Thursday, May 28, 2009

PPIP is dead and so is Wells Fargo

Voltron says: There are two things I worry about with respect to my short
Wells Fargo position. One is an overly generous government bailout that
would, for some reason, bailout the common share holders. The other is
massive inflation, which we are starting to see signs of as Treasurys
collapse. I'm basically betting that Wells Fargo will crash before either
one kicks in. The banks have been trying to game the Public Private
Investment Partnership by both buying and selling toxic assets at inflated
prices and put the government on the hook for 93% of the losses. It looks
like the FDIC is not playing ball, so that avenue is closed. It will
probably take Treasury a few months to concoct another bailout, which they
will probably do over a weekend of all-nighters when Citigroup and/or Wells
Fargo are on the brink of total collapse.

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