Wednesday, March 14, 2012


Bennie, Bennie, Bennie.  How did you get bagged by that Greek?  No, not the guy in Athens the guy at 270 Park, Jamie...yeah, got this headline-grabber stress test and before you say word one he's off raisin' dividends and buyin' back stock before you tell him it's ok so it looks like he runs you and not the other way around and you know what, Bennie, now it's not Helicopter Ben any more but Bennie the Schliemiel--you know from Schliemiel down South--and for you this is not a good thing.

Bennie...another thing.  I love the worst case...oy, THAT'S a worst case!  But only four banks don't have enough capital and one of them is Citibank?  So what does that mean?  No more Citibank in your worst case?  Bennie, I got news so you should listen:  in your worst case there isn't NOBODY LEFT!  It gets this bad and nobody cares for capital.  You think people feel good when Jamie says, "My primary capital is 5.4% but the Indian's is only 4.9%!  Do business with me!  Capital, schmakable.  I want cash and how quick can you give me my cash!!  And Bennie, when that happens again what do you do?  Make money like the last time?  Bennie, you're the second biggest bank in the world right now next to the thing in Frankfurt that the paisan runs.  What are you, in competition?  LIKE YOUR FATHER RAN THE BUSINESS BY SEEING HOW MUCH HE COULD SPEND?  Like your father had a Goisha Kop?   Bennie,  listen to your Uncle Charlie.  This is feel good, this isn't real.  You tell this to them out there and they think everything is ok except for one or two.  You know better Bennie, but you're beginning to think like the politicians, oy, I think you ARE a politician.  You want I should tell them that the stress test is really for Bennie the politician and that's all it's good for?  Bennie, I'm your uncle and I want to help.  You want, you ask, but Bennie you better start payin' attention to what counts and what's real otherwise soon it's going to be Bennie the Schmuck.

I don't have any idea how one can really design a stress test in general much less a stress test for institutions as different as Wells Fargo, J.P Morgan-Chase and Citigroup.  For the latter it must be particularly difficult given the far greater international nature of the institution.  But, there it is and frankly, I have no idea what it proves.  The markets took it in stride; JPM went up, C went down.  Fair enough, let's move on.  But when one speaks of exposure isn't it remarkable that the rating of the world's two largest central banks are never mentioned in the same breath inasmuch as their activities over the past few years makes them vulnerable to exactly the same risk as the institutions they oversee and, in addition, their exposure to interest rate risk and duration risk is far greater given the vast holdings of government fixed rate paper.  If someone thinks that there can never be an...issue...with central bank risk, one had best think again.

Oh, the Euros approved  Greece's bail out today.  So nu?

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