Thursday, January 29, 2009

All hope abandon ye who enter here!

Or in Latin it's "Lasciate ogne speranza, voi ch'intrate"" which, for Dante was the sign at the entrance way of Hell and today it aptly described the financials!

I had to put it in Latin, because today, we heard that last night, John Thain was speaking in pig Latin, as he was attempting his resurrection. But first, to understand that, and the financials, you have to know a little about another story of hell.

In Luke 16:19-31, we have the story of the rich man, who was also dressed in purple and fine linen, who found himself in hell, and looking across the gulf, he saw the beggar Lazarus, who apparently was enjoying himself in Paradise. The rich man, actually had the gall to ask Abraham, if he could have Lazarus, come over from Paradise to Hell, and just give him a drop of water from his finger to cool his thirst. (Maybe the rich man was watching The Mentalist and he thought he could just cross over.)

Apparently, the rich man didn't recognize that hope had already abandoned him. And that, the beggar, was now in riches, and he wasn't.

Enter John Thain, and his "pig latin" spoken at dinner last night with BlackRock Chairman Larry Fink while eating at San Pietro. Here's what Big John had to say while ordering drinks:

"...under the circumstances with this tough economy, I think I'll have tap water..."

Are you kidding me? At least we don't need an interpreter to decipher what John Thain wants. John Thain thinks he can re-cultivate his image, by ordering tap water in a loud voice so the whole world will now know that he is tightening his belt! He thinks a cup of water will make up for the billions and billions and billions and of wealth eviscerated under his watch, and the billions and billions he paid his lieutenants that helped him eviscerate it!

Apparently John Thain hasn't recognized that hope has already abandoned him! He still thinks he is in paradise, and a cup of water will fix his image, just like the rich man thought a drop of water from Lazarus would cure his thirst!

In the above example there is a great gap or moat between hell and Paradise. It's the same with the financials. But the great gap exists in the discrepancies of the prices for their most toxic assets! And in The Divine Comedy, in order to get to paradise, you have to get through hell first, and we are stuck in Dante's eighth circle--that circle reserved for those that commit conscious fraud!

Which brings us back to the financials today, and why all hope had abandoned them.

Supposedly, the two best big banks are Wells Fargo and JP Morgan. This morning, we found out that JP Morgan engaged in conscious fraud in their dealing with Madoff.

How is that supposed to engender confidence in the banks when they engage in that type of behavior? Was JP Morgan miming Santander? Did anyone notice that? Yesterday they promised $1.8 billion to those investors (excluding the institutions) that invested with Madoff. It sounds good until you look at the terms. It was a preference piece, with a yield of 2%, which means it was an offer of 15 cents on the dollar. But not in banker speak!

Now enter Wells Fargo. They touted their financial strength yesterday, not telling investors that without the $25 billion from the TARP, that their Tier 1 capital would be below 6%! WFC isn't even covering their dividend, and their tangible common equity is only at 2.68%, and yet they say they don't need anymore TARP money! Wells didn't disclose it, because they said that their TCE doesn't reflect the goodwill of the Wachovia acquisition!

Three banks, all at the eighth circle of Dante's Inferno, but they were led by Bernanke and the FOMC statement yesterday, whereby he promised to communicate that they possibly might engage in quantitative easing! Bonds got whacked again today. Does anybody believe "ceiling fan" Bernanke?

Which is why the financials are like Dante's Inferno! But the eighth circle, is supposedly just an evil pocket, a Malebogle.

A pocket? It's a moat!

And it's awful hard to get across!

Just like in hell!


E. T. Hansen said...

brilliant piece, has more quality than any of the shitfaced printed press these days. Am signing you up to my regular blog roll. Keep us posted

Palmoni said...

Thanks--It was fun writing it!

Anonymous said...

Your "translation" of Abandon hope is actually in Italian not Latin. You really want to write is "Omnes relinquite spes, o vos intrantes"

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Anonymous said...

The latin version should read like this:
"Totem Spem Relinquite Hunc Locum Adeuntes."
Trust me.