Thursday, September 18, 2008

Goldman's "mystique" tarnished

It's not just shortselling that is crushing these Investment banks, it's their balance sheets.

And when the stock starts falling, they read the 10-Q's and then they ask themselves why do they own these stocks?

Why do you want to own something when you have $60 billion of assets that you don't know what they are worth?

And how about VAR? We know these banks have $150-$160 million for their daily "value at risk" inputs. But hasn't the volatility increased markedly? And if volatility has doubled, doesn't that mean my VAR has to change?

How is that accomplished?

By reducing leverage.

And that's why the "naked" shorting has been so effective. Most people don't look good naked!

Their's more "mystique" with their clothes on!

But with all the Central bank liquidity added, and the new shortselling rules, maybe now they can put on some clothes.

We don't need lipstick on a pig, we just need them to get out the tuxedo.

We're going to have some shotgun weddings, with the Fed officiating.

Morgan Stanley at the altar, but nobody knows who the bride will be.

And Goldman, will go it alone.

Maybe Paulson will be the best man!

No comments: