because Dexia will dump 180 billion euros of bad assets into a "bad bank" guaranteed by France and Belgium?? Are you people (the traders buying this news) stupid? Are you going to be ecstatic when France's sovereign debt gets downgraded? No? Then why the F are you buying now, when that is exactly what is going to happen next? Morons!!! Thanks for decaying my TZA shares some more.
The irrational play in oil is paying off. Been buying on the dips and selling UCO when I have some positive gains. Looks like the commodity rally is perked up a bit. Maybe when SCO is around $55 might jump back in there if the rally loses steam.
It appears that FT published an article stating that EU finance ministers are formulating a plan to recapitalize the banks. The entire thing is nothing more than a rumor with with no details, but let me summarize. The "healthy" sovereigns will borrow money to reimburse the bank's losses on their huge sovereign debt losses from "healthy" banks and other investors. At what point do we run out of stupid people/institutions willing to loan money to sovereigns that clearly will never be able to pay it back? More importantly when do we stop rallying or short covering on stupid rumors with no details? Completely ridiculous. I have no doubt the shorts will be back, but even if the IWM went straight back to where it closed yesterday tomorrow, TZA will be $2.71 lower than where it closed yesterday. This BS is killing me.
That's the wonderful thing about the European situation. Every few days they "solve" the problem and we get the opportunity to short another rally. LOL. Looks like I'll get to buy back cheaper the FAZ shares I sold at the close yesterday and this morning.
The problem is too much sovereign debt, so the solution cannot be more sovereign debt. This is ridiculous. Dexia holds a bunch of Greek and other debt that is next to worthless, so now France and Belgium are going to guarantee it? Correct me if I'm wrong but when you guarantee something that is already recognized as worthless doesn't that mean you are just writing a check? So, basically France and Belgium are going to borrow money to pay Greece's debt. Hilarious. The Russell basically went straight up 6% on this? Is that some kind of bad joke?
First we transferred a bunch of bad mortgage debt from the banks to sovereigns, now the weaker sovereigns are defaulting, so we are transferring that bad debt from the banks to slightly stronger sovereigns whose debt is mostly owned by banks... I don't think you have to be real bright to see what is going to happen next.