Wednesday, April 21, 2010

Reality - Still Postponed Indefinitely

Wells Fargo reported its fantasy-land earnings today. Here's the money quote which is worth preserving for future reference:

"We believe quarterly provision expenses and quarterly total credit losses have peaked," Chief Credit and Risk Officer Mike Loughlin said in a press release.

Bond markets have rallied in the past year. Most of these Big Bank earnings from the likes of JPM, BAC, WFC, are from simply marking up the paper value of their fixed income - much of which is still very toxic. They aren't dumping any of these securities, so the risks of these long-term instruments have not been eliminated or even mitigated. Note the banks deceptively refer to these unrealized, and unsustainable gains as *trading profits* - as if they have a legitimate business operation, one that will consistently generate *profits*. Just wait and see. Once the bond market jitters return, all of a sudden their so-called traders will be wildly unprofitable, again.

Of course, that's not the extent of the financial legerdemain. ALL OF THESE BANKS have billions upon billions of loans held *off the books*. And guess what....those aren't exactly their *good loans*!

The banks are flat-out BANKRUPT. They misrepresent lie about profits and hide losses.

AND they are leveraged to the hilt! See prior post - Capitol Thievery - where Wells Fargo clearly admits they are levered 15 to 1 - meaning they only have $1 in the bank for every $15 of liabilities.

I don't know about y'all, but I'll take the OVER of that 15 multiple.

I bought more puts today. 2012 January 25-strikes for just under $2 apiece.

See also - Greek For Moronic Bankers.

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