Bear Mountain Bull

“There is a time and a place where CASH is NOT TRASH”.

This is that time, and this is that place.

A very good piece from Frank Barbera tonight on managing your money in tough markets:

So often in the past, we hear investment advisors speak of “investing for the long term” and that over time things always come back. That may yet be true, but that advice does not address the human aspect of investing, which is the frailty of human nature. As a hedge fund manager myself, I have experienced my portion of tough times when managing investment portfolios. It is the kind of pressure that mounts –- sometimes by the hour, steadily wearing on the nerves — slowly and relentlessly eating away at you from within. The pressure can go on day-after-day, week-after-week. Anyone who ever said ‘investing’ was easy simply does not know what they are talking about. It is ‘war’ without bullets, but a kind of mental war, nevertheless.

For investment professionals, we are trained at managing risk, and in making the kind of tough decisions which facilitate more rapid portfolio recovery. In any war, there are many battles, and in many battles, the home team can be tactically outflanked. In any battle, a good commander needs to know precisely when to fall back, and there is always a time to fall back. Yet for the average investor, he is indoctrinated into a more passive approach – ‘forget about what is happening now, and look forward to a better day down the line’ -– he is told. Yet, if John Q Public sees his portfolio sinking day-after-day, week-after-week, and perhaps month-after-month, we have to ask out loud, “Is he really going to have the intestinal fortitude to stick with a dollar cost averaging strategy and keep “pouring in” what must soon look like more ‘good money after bad’? — How long will it be before his resolve is worn down, before his psychology is crushed by the weight of crumbling markets?”

In my view, that is a question that most investors really need to assess, and this is one of those last good moments to make the all important ‘gut check.” Does what is happening now really seem to justify you keeping your hard earned capital actively involved in these collapsing markets? Of course, ‘age’ can be a factor, and perhaps for those in their 20’s the time horizon is not an issue. However, for most of the rest of us, one has to stop and ponder the imponderables. Ask what happens if the recession causes YOU to lose your job at an inopportune moment? What if this is the start of a second Great Depression? Then what? The answer for most is that if a job is lost, then all of a sudden that pool of investment capital which was being ‘dollar cost averaged’ and held aside ‘for the long term’ — well, that capital is immediately liquidated and becomes the new day-to-day living capital. At that point, losses are realized, a bad taste for investing is cast, and who knows how long it will be before that investor returns to the capital markets. Risk control and a Stop Loss mentality would have avoided this outcome.

The myth that is never debunked is that in each economic cycle there is a time and a place for investment managers to hold onto CASH. There is a time and a place where CASH is NOT TRASH, and where investment managers should be paid to hold onto cash and preserve capital. In fact, I would argue in the most passionate possible terms, that it is at times like that, where investment managers truly establish their value. Capital preserved in a crash is capital available to invest when real bargains are on the table when the long nightmare finally comes to an end.

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In summary, we digress to this subject to address the concerns of those who are confused and wondering, what should I do? To be clear, situations like this demand -– they (pounding the table) DEMAND, — that investors manage their risk! Preservation of capital is key, and with the temperature in capital markets now at a boiling point, those investors who proclaim they are dyed in the wool “long term investor types” had better be sure because these markets are very likely to keep on testing their mettle for some time to come.

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Against this backdrop we would reiterate that for the majority of most investors, the operative rule of the moment should be to avoid this declining vortex, this hotly burning ‘ring of fire.’ Lighten up, and raise cash. Use rallies as opportunities to sell into strength. The state of the economy is NOT secure, and as a result, this is the only recipe for self-preservation in the kind of powerful bear market that now prevails.

There’s more. Go read the whole thing.

The bailout nation just grows and grows, and there’s no end in sight – except there’s no one there to bail out the poor taxpayer, who will end up paying for all of this in one way or another:

As the U.S. government struggles to agree on a sweeping bailout plan that would send a lifeline to Wall Street, captains of other foundering industries are hoping their own distress signals will trigger a wider range of rescue efforts.

