Investors still in denial …

It is quite unbelievable … investors still are in denial about the facts …

They still live the dream, that after a bad 2008 … things HAVE TO become better …

Unfortunately … we are at the BEGINNING of the downfall … not the end …

EVERYTHING was built on LEVERAGE … and now … the leverage option cedes to exist

Look at all the Government guaranteed institutions … FNM, FRE, AIG a.o.

PENNY STOCKS … Citibank … Bank of America going down the same street …

AIG … trying to get MORE money … MORE backstops … AUTSCH

And now … they really fancy a BAD BANK … as IF we had not enough, better TOO MANY of them

Look at this chart … approved by the Govenment as it is from Goldman Sachs

Goldman Sachs Group estimates that troubled assets could exceed $5 trillion, if defined as assets that could show a loss rate close to, or above, 10%. To put that in context, $5 trillion is just over 40% of the $12.3 trillion in total assets of U.S. commercial banks.

Now … a simple calculation … for the BEST CASE!!!

Take a loss rate of ONLY!!! 10% on these assets … What does that mean???

Every bank with a leverage above 20 will be WIPED OUT!!!

You by chance know, what that means???

This means ALL OF THEM WILL BE WIPED OUT!!!

The most conservative banks still have a 20 times leverage!!!

So … don’t ever celebrate a BAD BANK … just look for the exit …

EVERY BOUNCE is a present YOU SHOULD VALUE!!!

Tags: BAD BANK, deleverage, outlook, stupidity

This entry was posted on Sonntag, Februar 1st, 2009 at 11:37 and is filed under FDAX. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.