Tuesday, January 27, 2009

Buy the banks

Sorry bears, that's the story with the "bad bank" proposal. It's a recapitalization of the banking system, without dilution.

Anyone have an old huge boxy monitor that would sell for $49 that you paid $499 for? Imagine if you could sell a warehouse full of these monitors for $499. Would that help you out?

It's the same with these banks. You, the taxpayer, are buying these monitors from these banks, but instead of buying monitors, you are buying "assets" from the bank's warehouse that never was, even though they don't have value in the street. So you can bash the banks and their executives, and complain about their excesses, or you can buy the stocks and make some money.

Why should I use monitors for an analogy? Because I'm pretending I'm a banker, and just parsing word etymology to get a point across.

A monitor lizard, is known in latin as Varanus. And their won't be any VAR on the sh*t that the bank is buying.

They are holding these assets to maturity!

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