Hank was ready with his “I told you to reform the rascals before” retort and “now look here, we have the Reichstag Fire.”

Between his Dr. Evil finger-like gestures and fiddling you could see he knew he had ‘em by the balls. Word afterwards was that there is some resistance especially among GOP phony “free market” types about all this. Not to worry though, I am sure Hank has a nice Nagasaki atomic bomb FDIC bank (banks?) seizure lined up for this Friday to get those Boyz in line. And get in line they must, as foreigners have to be about ready to ignite their own nuclear reaction.

Fitting within the emergency Reichstag fire measures, this brinksmanship also now has a Gestapo “law enforcement” tenor to it. The Bazooka Men and House of pain boyz have discovered the political benefits of punishing rumor mongers, naysayers, and bearish market manipulators. The Bazooka Men would certainly know all about spin and manipulation. Once Hank gets his new powers in hand he can team up with his Wall Street buddies and auction off to “sovereign wealth” foreigners all kinds of bargain basement assets to bring all those poor return Dollars home for the real loot. Then rake in the fees and commissions.

Meredith Whitney has put out a presentation on bank stocks with some takeaways. This charts shows the valuation of large bank stocks relative to futures on the Case Shiller index. CS expectations now call for a peak to trough in housing prices of 33%. I have no argument with traders on this as I now believe the markets have caught up with my views. To date the CS shows a 20% decline in national housing prices. I believe it is more than that now. In other words the reality is a bit worse than the current CS numbers, but the process is further along. I agree with Meredith’s valuations on these banks stocks. I also believe many if not most regional banks have already overshot these valuations levels.

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