Banking Panic!

Hello All

Sorry but I must be brief tonight. I have lots of work to do, but wanted to put a quick piece up given the amazing events today.

Today's 4% selloff was all about the banking sector. There was a virtual selling panic among all the financials as the continued lack of transparency forced all of the financial babies to be thrown out with the bath water. PNC lost over 40% of its value even though its a solid bank that did zero subprime loans.

This is what happens when the government won't let investors see the balance sheets! We need clarity here or all of these stocks are going to zero. I have to laugh at these greedy arrogant bankers,. They all thought they were so slick as they cooked their books.

They all assumed the Fed would swoop in and save the day and bailout their balance sheets without punishment. The bankers all figured their greed and insane risk taking would all be forgiven by their fellow banking buddies at the Fed without repercussions.

Ooops! Bad bet! Chalk this one up with all the other bad bets you made this year! It appears all of you clowns overplayed your hand just like Dickie Fuld did. Enjoy your ineveitable nationalization. In the future, don't mind the guy behind you . Its just a banking regulator breathing down your neck making sure you aren't committing fraud. That is if you are lucky enough to not get fired by the government first!

The arrogance and stupidity among the banks is beyond belief.

Some examples:

- BofA's Ken Lewis ridiculous overpayment for the acquisition of worthless toxic assets like Countrywide and Merrill Lynch.

- Wells Fargo acquisition of Wachovia and their horrifyingly bad lending portfolio.

- JP Morgan's acquisition of WAMU's worthless balance sheet.

What were these butt holes thinking? In my opinion, all of these "financial whizzes" simply got way too full of themselves just like Dickie at Lehman. When your holding 2,7 off suit in No limit hold-em poker you fold. These morons thought they could continuosly take limitless risk and go "all in" on every financial hand without any repercussions! They apparently thought the Fed had given them a limitless "get out of bail free" card. Well guess what folks? They are about to learn that that card was limitless to a point.

The reality of the situation here is their power and greed fooled them into thinking that they were unstoppable. If they all went to a psychologist they would be diagnosed with a classic case of narcissism. As the Romans learned thousands of years ago: No one is unbeatable. Go to the grave and ask Hitler and Napoleon how that theory worked out for them.

Its pretty simple: None of these CEO's would have gotten into this disaster this deep if they hadn't been blinded by pure greed.

There is one thing that really bothers me most about the fallout of this whole fiasco: I haven't seen one instance of remorse from any of the bankers on Wall St. Not one! I have yet to hear one "I'm sorry" or "I made a mistake" from any of these guys.

The only reaction I have seen from the pigmen so far is a string of suicides as these bunch of narcissistic asshats now realize that they must sell their jets and live like the rest of us. Its no shocker these whimps all took the easy way out. Don't get me wrong, my heart goes out to their families but you gotta admit it speaks volumes in terms of their lack of character.

I hope all of these large banks go to zero and get taken over by the government. From what I can see, there isn't a decent human being among the banking bunch. Lets fire them all and replace them with decent people who want to make money by using sound banking. Lets get rid of the banking crooks that became obsessed with milking as much money as they could from every US citizen.

The world of finance should be ashamed of themselves.

Bottom Line:

I don't know how this ends folks. FAZ was up $25 on the day closing at $88. Unfortunately, I was not home to take profits. I plan on doing so tomorrow. I will do the same with my XLF PUTS and I will most likely sell my Citi PUTS as well.

Could this freefall continue? Yup. Some of these stocks are going to zero due to nationalization because the government will have no choice. Citi and BofA are a mess. However, staying short doesn't make much sense at these levels. There is little meat left on these bones and if they aren't nationalized you could get rammed on the long side.

I made a few moves this morning. I sold my TBT and took profits anticipating a dive into treasuries due to the selloff. I also added some SRS this morning at around $62. I held my small long QQQQ call position as a hedge. I gotta say folks, today was a very sad day for me despite the fact that it was a very profitable one. I would pick a healthy banking system over some trading profits without even thinking about it.

As for TA, we broke through critical support today. The 740 low on the S&P is now back in play, and if we break that then god help us. The risks to the upside must also be respected because we are extremely oversold. Obama will also begin coming out with his agenda beginning tomorrow. I expect swift government intervention. Never underestimate the power of hope on the long side.

At this point, IMO hope is about all we got. Lets all "hope" that Obama can pull off a miracle and turn this thing around.

I am 100% behind you Obama. I hope you have the strength to make the tough choices. I hope you have the character to withstand the criticism when we are forced to say no to many bailouts.
I hope that you realize that both time and money are running out.