Major US Banks Are Profitable....... Oh Puhlease!

Putting aside the media's facile obsession with explaining every tick of the tape with an event, lest''s examine the supposed reason for the beginning of this rally. The idea that Citi was profitable in the first two months of 2009.

The argument goes that writeoffs are non-cash and therefore don't affect cashflow or profitability. That's great if you ignore the balance sheet. Remember write-offs are euphemisms for mistakes and in this case it is the reversal of falsely booked profits in prior years.

Write-offs are taken through the P&L and then written off against equity in the balance sheet and if a company has no equity it's out of business, especially if it is a bank that has to maintain a certain level of equity. Where would Citi be if it didn't get $45 billion of equity injections and $300 billion of assets guaranteed by the government.

As for excluding credit losses that argument is even more ridiculous, a bank is in the business of extending credit and thus credit losses are part of the business, how can you possibly exclude them? That's like saying GM is profitable if you exclude what it costs to make cars.

Anyway Krudlow the Clown and his clueless minions Jerry the echo Bowyer and Dick Bove bought into the whole scenario. Luckily Joe B was there to tell them what morons they are. Remember that Dick Bove was the same guy that said a year ago to buy Citigroup at $30, that they didn't need to cut their dividend and that the credit crunch was over! This guy is a bank analyst and yet he clearly doesn't know how banks work. Watch this incredible display below:

Market Rally Continues

ps. I said something else in that post a year ago and that is that I watch too much CNBC, some habits are hard to break.

Cramer vs Stewart Showdown

The much awaited showdown between Jim Cramer and Jon Stewart aired on the Daily show on Thursday night. I thought that Jon Stewart might make it lighthearted and go easy on Cramer but thankfully he did not. In fact quite the opposite.

I think it is fair to say that there has been a growing divide between main street and Wall Street. There is a growing revulsion for those that made millions, walked away when the music stopped and left the taxpayer on the hook. Jon Stewart hit that chord beautifully on Thursday night.

The only thing I will say is that was disappointing is that not more light was made of the lack of accountability of more of the hosts. For example that complete and utter moron Dennis Kneale, who should be gagged and thrown in the East River, Michelle Caruso Cabrerra who like Kneale has an opinion on everything and knows nothing but most importantly Larry Kudlow, or is that Kuntlow?

Not only is Krudlow the Clown a right wing nutjob but he has been completely and utterly wrong on everything for the last 2 years. 18 months ago Krudlow would arrogantly deride anyone with a bearish opinion backed up by his trio of idiots, Don Luskin, Brian Wesbury and Jerry Bowyer all who have been completely discredited but who interestingly continue to get invited back on the show whilst people like Mike Panzner and Barry Ritholtz who got it right, haven't been seen for the best part of a year. Anyway that's my rant over, enjoy the videos.

Part I

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 1

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

Part II

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 2

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

Part III

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 3

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

Jim Cramer vs Jon Stewart Continues

NBC are pulling out all the stops having Jim Cramer go on 2 shows on the NBC network to help salvage his reputation. Anyone with a brain can see through the pathetic PR exercise. NBC doesn't seem to realize that the more they go on about it the worse they make it.

On the Daily Show on Tuesday, Jon Stewart pointed out how ridiculous the shills at NBC and Cramer look. The thing I took away from the clip was the look on Cramer's face, the guy is obviously really suffering, and I don't feel one ounce of sympathy for the fraud.

The Daily Show With Jon StewartM - Th 11p / 10c

Basic Cable Personality Clash Skirmish '09

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Economic Crisis

Here is Cramer's denfense, absolutely pathetic the guy is a complete charlatan,and the dozy bitch that often appears with him on CNBC Erin Burnett is not much better.

John Stewart Exposes The Charlatan Jim Cramer

Hat tip to Deano for spotting the latest skewering of CNBC and more specifically Jim Cramer on The Daily Show. After the great job they did on CNBC just a few days ago, Jim Cramer tried to defend himself in an article on mainstreet.com. Read Cramer Takes on the White House, Frank Rich and Jon Stewart.

However Cramer would have been better off shutting his mouth and taking his medicine as The Daily Show absolutely tore him a new arsehole in their latest segment and showed him up as the true charlatan that he is. Once thanks again to Deano for the links and the heads up.

The Daily Show With Jon StewartM - Th 11p / 10c

In Cramer We Trust

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

Geithner Gone By June?

Chris Whalen of Institutional Risk Analytics says that Tim Geithner will be gone by June. Also in this brief piece, he says Citigroup will be resolved by some kind of liquidation process, about time. Let's hope he's right on both scores but I have a feeling we may be disappointed.