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If the deal is eventually passed, the fix will be aimed at cleaning up the mess on Wall Street’s books, leaving casualties from other troubled corners of U.S. industry to pound the table for a piece of the action. And that’s exactly what they’ve been doing.

Automakers are about to get a huge loan on the cheap and they have a request in for more. Even home builders, the corporate beneficiaries of the easy-money era, feel they deserve a helping hand. Can the nation’s hard-luck airlines be far behind?

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Many in the investment community are worried about the nation’s commitment to capitalist principles and are expressing deep misgivings about the strategy that’s suddenly holding sway in Washington.

“The government doesn’t seem to have a plan as much as they have a plan to have a plan,” said Bob Brusca, chief economist at FAO Economics. “Is it the end of capitalism? It seems to say it’s a loss of belief in the things we claimed to have believed in. If this were Star Trek, Spock would never do this. It’s just not logical.”

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Even if only a fraction of Corporate America’s requests do get accommodated, the level of federal support is already shaping up to represent one of the biggest injections of public capital into the private sector since Franklin Roosevelt’s New Deal policies of the 1930s.

Some critics bristle at the notion that throwing money at the problem is the only way to unclog stoppages in the financial industry.

“I cannot identify a single good reason to do the bailout,” Dean Baker, economist and co-director of the Washington-based Center for Economic and Policy Research. “Talk that taxpayers would make money is a fairy tale.”

The Nasdaq-100 had a big day – but it does nothing to improve the look of this chart.

Chart courtesy of StockCharts.com

What goes down must come up – what goes up must come down. Those were the rules for today.

Pretty much a complete flip from yesterday that allowed the indices to get back some of yesterday’s losses, but not a lot more than that.

Treasuries reversed, with prices falling and yields moving up:
6-month: 1.57%    2-yr: 1.97%    5-yr: 2.98%    10-yr: 3.83%    30-yr: 4.31%.

Internals swung back hard over to the positive side, but volume backed down from yesterday’s levels. Advance/declines were 4 to 1 on the NYSE and 12 to 7 on the Nasdaq, with up/down volume 10 to 1 on the NYSE and 4 to 1 on the Nasdaq. New highs remain very scarce, and new lows were still pretty high for such a ‘big’ day – highs/lows were 3/339 on the NYSE and 12/233 on the Nasdaq.

Many of the same groups that led the way down yesterday led the way up today: banks (+15.7%), brokers (+11.3%), REITs (+6.8%), steels (+7.3%), natural gas (+6.4%), metals (+5.8%), computer hardware (+5.7%), oils (+5.2%) and internets (+5.0%). Only the gold and silver stocks (-1.3%) showed up red.

Energy prices, like stocks, bounced back up a bit. Crude oil gained 4 bucks – normally a big move, but small in comparison to yesterday’s 10 dollar dive – to $100.64/barrel, gasoline rose 9 cents to $2.48/gallon, and natural gas recovered to $7.45/mmBTU. The dollar index got another big bounce, up to 79.38. Gold slid all the way back to $864/ounce, and silver dove to $11.91/ounce.

BMB Note:   I’m not sure what the reason for today’s move back up was – more bailout talk, end of month/quarter, short covering after yesterday’s big dive by those who were still short – it doesn’t really matter. It didn’t do much to change the big picture – or even the little picture at this point – though it probably took some of the sting out of yesterday’s mini-crash.

Sure, the numbers looked big – but they’d look a lot better if they hadn’t come just a day after yesterday’s debacle, wouldn’t they? And we have to continually remind ourselves that the biggest up days take place in these bear markets. It’s just the first day up off of yesterday’s low, coming on much lighter volume, and though the indices managed to get half (or more) of that big drop, it doesn’t do anything to change even the short-term trend. The Dow is still down almost than 300 points in two days, the Nasdaq down 100 points. So take it easy. We’ll see, in time, if this market is eventually able to turn things around. It’s got a long way to go.

As you may have noticed, things remain extremely choppy and unpredictable, and we’ve still got nothing but bailout talk dominating the news. Maybe things will settle down a bit after this whole mess gets figured out, but for now, I prefer to just let things play out without dragging me along and slamming me up against the siderails.

