Fear of Clowns

"Faith may be defined briefly as an illogical belief in the occurrence of the improbable."
- H. L. Mencken

Saturday, September 27, 2008

Viva la Capitalism! 

There are many solvent banks looking forward to benefiting from the failure of stupid New York investment banks that played their cards wrong.

As I see it, having read more since my first post on the subject, the situation is not as much a crisis as a failure of judgment by formerly sane and sober financial institutions. Let the lending institutions that remained sane and sober benefit from the demise of the insane institutions.

That some banks have enjoyed a phenomenal 20-30% jump in stock prices in reaction to the alleged "Wall Street meltdown" says to be there is no meltdown, just a realization that some banks, but not all, busted themselves.

From my home town newspaper's article, linked above,

The biggest winner: TCF Financial Corp. Shares of the regional consumer bank jumped nearly 30 percent this week and are up 96 percent since their July low.

"TCF was heavily shorted, and because it had many home-equity loans it got killed in the selloff of bank stocks," said veteran regional bank analyst Ben Crabtree of Steifel Nicholaus. "TCF is not out of line with other banks I follow. I've got stocks up by 100 percent this month."

U.S. Bancorp is up 36 percent since July 1, and 20 percent so far this year. USB has minimal exposure to the subprime mortgage virus that has brought down so many money center banks and investment houses from New York to London.

"This is Wall Street vs. Main Street, and Main Street is winning," said Keith Tufte, a veteran equity analyst and portfolio manager who now runs Longview Capital Management in Eden Prairie.


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