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ProShares UltraShort Financials Message Board

  • arbplayer arbplayer Nov 22, 2008 3:33 PM Flag

    congress will save banks at all costs


    I think it would be safe to sit on the sideline at these levels. Congress and the rest of the government is going to do what it takes to save the banks and instill confidence back into the system.

    Unlike the administration that is walking out the door in 60 days and don't give a shit - the new administration and congress are banking their jobs on doing everything within the public eye to restore confidence to the markets and save our banking system. The dems will do this simply to have a told you so attitude toward the republicans and maintain a strong control through the next election.

    I would suspect the following coming this week:

    1. Ban on short-selling or reinstating the uptick rule
    2. Additional capital injection at the very least to Citi with extremely favorable terms
    3. Obama transition team will disclose their intentions to continue down the path of the original TARP plan and that is to buy bad assets off of the banks - this will create tremendous positivitity for the credit markets.
    4. Introduction of a plan that will be directed toward the housing market and putting a floor in on housing prices through favorable re-negotiation of loan terms and introduce a gov't insurance program that will be similar to the fha/va program.
    5. See some suspension of the mark to market rules that will extend until the other pieces of the plan are put in place.

    All of these activities will shore up the banking system, bank capital needs, housing prices and asset valuations etc.. Yes - it will be expensive, very expensive for the taxpayer - but the alternative, which the market is giving the public and government a taste of is - complete financial failure.

    Stay away from the short side because you will lose trying to bet against the unknowns of the federal government.

    Citibank will not fail
    Wells Fargo will not fail
    JP MOrgan will not fail
    Morgan Stanley will not fail
    US Bank will not fail
    Bank of America will not fail
    Goldman Sachs will not fail

    This has become very clear with the words we have been hearing from the new administration over the last few days. Be carful! Waves can't predict government action.

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