The Daily Show Rips CNBC Apart

Absolutely one of the best clips I've seen in a long time. A host of CNBC muppets really get their commuppance on this clip although you'd need a movie length version to do it justice

The Daily Show With Jon StewartM - Th 11p / 10c

CNBC Gives Financial Advice

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

Jim Chanos on Incompetence and Criminality

Always worth listening to, Jim Chanos on the distinction between incompetence and criminality. Basically Chanos says we should expect to see Enron style investigations into some of the wildly misleading statements by bank executives over the last couple of years. Chanos reveals how some institutions were pricing securities using two sets of books to make their financial position look better as just one example.

Shiller on P/E Ratios

Bob Shiller one of the foremost experts on P/E ratios, argues for using a 10 year average of earnings to get a more smoothed P/E ratio.

Inside The Meltdown

Worth a watch if you don't know what happened in the second half of last year and if you do it's still worth a watch. From the PBS show Frontline:

How To Deal With An Economic Crisis

You just couldn't make this sort of stuff up. It seems Japan's economic woes finally got to the Japanese Finance Minister,Shoichi Nakagawa who went on TV out of his tree.



Absolutely brilliant performance, I think he should be guest speaker at Davos next year for a seminar on how to deal with an economic crisis. Click on the story from Bloomberg below to read about Japan's worst quarterly GDP performance since 1974.

Japan Economy Goes From Best to Worst on Export Slump

Japan’s economy, only months ago forecast to be the best performing among the world’s most advanced nations, has become the worst.

Gross domestic product shrank an annualized 12.7 percent last quarter, the Cabinet Office said yesterday. The contraction was the most severe since the 1974 oil crisis and twice as bad as those in Europe or the U.S.

Another Demonstration of Media Idiocy

Came across this story from Talking Points Memo. It is emblematic of the cluelessness of mainstream media. Read the quote below and then watch the video.

TPM Reader JC sent me to this interview with Nouriel Roubini and Nassim Taleb on CNBC. Here's what JC wrote: "In this clip, Nouriel Roubini and Nassim Taleb are still being treated as a circus sideshow by CNBC... They're predicting the end of finance, and offering the only clear path out of this mess that I've seen offered (with the knowledge to back it up), and CNBC keeps asking them for stock tips. It's ludicrous. Wall Street media -- CNBC at least -- doesn't realize how bad this is yet. They're stuck in a bubble where they think everything will go back to normal in a few months...."

He hits it spot on. These two guys are talking about a deep structural crisis in the world economy. And these CNBC yahoos can't stop asking for stock tips. Really surreal.

I'm watching it again now. This is a seminal piece of video. You have to see it. I'm not sure I've seen anything that captures -- albeit unintentionally -- the vast disconnect over what is happening today in the US economy.

Predicting Crisis: Dr. Doom & the Black Swan

Not much actually gets me angry but I believe if I saw Dennis Kneale in person I would smash his face into a bloody pulp and Michelle Carusso Cabrerra would only avoid the same fate because she is a woman but she would get a stern talking to.

The Skeptical Empiricist

self proclaimed skeptical empiricist Nasim Nicholas Taleb, author of the Black Swan, gives an interview on Bloomberg. You could watch a years worth of CNBC and you wouldn't learn as much as you will from listening to 15 minutes of Taleb speak. He questions conventional thinking and debunks bogus economic forecasts with his alsways original viewpoint. Click the image to listen to the interview.

Stephen Roach on Global Outlook

Stephen Roach is Managing Director and Chief Economist of Morgan Stanley,based in Asia. He has been known as somewhat of a permabear but has been vindicated for his views in light of recent events. He dismissed the de-coupling thesis very early on and he has definitely been proven correct on that call.

Bloomberg Interview with Martin FeldStein

Martin Feldstein, is the former head of the NBER, the committee that makes the ultimate decisions on whether the US eocnomy is in recession. This interview covers a variety of topics from the US Auto Bailout, to housing and how bad the currrent recession will be.

Feldstein is of the belief that forecasts of a turnaorund in the middle of next year are overly optimistc and he sees the recession lasting much longer. That is the my view as well. The idea that the US can spend it's way into prosperity I find naive at best. Feldstein was early with his call on the current recession and talks a lot of sense. Well worth a watch.

