I am reading about how the bond insurers are in discussions with banks to cancel $125 billion in bond insurance. There are not enough adjectives to describe the situation there but please don't worry everything is fine, the credit problems are contained. United furlowing 900 pilots. Goldman reducing banking staff by 10% but please don't worry, everything is fine, the economy is resilient.
I cannot stress how important the financial sector activity is to the overall market. What is going on in the financials demands your attention. I believe the problems there are not 'bottoming' and that 'things are getting better', but rather problems are getting worse. The alt-A pay option neg am mortgage problem is next with commercial real estate right next to it. You think banks will be lending in this environment? If so guess again.
That being said, how the financials go so goes the overall market and slowly but surely the short bus riding equity managers of the planet are coming to this realisation. As this process accelerates the results will be shocking. But again don't worry, Lieberman and Company are going to flush out the speculators from the energy markets, thereby fixing the 'energy bubble' making everything fine once again.
For those counting on the Saudi's increasing production to save the day, I can only say I wish it were true as they are no different than the U.S financials in their disclosures. It makes perfect sense that the same people who feel the financials are bottoming, the economy is resilient, the credit crisis is in it's late innings, are the same people who believe a country who will not let any independent agency audit it's petroleum reserves can increase production and save the day. Better to believe in the tooth fairy and Santa Clause as those 2 are much more plausible ideals.
Good speculating to you all.
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