JULY STOCK TALK V

The broker/dealer business model is "inherently unstable" and the four remaining major firms will not be independent in a few years, says Nouriel Roubini, economics professor at NYU's Stern School and chairman of RGE Monitor.

Embattled Lehman Brothers is likely to seek a buyer "within months," Roubini says. Lehman Brothers ceasing to be independent is not such a shocking outcome, but Roubini ultimately sees a similar outcome for Goldman, Merrill Lynch, and Morgan Stanley.

The problem, he says, is that broker/dealers use the same model as banks -- borrow short and lend long -- only they borrow on even shorter timeframes, use more leverage,  and don't have the kind of government backstop banks enjoy.

Selling short SPY................

Thanks Vermeer, i've picked some winners lately. 

speaking of shitty shoes, i wish that DECK options had more volume.  I'd love to load up on puts before they report.  that thing should be $5, just like CROX.  but there is no activity on any of the options. 

Two more national banks fail, number will rise sharply

Posted Jul 26th 2008 6:50AM by Douglas McIntyre
Filed under: Forecasts, Bad news, Industry, Housing

The FDIC took over two more banks. According to The Wall Street Journal, "The Office of the Comptroller of the Currency, a division of the Treasury Department, revoked the charters of First National Bank of Nevada, based in Reno, Nev., and First Heritage Bank of Newport Beach, Calif. The FDIC was appointed receiver of both banks." The Nevada bank had over $3 billion in deposits.

Current estimates are that less than 100 banks will fail during the current credit crisis, a much smaller number than closed during the saving and loan debacle of the late 1980s.

But, those estimates may be low. Bill Gross, an extremely prominent investor and head of Pimco, recently wrote that total losses related to the housing market will hit $1 trillion. About $450 billion of those write-downs have made it through the system. That leaves a potentially massive burden on the banking system going forward.

Good stuff, Koaj.  Reggie's smart, allright.  I remember last year about this time when I first started posting in this room.  I was all gung-ho looking for some financial shorts right before September.  You were rightly bearish as well.  I hope you were able to seriously capitalize on that assertion.  Like the true dumb-f--k that I am, I chickened out and was way, way too conservative because I was terrified of bailout packages that were going to come (I got obliterated back in later 90s during Asian Tiger bailouts and it still gives me the shakes thinking about it).

This gdmf-ing country deserves to go right down the drain with its horrendous policies put down by its lying leaders.  I am angry as hell about the future, but more sad than angry when you really get down to it.

I am all about capitalism and "free markets" where people live, die, thrive, crash, fail, survive, burn, etc.........

WITH NO GD BAILOUTS

Filings here jumped nearly 805 percent in the second quarter from the year-earlier period, according to a report released yesterday by RealtyTrac Inc. The next-highest increase was 587 percent in Greenville, S.C.