Deron Wagner comments on the short selling ban:

As stocks were getting killed yesterday, I couldn’t help but chuckle at the recent restrictions on short selling. Sold to the general public as a way to protect them from those “evil short sellers” who profit at the peril of others, the short selling ban obviously did nothing to save the market yesterday. Think the losses might have been greater if not for the short selling ban? I think the opposite, as less shorts in the market means less nervous bears who will take profits and cover their positions, thereby helping to spark a rally. It also means lower odds for an eventual “short squeeze,” a high-momentum upward thrust driven by short sellers who are forced to simultaneously close their positions. “Short squeezes” often help weak markets to form important bottoms. As I mentioned last week, messing with the natural ebb and flow of our free market system of supply and demand is not only useless, but quite dangerous.

A bit of a bounceback in stocks after yesterday’s bloodbath, and maybe some correction of the bizarre after-the-bell action that Gary K. mentioned this morning. The indices are higher by 2-4 percent, with A/D lines positive as well – but the Nasdaq is showing an advance-decline percentage of only +9. Not real impressive. Volume is also light.

Most of the groups are green, led by the financials, energies and metals. Treasuries are lower, yields higher. Energy prices are higher, the dollar index is higher as the Euro slides against the dollar, gold and silver are lower.

That’s the way Gary Kaltbaum sees it:

Happy New Year. I am writing this Monday night to be put out Tuesday morning.

I have one question… one simple question. Knowing the scare tactics they have used over the past week and knowing those scare tactics put the market on edge, why did Congress actually go to a vote knowing there was not a firm majority? Just what did they expect after the “no” vote? Are these people insane? They set the market up for failure.

I do believe a deal gets done this week… no matter what… so I was surprised we were smoked so much but when you have fear combined with redemptions, you get what we got.

The Dow was only down about 580 on Monday at 4 pm with the Nasdaq down only about 160. One minute later, the market was much lower. I think there WAS A BAD FUTURES TRADE at the close… and expect futures will be up big tomorrow to fix this discrepancy. Be careful of those who say the market is up big in the morning if I am correct. For instance, ESRX was over $77 at 4 pm but is showing a close of $66…

This continues to be a classic bear market. Huh! Yup. It is classic in price. It is classic in its action. It is classic in the reaction by Wall Street… only this time, the characters have changed. In the last bear market, it was technology and Internet. In this bear market, it is financials. In the last bear market, it was Enron and Worldcom. In this Bear market, it is Bear Stearns and Lehman. Lastly, the panic we are now seeing is the most classic part of the bear market… thus my recent warning to you that we had not seen that part of the bear market when EVERYONE recognizes it… and everyone wants out. Panicky action is classic in a bear market. All news, all front covers… and all talk is now about the markets and the economy.

Do not be fooled by the miscreants that the end of the world is at hand. This deleveraging had to happen at some point. We will look back on this in a few years and recognize something had to be done… and since the regulators and ratings services were either in the back pocket or asleep at the wheel, the market did the job for all of us.

Our economy is always more resilient than it gets credit for. At the end of the day, this country has always survived and snapped back from challenges… including wars, depressions, recessions and 9-11. I am highly confident this too will pass… but it will take time.

I am happy and proud I saw this coming and have missed this whole bear market. I am now sitting back waiting for the characteristics of a new bull to show up. The best news is that investors are now in an important phase that will ultimately lead to a market turn… and that is exactly what you are seeing. It is anyone’s guess as to where this ends or how far it goes. I will remain defensive to the maximum until I see real signs of accumulation… but it hasn’t happened yet.

Says Jim Rogers on Bloomberg – comparing the current situation to similar times in the past. He says South Korea and Russia let companies fail and their economies bounced back, whereas Japan did not, and suffered a ‘lost decade’.

Some thoughts today on deflation and government intervention, from Bennett Sedacca:

Where is deflation rearing its ugly head? Well, pretty much everywhere. Every place I turn, whether it be money supply, real estate prices, equity prices, debt prices, loan creation, commodity prices (except gold), consumer confidence, I see deflation.

