Barclays PLC (ADR) (BCS)

cdulan (95.89) Submitted: 8/24/07 3:25 AM : Start Price: $47.19 BCS Score: 35.40

It was musical chairs and I am wondering how many people know that the music has stopped.





Let me get this right... 40% of the profits of the bank came from spread trades (SIV) on the commercial paper market and long term securities (often US mortgages). The commercial paper market has been closed for a month and will reopen some time later with a new pricing paradigm.





There is absolutely no way this stock can maintain it's current valuation. The profits are going to take a huge hit.





TrackJimCramer says "bull". But Cramer even states that the current earnings estimates for the banks are just "a figment of their imagination now". I just think Cramer does not talk about the upcoming carnage because he took so much heat for the "YOU KNOW NOTHING" rant.





I really wonder how these hundreds of "bull" people can still be so optimistic about a company has been at peak performance and recently lost it's major source of revenue generation.





WSJ article from Aug 23





"Edward Cahill, a senior structured-finance executive at Barclays Capital, resigned this week, people familiar with the situation said, as investment structures that Barclays helped arrange for outside clients lost value because of the global credit-markets crisis....Barclays Capital, part of British bank Barclays PLC, has helped fuel Barclays's growth and accounts for 40% of the company's profit before taxes.





Mr. Cahill's group developed cousins of CDOs known as structured investment vehicles. Barclays specialized in a subset called SIV-lite, which relies on short-term commercial paper to buy portfolios of securities with longer-term returns. The structures, in normal times, borrow the commercial paper and earn money on the higher-yielding returns from the assets, including securities underpinned by U.S. mortgage loans."

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