Whalen - No Bank is too Big to Fail

I'm fast becoming a fan of Chris Whalen of institutional Risk Analytics. He pulls no punches and talks common sense. In this segment he makes the case that noone is too big to fail and the likes of Citigroup should be liquidated rather than being put on life support. Unfortunately I think Whalen's points are falling on deaf ears. The quote below from Chris Whalen is one of the most salient statements I've heard in a long time:

We have got to stop pretending that size gives you a pass on economic reality

Citi Bailout

Shiller - More tough times ahead for the US

Great interview with Robert Shiller on the 7:30 report. Shiller is admiringly honest, amongst other things he admits that economic forecasting is a lot of guesswork. He touches on a particularly interesting subject which is basically that in times of relative stability, economic forecasting is easy because you just extrapolate previous trends, However in times such as we are in now, extrapolation doesn't work, so technical forecasting models don't work.

Again these are the same themes that Nassim Nicholas Taleb talks about in the Black Swan. That's why when I hear mainstream economists and other market pundits compare this bear market or recession to previous ones and then try to draw conclusions based on those previous experiences I become very skeptical.

I have to admit I am sucker for this as well, we always try to look for patterns that repeat themselves, however you need to cognizant of the fact that some of the events we are seeing now have no historical precedent and therfore it is unreasonable to think they will play out the same way.

Whitney on the Future of Financials

I've posted about Meredith Whitney a number of times. She's been out in front of the problems facing the major banks for more than a year now. She talks commmon sense backed up by facts and as the finaical crisis has played out she has been vindicated in her views and I implore readers to listen to what she has to say in the interview below.

Future of Financials

Amongst other things she says:

Securitization market is not coming back.

Pullback in credit extension to consumers like we've never seen before.

Unemployment could approach double digit levels.

Wall Street analysts are anywhere from 30% - 70% higher than her forecasts for the banks and she thinks she is on the high side.

Banks will come back to the market for more capital.

More dividend cuts.

Citibank will go to single digits.

Well worth a watch.

Bank Injections just the Beginning

I've noted over the past week the improvement in certain credit metrics such as the TED spread and LIBOR rates, however it is one thing to provide liquidity and guarantees to the system but quite another to get banks freely lending to corporates and houselholds.

The conventional wisdom of the treasury directly injecting capital into the "chosen ones" is that it will help shore up their capital bases and that would give them confidence to start lending to each other again and kickstart lending in the broader economy.

However, as Chris Whalen of Instituional Risk Analytics points out in the following interview, the losses coming down the pike will mean that the capital injections will be used just to absorb those losses and thus more funds will be needed to prop up these institutions in the coming months.

Who the hell is Chris Whalen and why should we believe him? Whalen is one of the few that went against the chorus of bullish cheerleaders and predicted the current crisis and the implosion of Freddie and Fannie. Much more credible than the pundits that never saw the current crisis coming and are now saying that the worst is over.

Jim Chanos Tells it Like it is

I've mentioned before that sometimes CNBC has some great interviews. Yesterday, legendary investor Jim Chanos co-hosted squawk box on CNBC and gave his views on a number of issues such as short selling and mark to market.

Jim Chanos on short selling.

Expiration of Short Selling Ban


On government intervention. Interesting perspective, the problems may be too big for government to fix.


Government's Involvement in Banks


...on mark to market, such a common sense argument, these phony free market capitalists that praise the virtues of the free market but then want to suspend prices that they don't like are the biggest of big hypocrites.


Market to Market Controversy


On his short position on Macquarie Bank and its flawed business model.


Legendary Short Seller Jim Chanos

Well worth a watch.

Jim Awad Makes a Complete Fool of Himself

I doubt by now that anyone needs to another reason to doubt the opinions of so-called experts when it comes to the stockmarket. But just in case you were beginning to think that you need some guidance, here is a reason to think again.

Stocks Watch Washington, Pt. 2
Jim Awad appeared on Kudlow & Company on Wednesday night and let out this pearl of wisdom when asked about one stock market pick for investors:

“One pick, well you want long term international growth and a current dividend and exposure to a turnaround in financials I gotta tell ya, if GE doesn’t work nothing works.”

Then less than 12 hours later GE drops this little bombshell.

GE Cuts Forecast, Suspends Buyback on Market Weakness
Sept. 25 (Bloomberg) -- General Electric Co. reduced its annual profit forecast for the second time this year and suspended its stock buyback because of ``unprecedented weakness and volatility'' in financial markets.

Full-year earnings will be $1.95 to $2.10 a share instead of the earlier projection of $2.20 to $2.30, Fairfield, Connecticut- based GE said today in a statement. The world's fourth-largest company by market value fell in early New York trading.

So I guess Jim Awad is now thinking nothing will work. Nice one Jim, made a fool of yourself on national TV. However, in anindustry with no accountability, he will be invited back next week to espouse more of his 'expert' views.