When you think about it, it is not terribly difficult to understand how we got into this mess. Too much debt, notably low quality debt was created at every level; Government, consumer, corporate, etc. Then, this debt was levered up at the suggestion of the SEC and then carved up into esoteric investments that were scattered about the globe in an insidious manner.

We are simply now living through the painful unwind of debt creation, that is to say we are living through debt destruction, which is just a nasty version of deflation.

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I, for one, am tired of the constant intrusion into what used to be a free market. I am tired of having Sunday’s become a work day and wait to see who will be merged into whom. Making it illegal for me to express my views about a bank or insurance company via a short sale is Socialistic and will simply make the pain last longer. Handing $700 billion of our money over to a bunch of fiscally irresponsible financial institutions is sickening. I have spent the better part of the last 10 years trying to understand the most complicated financial mess ever created and what happens? I end up the proud owner of all of the garbage I stayed clear of, namely Fannie/Freddie/AIG and $700 billion of nuclear waste. And then I get to watch the long list of executives at these institutions rewards themselves with tens of millions of dollars. What a country!

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…what is needed is the Government get out of the way and the market be a market. The interventions/intrusions that have become so commonplace and sickening need to end. Those of us that manage hedged portfolios need to be allowed to hedge ourselves. It is a stabilizer, not a bad thing.

Note how Wachovia, Nat City and others plunge even though short selling is banned. This shows the market is differentiating between the good, bad and ugly. Let the Darwinism back into the markets, let companies fail, let the system work it out. Will this lead us into a very deep Recession, yes of course it can. But we can see that no matter how many intrusions we have all been forced to live with, the markets march relentlessly lower. I understand that the Authorities are simply trying to slow down the unwinding process and let there be just a handful of good banks left at the end, this will likely take place anyway as poorly run companies fail. My sense is that the more they intervene/intrude, the greater chance for a Depression, and to be brutally honest, I would rather not see that happen to what used to be a great country. It can be great again if they just let it alone.

To tell you just how much they have intruded, let me give you a couple of real-life examples of what has happened as a result of the short selling ban. A friend of mine, that happens to be an exceptionally talented long/short manager called me while I was having dinner at the Ryder Cup and said ‘I had to shut down my business today, how on Earth I can run a long/short book when I can’t short things’? Another fellow said ‘do I change my convertible arbitrage fund documents to say that I can no longer run the fund as designed’? When I asked an options trader if I could do a particular options trade (an put option strike roll, where you sell one put option you own and simultaneously buy another put with a different strike price), he advised me to call my lawyer as no one understands the rules well enough yet.

Then, something completely surreal showed up on my Bloomberg screen yesterday, an index created by Bloomberg that tracks the performance of the ‘do not short list’. On this list are companies like Zale’s (ZLC), CVS Drugstores (CVS), Sears (SHLD) and 13 other non-financial companies, with a total of 964 companies now being in the list. What was originally supposed to be a list of important financial institutions that needed protection turned into a muddled collection of companies with good lobbyists. I thought it was a joke, but alas, it is the real deal, and makes me ill that it even exists. It is yet another failed intervention that will just squeeze a few weak shorts out of the market only to make it worse later on.

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It seems like a foregone conclusion that deflationary pressures are now squarely upon us. Prices are falling in asset classes across the board and the economy is beginning to contract as shown in the list below:
 

• Stock prices around the globe are falling. 
•  Credit spreads are blowing out around the globe (lower prices).
• Commodity prices are falling.
• The economy is contracting.
• Unemployment is surging and is likely to continue to surge.
• The Federal Reserve’s balance sheet is impaired.
• Real estate prices continue to fall.
• Business spending is declining.
• Commercial paper outstanding is dropping.
• Money funds are ‘breaking the buck’.
• Treasury bill rates are near 0.
• The TED spread (LIBOR – T Bill rates) is at sickening levels.
• Counter party risk has never been higher.

Will we see hyper-inflation after deflation, as is the norm? I have not yet made my decision on this subject as we are not alone in this mess. When countries have isolated bouts of deflation, they usually have to inflate their way out of it. Perhaps we will, perhaps we will not. Or perhaps there will be global hyper-inflation.

