Not So Fun

In my March 11th post on Phillip Purcell I questioned Mr Pandit's veracity.
I'm not the only one. This is from a Bloomberg news article.

Bank Profits From Accounting Rules Masking Looming Loan Losses
By Yalman Onaran
June 5 (Bloomberg) -- Big banks in the U.S. say they’re on the mend. The five largest were profitable in the first quarter, rebounding from record losses for the industry in the fourth quarter. Share prices have jumped, with the KBW Bank Index doubling since March 6.
Treasury Secretary Timothy Geithner, after “stress testing” 19 banks on their ability to withstand a worsening economy, declared in early May that Americans can be confident in the banks’ stability and resilience. Wells Fargo & Co. and Morgan Stanley were among banks raising $43 billion in new capital since then through share sales.
“With our capital and assets, stressed as they have been, we can go back to focusing all our attention on managing our business and restoring value,” Citigroup Inc. Chief Executive Officer Vikram Pandit said after Geithner’s examinations were completed.
The revival may be short-lived. Analysts who have examined the quarterly profits and government tests say that accounting rule changes and rosy assumptions are making the institutions look healthier than they are.
The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President Barack Obama’s efforts to pull the economy out of recession.
‘Bogus’ Profit
Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on the pig."

This is just part of a good article. It's linked above if you want more.

Also, it's part of my "sour grapes" rationale for losing money on my last 4 options trades. If the banks aren't lending the money what are they doing with it. I think they must be giving it to investment companies to run the market up to show some profits for the quarter. Once Mr Smith decides it's safe to go back into the market and recoup some losses, they'll be happy to sell to him at inflated prices.

Jimmy Rogers, commodity trader extrordinaire says for nearly the first time in his trading career, he's not short any stocks, because this newly printed "money" being pushed into the market could run the market up to 15 or 20 thousand on the Dow Jones Industrial Average. He's not sure, but he can't take the chance on shorting. So he's buying commodity futures, on the hunch the same inflationary pressures raising the Dow will affect commodities, but the demand for commodities won't dry up overnight the way the buyers in the stock market will when the time comes.

I'm not sure the market will rise over 10,500. I mean, have people completely forgotten about price earning multiples and balance sheets? But my put buying is temporarily suspended.