The Great Shell Game
14th July 2008
Which shell is the ball under? We all remember the shell game where the only goal is to deceive the bettor and take his money. That is what is going on in the financial sector today. What is the exact purpose of off-balance sheet entities other than to deceive? I have an idea. Lets give every bank 90 days to bring the off-balance sheet stuff on to the balance sheet.
Also, any CEO who states that their bank is well capitalized and goes belly-up within 90 days, should go directly to jail. Get ready for some overcrowding boys! Who should be in the hokey right now? Lets start with the tanned Countrywide guy and his spawned step son who ran Indymac. Who is on the short list for the ball and chain now? Vikram Pandit at C and whoever runs WM and BBX. C has a cool 1.1 trillion in off balance sheet issues. That’s trillion folks! WM and BXX are on the wires after hours saying they are well capitalized. If your stock is below 5 bucks, there is a problem somewhere that’s for sure! Or how about are friends at FRE and FNM? If you throw the off balance sheet stuff on FRE, they are only leveraged 68-1! This situation took years to build up to this and it will take years to unwind.
BA