At any rate, risks remain high, perhaps the highest in my career. Can the market bounce on some bailout news? Of course it can. But we will continue to use all rallies as selling opportunities. We remain void of credit risk (although Goldman Sachs debt in the +10% area intrigues me) and void of equities from the long side. We continue to look for a rough 2009 and will likely get short again should the Socialistic short selling ban be removed.

We’ve pointed out Mike Shedlock’s efforts in rallying his readers to speak out against the bailout bill. Tonite he gets recognition in the WSJ online:

The proposal’s defeat was also cheered on by a number of blogs that in recent days have posted links to lawmakers’ telephone and fax numbers and urged citizens to oppose the plan. They included stopthehousingbailout.com, a Web site organized by a 37-year-old Los Angeles attorney named Morgan Ward Doran, and globaleconomicanalysis.blogspot.com, run by Mike Shedlock, an investment adviser at SitkaPacific Capital Management. Mr. Shedlock said in an interview Monday that his site had received 1.7 million page hits this month, which he said was half a million more than normal.

On his Web site, Mr. Shedlock has derided the proposed rescue as “a rush to judgment” that would benefit “high-flying financiers who chased big profits through reckless investments,” and as “a complete waste of $700 billion.”

“A number of people emailed me to say this was the first time that they’ve written, faxed or phoned their member of Congress,” said Mr. Shedlock, a 55-year-old resident of Prairie Grove, Ill. “Were going to phone and fax every member of Congress who voted against this to thank them. … Everyone who voted to pass this bill, we’re going to actively organize to oust them.”

…you don’t succeed, try, try again.

The Russell has had a very rough six days.

The other major indices smashed through the ‘bottom’ put in a couple of weeks ago.

Big-cap techs got roughed up pretty good, hurting the Nasdaq averages worst of all:

Charts courtesy of StockCharts.com

Wow. That was just one big surprise, from start to finish. And a rather nasty surprise, if you were long this troubled market.

Treasuries rallied hard, and yields dove:
6-month: 1.25%    2-yr: 1.73%    5-yr: 2.74%    10-yr: 3.62%    30-yr: 4.16%.

Internals were positively gross, with volume much higher than we were getting all of last week. I’m having trouble getting consistent numbers on the internals, so these are best guesses: advance/declines were 1 to 19 on the NYSE and 1 to 7 on the Nasdaq, with up/down volume 1 to 19 on the NYSE and even worse on the Nasdaq. I’ve got new highs/lows at 3/890 on the NYSE and 6/491 on the Nasdaq.

All red in the groups, and blood red at that: banks (-17.0%), steels (-16.8%), metals (-14.7%), brokers (-13.1%), natural gas (-11.8%), oil services (-11.7%), oil stocks (-11.0%) and disk drives (-10.6%) – that’s just the ‘worse than ten percent’ group. Yikes.

Energy prices, like just about everything else, took a tumble. Crude oil fell more than 10 bucks to $96.37/barrel, gasoline dove to $2.39/gallon, and natural gas dropped to $7.42/mmBTU. The dollar index moved higher, as other currencies also struggle. Gold rallied up to $905/ounce, but silver fell to $13.07/ounce.

BMB Note:   Well, we certainly weren’t expecting that. But that’s been the problem with this market. You just don’t know what to expect. If you had asked me last Friday, I would have thought that we could just as easily have been up 400 points today. Then again, I wouldn’t have believed you if you had told me the House vote on the bailout was going to fail either…

And that’s why we haven’t been trying to play this market. It’s been very difficult to play, even on the short side – assuming you can find stocks that you’re still allowed to short.

I’m not sure what you can say about a day like today. Hope you’ve kept your hard hat on. Markets are under tremendous stress, there’s been an awful lot of debris falling down around us, and it’s pretty easy to get hurt no matter where you stand. Things are getting pretty oversold again, but as we’ve seen before, oversold can become even more oversold – and sharp rallies can spring up out of nowhere.

The House vote failed. Unbelievable.

Update:   The vote hasn’t been closed yet – they can still twist arms before they give up.

