Jim (cont'd):

First, we wouldn’t allow the Uptick Rule to come back… the rule that makes short sellers wait to pay more for a stock before they can bank it down… we know that is much easier to short sells without this rule… we know its absence allows short sellers to sow fear… the lack of an Uptick Rule allowed the SKF, the UltraShort Financial Proshares to be born… the instrument of mass bank destruction that allows you to sell short twice as many shares as you would otherwise… and by presumably bring back the Uptick Rule we wipe out this pernicious nuclear short selling weapon… so if we want things to stay bad… stay irreversible… we will make sure that the Uptick Rule stays abolished and the short sellers can keep banging them down with immunity and impunity.

Second, if our goal is make things worse… we can continue strict mark to market accounting rules… that force banks to value all of their assets based on the selling price of the most toxic stuff… if we want to continue to destroy the banks, mark to market is really valuable… because many of the mortgages that these banks have are actually golden… but under these accounting rules they have to value them like, well the interpretation that they are using, not like golden but brass… now both Fed Chairman Ben Bernanke and JP Morgan’s Jamie Diamond have good ideas here… if we want to lay the banking industry to waste, we ignore both men entirely.

If our goal is for total failure and ultimate nationalization of the banks… the third thing that we would do is demonize the bankers and treat them all as if they are AIG execs.. this is where the administration and Congress have been… it has created an atmosphere of fear and distrust that is just fabulous for short sellers and makes everyone just want to sell the whole group… wait a minute…. this is the policy right now… I just described the three things that dominate the current regime… look we may not know what works, right… but we know what doesn’t work… what will definitely lead to the banks destruction… and we are doing it all right now… even if change these three things it is entirely possible that the banks all get wrecked anyway… although perhaps in slower motion rather than with the voracity that their destruction is occurring with right now… but I bet some would be spared… others would prosper… under prevailing circumstances it is Jim Morrison time, no one gets out of here alive.

Bottom line…

 

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The Bottom Line!:     You know that you can’t make guarantees when it comes to the stocks or the economy… but I think that I have got one thing that is 99% certain… if we don’t change these nefarious policies of financial destruction… then all major and regional banks will be alienated.