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Tuesday, January 13, 2009

Financials: Breakdown. Test of Panic Lows Pending

Things aren’t looking pretty for the financials. Citigroup (C) for example got whacked for almost 20% yesterday alone, breaking decisively through all support. There now is nothing but a giant air pocket all the way down to the $3.00 panic low.

Bernanke continues to try really really hard… feeding more of the same into he system.

Bernanke Urges ‘Strong Measures’ to Stabilize Banks (Update1): “Federal Reserve Chairman Ben S. Bernanke warned that a fiscal stimulus won’t be enough to spur an economic recovery and that the government may need to buy or guarantee banks’ tainted assets to revive growth.

“Fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system,” Bernanke said in the text of a speech today at the London School of Economics. “More capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets.”

Bernanke’s remarks indicate he may be seeking to influence deliberations among lawmakers and President-elect Barack Obama’s economic aides on how to deploy the next $350 billion of the financial-rescue fund approved in October. While some Democrats have focused on offering aid to troubled homeowners, the Fed chief’s comments show he’s more concerned about a continued choking off of credit to companies and households.

The Fed chairman recommended three approaches on troubled assets. Public purchases of the bad assets are one possibility, as was originally planned under U.S. Treasury Secretary Henry Paulson’s Troubled Asset Relief Program.

The government could also agree to absorb, in exchange for warrants or a fee, part of the losses on a specified portfolio of troubled assets, he said. Regulators used that method recently with their bailout of Citigroup Inc.

Another measure “would be to set up and capitalize so- called bad banks, which would purchase assets from financial institutions in exchange for cash and equity in the bad banks,” he said.

While the U.S. Treasury has already channeled $350 billion in taxpayer funds to recapitalize banks and rescue companies including American International Group Inc. and Citigroup, financial stocks have been hammered in recent days amid deepening concern about credit losses.”


Anonymous said...

Thanks for all the extra great posts recently -- it makes up for the withdrawal I went through over the holidays.

Anonymous said...

Hey yeah forgot to say thanks.

gary said...

...srs....eev....faz...need i say more....!

great posts about tech analysis over the last week or so...kudos anchorman.

Anonymous said...

so a 300B backstop is not enough. wow whats a fed to do. if they throw more money at it people lose faith in all measures already taken. if they let c plunge then people lose faith in all measures taken. why is c failing if the us govt is garanteeing so much already?

Anonymous said...

A rathole.

sc said...

What do you think of long PGF vs short XLF? Invest along side Uncle Sam and be prepared for common equity dilution and dividend cuts.