Value Microcaps Free-For-All

[roguedolphin]

Banks Closed Till Further Notice
Wednesday, June 18, 2008
http://realestateandhousing2.blogspot.com/2008/06/banks-closed-till-further-notice.html


Investment Advice - For more than a year, many of you have asked me for investment advice. I have been unable to provide it as I would like, so finally after enough prodding, I sat for my Series 65 exam and passed it. With the Series 65 I can provide investment advice for a fee, which means I can devote the time necessary to providing you with the very best advice. I will be accepting a limited number of clients in two distinct groups. One, will be high net worth individuals interested in a comprehensive strategy. And the second will be a group of clients interested in Crisis Investing, and how to trade and protect their accounts.

Depression – I am no longer shy about the word. I have been talking about it for two years, but now my Depression Index is 100%, and after today’s Royal Bank of Scotland announcement, I feel much more comfortable. RBS got the dynamics wrong, but they still understand there is going to be a crash. RBS believes it is attributable to inflationary issues, when in fact, the foundation of the crash will be the failure of international banking. And this will be a direct result of the leverage we have seen mis-used during the last eight years. I should note . . . the leverage with “absolutely no accountability.” More on that for clients, but builders are still building and office/retail/commercial is still going up with non-recourse money. We will talk about this on the Conference Call next week.

Banks and Financial Institutions – Not a day goes by now that I don’t see something extremely disturbing in the banking/financial sector . . . first hand. Whether it is a spread sheet I am asked to review or an inventory list or a huge project gone bad. I’ve written about assets, inventory and all of the creative ABCs. I also discussed what happens when you strip out CMOs and how the pie was divided into more pieces than there was pie. Just about every day now I am quizzed by a financial institution trying to find the hidden value in their assets. I refer them to Carl Icahn and WCI, and Wilbur Ross and his subprime slime. I tell them to follow the money. It’s not that hard. The money didn’t simply disappear. It just changed hands, and unfortunately it is not in their hands. I tell them to look at what they did yesterday AND what they are doing today AND what they are planning for tomorrow. Nothing much has changed, except they now are compounding the problem by totally mismanaging their assets and not lending to qualified buyers. Strike that. Totally, strike that. . . . . . . .

Banks Closed Till Further Notice - Banks are not lending BECAUSE they can’t. They can’t lend what they don’t have. They can’t create more leverage, when they are trying to deleverage and get rid of assets worth just a fraction of what they are telling the Fed they are worth. They can’t lend on residential properties that they are dumping without talking to the guys in the office next to them. Depression? Folks, it’s already here. But this time it will take a bit longer to register. We will see bank failures, despite what the totally clueless and misinformed FDIC Chairman Bair said the other day. She has no clue what is going on. This lady is either dumb as a box or slick as a fox. If I had a TV show like Cramer, now would be the time for screaming NO CLUE and beating my fists on the table. Instead, Jimbo just reported a turn in Florida Housing because SPF announced a spike in numbers, and Bob Toll took an extra shot of Kool-Aid!!!! Jimbo, you have No Clue dude, but a hearty stuttering Boo Ya to you. By the way, Jimbo told me I was totally clueless in November of 2006 when I was writing about exactly what we have seen for the last 18 months.

Cool Down Period – Before I overheat, I will take this opportunity to cool down. It’s sad that we are where we are, and still we have politicians and executives jockeying for position and nose rings. As of now, I must limit some of what I report because my clients feel they are paying for things I discuss in public. But I will close with a banking wrap up.

I have had the opportunity to speak with quite a few executives from financial institutions. Some of them pay me quite well for my time, but then don’t do anything remotely close to what we discussed. And then they come back two months later wondering what hit them. All of them, without exception, either have no clue what is going on or are simply lying to collect a paycheck. Either way, it is bad. I’ve spoken with some banks about their residential inventory in terms of how to sell it quickly, without huge expenses and for the best price. It’s like talking to a rock underwater. I’ve spoken to institutions that have hundreds upon hundreds of millions invested in projects that I am quite familiar with. They’re still looking for the hidden value because they cannot believe their $300M loan is now only worth $50M. And if you think Goldman Sachs and JPMorgan are immune, think again. I can say that now because JPMorgan is not a client and Goldman Sachs has not been a client for a couple of years. You might think I am a jackass for saying that, because they will now never think of giving me new business, but for those that know me . . . they know I always tell it like it is.

Where’s Greenspan lately?
Posted by Mike Morgan, J.D., GRI, CRS at 10:51 PM