They got one arm twisted back so far – YEA 206, NAY 227, Not voted 1.
Another one: 207, 226. But they’ve got 94 Democrats voting against – they could probably still pull it out.

John Harwood on CNBC just said he got a message from the senior Democrat leadership that said there was “no chance of passing this bill.”

Wow.

Mr. Practical apologizes to the taxpayers of the future:

Dear Taxpayer,

As the US government is in its final hours, or days, or weeks of deciding what it will pass as a bailout plan(s), I wanted to send this special message to you.

First, I’m not talking to Americans over the age of 20. When Congress bends its proverbial knee to taxpayers, it does so strategically. What allows it to bamboozle most citizens into fiscal irresponsibility is that current voters are either consciously or unconsciously in on the game. All Congress really has to do is keep fooling future voters, the very young and innocent, for that’s “our” real prey.

Congress is not going to tax current taxpayers for the bill on this or any other bailout. Both candidates are promising tax cuts already. So who is really going to pay for all this? With the US public debt around $11 trillion — and with unfunded future obligations an additional $50 trillion — Congress certainly doesn’t have the “cash” to pay for anything.

Not to worry – they’re going to get the “money” where they usually get it, and in the same way that caused this crisis: They’re going to borrow it. They’re going to borrow it mostly from Asian central banks: Even if they don’t want to lend it, they’ll be forced to through a massive devaluation. But borrow it we will – and no one of current age really cares, because we aren’t the ones who’ll have to pay it back.

So it’s to you, future taxpayer, that I really write this letter, and give the following advice: Learn as fast as you can about economics and about the world and its politics…About what and who is taking away your future standard of living.

When Congress votes to “use taxpayer money” to bail anyone out, it isn’t “our money,” but “your money”; our generation is borrowing your future from you. You will pay for all of this either through much higher taxes or a much lower dollar, 2 sides of the same coin.

Government will use your money for completely unproductive things — like supporting the stock prices of banks — but not for productive things, like researching energy to any serious degree. It always turns out that way.

Some lessons won’t be easy to learn. For example, slipped into the bailout bill is something that is gibberish to most, but probably one of the most important things to happen to the murky world of central bank finance: The Fed now has been given the ability to pay for deposits.

Innocuous as that sounds to most, it is anything but: It now allows the Fed to expand its balance sheet to infinity. I’ll let you study why that is, but suffice it to say, the Fed now has in its power the ability to totally debase the US dollar. That’s very important to you, because you’re going to be earning future dollars.

Unfortunately, that’s all the advice I have for you – other than don’t listen to older people.

Also: I’m sorry.

Sincerely,
Mr. Practical.

No need for you to apologize sir – it’s not your fault.

Mish quotes Sheila Bair, head of the FDIC:

“On the whole, the commercial banking system in the United States remains well capitalized. This morning’s decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury,” Bair said. “This action was necessary to maintain confidence in the banking industry given current financial market conditions.”

That’s great news Sheila. Given that the banking system is well capitalized, it should not need an infusion of $700 billion of taxpayer money.

Sounds right to me.

Umm, let’s see – red, red, and more red. The indices are down between 2 and 5 percent, with the Naz-100 really getting clobbered at the moment. Leading the groups down are the steels and metals, banks, natgas, oil services, oils and disk drives.

The Fed is sending even larger helicopters all around the globe to conduct even more money drops – a measly $630 billion.

Treasuries are higher, yields lower. Energy prices are lower. The dollar index is slipping down off morning highs – a boost from more weakening in the Euro as banks over there suffer as well. Gold is higher, but silver is lower.

Citigroup takes over Wachovia’s banking operations. The FDIC insists that the bank didn’t fail. Citi will take some of the bad loans (and probably turn the promptly over to the govt. when the bailout bill is passed), and the FDIC will get stuck with the rest.

How can the FDIC afford this? And where is Citi getting the money to do this deal?

WB stock looks to open below a buck…

Too bad we’re not an infomercial here – this is more ‘real’ than that.

We can add a German bank to the UK and Belgian banks that we mentioned yesterday.

With the bailout legislation, or so they say. The WSJ has the story, and a link to the draft PDF file.

