Well we got to wake up to this little bit of news in an article from our friends at Bloomberg News entitled, "On The Edge Banks Facing Writedowns After FDIC Loan Auctions"; um, commercial lending is going to give banks more pain. By reading this blog, this comes as no surprise. However, what might surprise people is the extent at which most banks have been playing "hide the salami" (technical term), over the last few years with regard to their commercial mortgage portfolio. You see, when the FDIC auctions off these loans from a troubled bank, EVERYONE who owns a piece of that loan must mark it on their books at the price at which the loans sell. So when you read that last sentence, you say, "well of course they should. That's what they are worth in the marketplace at this moment. Seems fair." Well it does seem fair except the banks, with their teams of lawyers are fighting this tooth and nail to NOT have to do this. I wonder why? Cause they (and we taxpayers) are gonna take it right in the pooper (another technical term) again. We here at Monkey Business, have been calling for this kind of transparency for a long time, and KNEW this day would come. Now its time to pay the piper.
126 banks failed last year and in gambling terms, I have the "OVER" on that amount of failures in 2010. Take a look wherever you are, and see if there's some businesses shuttered in your area. Lots of em right? With strong histories even and a long tenure in business. Not good. But let's talk about healthcare. I didn't watch that "Hollywood Hoedown" last night but it sounds like even the communists in Hollywood were quiet in terms of their praise of the "used to be Jesus on earth" running our country these days. Interesting times.
Now that all being said, the stock market has roared right in our collective mushes (still, yet another technical term). The stock tickers SPY and QQQQ are up around 5% since we shorted them awhile back and we are throwing in the towel today. Yep buy the SPY and QQQQ stocks back and cover your short positions. Yes, even despite, all the bad news we continue to see. Don't worry we'll get more cracks at this. We just want to continue to show our discipline, not get emotional (well, not get TOO emotional, I'm screaming a bit right now as I write this), and get carried out in a bodybag. Live to fight another day. Good luck to the FDIC in their auctions of bad bank loans. After all, who do you think pays MORE for this mess when the auctions don't go well? Go ahead look in the mirror.
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