Andy Kessler: WSJ: What's Next for the Banks:
January 24, 2008
If you want to know what's going to happen to the big banks and investment banks, you've got to go back to early 2003, when the seeds of destruction were planted.
It had been a year or so since a couple of trillion dollars of investor wealth had been wiped out. The Dow was 8000 and dropping, and the stocks of big institutions from Citi to Merrill Lynch to Morgan Stanley were at multiyear lows. Bank lending was down, but no one was really worried. The old 'borrow short, lend long and pocket the difference' game had been around for millennia, and banks had weathered worse than this mild economic slowdown."
Rescue Me: A Fed Bailout Crosses a Line - New York Times:
"What are the consequences of a world in which regulators rescue even the financial institutions whose recklessness and greed helped create the titanic credit mess we are in? Will the consequences be an even weaker currency, rampant inflation, a continuation of the slow bleed that we have witnessed at banks and brokerage firms for the past year?"
Bill Fleckenstein had these comments before the Bear Bailout:
Fed's latest giveaway won't work:
"For some time now, the Federal Reserve has been writing a book. It's called "What Not to Do," and on Tuesday it penned a chapter called "The Prudent Bailing Out the Reckless."
That was via the Fed's creation of a $200 billion Term Securities Lending Facility, a pool of money it can lend to securities dealers on top of funds it has already injected into the financial system.
I guess the sight of all those suffering hedge funds and brokers was just too much to bear."