Some of the elements of “the plan”, according to the AP:

Update:   Oh sure, as soon as I get this post out, I find that Calculated Risk has the summary from Pelosi’s office. And you gotta like the cartoon Barry has at the end of his post.

Under the rescue plan, the government would pump as much as $700 billion into beleaguered financial firms that are starving for cash, taking over huge amounts of devalued assets from the companies in the hopes of unlocking frozen credit.

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A breakthrough came when Democrats agreed to incorporate a GOP demand — letting the government insure some bad home loans rather than buy them — designed to limit the amount of federal money used in the rescue.

Another important bargain, vital to attracting support from centrist Democrats and Republicans who are fiscal hawks, would require that the government, after five years, submit a plan to Congress on how to recoup any losses.

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Executives whose companies benefit from the rescue could not get “golden parachutes” and would see their pay packages limited.

The government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies’ future profits.

To help struggling homeowners, the plan requires the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers’ monthly payments so they can keep their homes.

“Nobody got everything they wanted,” said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. He predicted it would pass, though not by a large majority.

And then there’s this:

Gregg, R-N.H., said he thinks taxpayers will come out as financial winners. “I don’t think we’re going to lose money, myself. We may, it’s possible, but I doubt it in the long run,” he said.

Any of you believe that?

Notes on the latest moves in the industry groups:

• I’m not going to spend much time on the charts right now, thinking that they could easily change a great deal depending on the news – and I believe very few are really buyable at this point.
• If you’d like to browse through them yourself, have at it: set #1 — set #2 — set #3 — set #4
• For a more detailed breakdown of group movement over various time periods, try Prophet.net’s Industry Rankings page., or the Industry Group Tracker at WSJ Online.

Which government can take over the most companies…?

Seen on WSJ’s ‘breaking news’:

The British government will nationalize troubled lender Bradford & Bingley.

Update:   The story now says that the govt is “leaning” toward nationalization, FT.com says it is “expected”.

Update II:   Belgium’s Fortis too. From Calculated Risk:

BELGIUM’s Fortis is this weekend poised to become the first large continental bank to fall victim to the credit crunch, as the global chaos continues with Bradford & Bingley and American savings giant Wachovia both teetering on the brink.

The Belgian central bank and the country’s regulator are paving the way for a bailout of the huge banking and insurance group, which has a £540 billion balance sheet and a market value of £12 billion.

Barry ‘thanks’ Washington for their help – going all the way back to ‘irrational exuberance’ – in aiding Wall Street to create the mess we’re in today:

To: Washington, D.C.
From: Wall Street
Re: Credit Crisis

Dear D.C.,

WOW, WE’VE MADE QUITE A MESS OF THINGS here on Wall Street: Fannie and Freddie in conservatorship, investment banks in the tank, AIG nationalized. Thanks for sending us your new trillion-dollar bailout.

We on Wall Street feel somewhat compelled to take at least some responsibility. We used excessive leverage, failed to maintain adequate capital, engaged in reckless speculation, created new complex derivatives. We focused on short-term profits at the expense of sustainability. We not only undermined our own firms, we destabilized the financial sector and roiled the global economy, to boot. And we got huge bonuses.

But here’s a news flash for you, D.C.: We could not have done it without you. We may be drunks, but you were our enablers: Your legislative, executive, and administrative decisions made possible all that we did. Our recklessness would not have reached its soaring heights but for your governmental incompetence.

You can find a link to the full PDF file at The Big Picture.

I saw this at Dealbreaker yesterday:

The U.S. Securities and Exchange Commission is ending its program to supervise large independent investment banks now that the five participants have collapsed or reorganized.

The announcement Friday coincided with criticism by the SEC’s inspector general of the agency for failing to properly supervise broker dealer risk assessments in a program run by the Division of Trading and Markets.

Stage direction: SEC officials mount their horses, tip their hats, and ride off into the sunset. Pan back to show village burned to the ground and citizenry slaughtered, voiceover by Wilfred Brimley waxing poetic, “They did what they came to do. Their work here was done.”

And a job well done, don’t you think?

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