moneymcbags (< 20)

9/13/10 Midevening Report: You can't spell "unstable" without BASEL

September 13, 2010 – Comments (0) | RELATED TICKERS: MLNK , MSFT , VMW

The market ran up again today because Warren Buffett said the economy is fine (and as we at the award winning When Genius Prevail know, if you keep saying something, people will eventually believe you) as noted by the fact that he is back to eating four scrambled faberge eggs for breakfast with his soylent green as opposed to just two, Basel III was agreed to by central bankers, regulators, and shamans (to be potentially ratified sometime later this year), and all of the regression models which use outdated data to forecast the economy have decided to draw hockey stick charts in honor of the coming winter season.  So it was a good day if you were long equities and locked in some profits, but probably a better day if you were long Sophie Monk and locked in your twig and bits (and yes, that is the worst pun in the history of the award winning WGP, but you get what you pay for).

 

The new bank regulations caused financials to rally as the regulations are seen as not stringent enough to keep banks from further manipulating the market, and yet stringent enough to give the optics that they will curtail the predatory lending behavior that started this whole global economic recession cum depression.  The most important of the new requirements is that banks will now need to hold 7.5% of common equity as reserves (up from 4% in the US, 2% in most of Europe, and 0% in Greece) and will be forced to comply by 2019, which only gives banks 9 more years to manipulate the sh*t out of lending and cause another global meltdown before different rules are not put in to place when these become outdated before they are even implemented.   Whew.

 

Seriously, Money McBags is breathing so much easier now that in potentially 9 years (that is if Basel III is fully ratified by the end of the year and the EU still exists by 2019), banks will have to hold more reserves, or simply just push more loans down to off-balance sheet accounting sleights of hand like conduits, structured investment vehicles, and the inconceivable Lloyd Blankfein's E*Trade account.  The market simply wants to rally but you'll excuse Money McBags if he is more fascinated that blind people read Playboy than he is in anything that will likely not happen for 9 years as with the exponential acceleration of technology and medicine, in 9 years we all may be living on Uranus (or the slightly larger and infinitely more comfortable Ines Sainz' anus) grokking the downfall of society and not caring one iota about whether or not C or BAC is holding reserve capital.

 

There wasn't much US macro news today which allowed investors to forget the worsening fundamentals and instead focus on their feelings.  Internationally, the EU raised their 2010 growth forecast to 1.7% from....READ MORE....