If you think Don King and "The Donald" have seen some nasty haircuts, wait until you get a load of what's coming down the pike for Portuguese bondholders! I even put a little something in the comments section for all you goldbugs that is bound to cause you to get one of these fashionable 'fros...
At the request of one of our Professional Subscribers, we performed a preliminary analysis of Force Protection, Inc. While it doesn’t suit our needs, I have decided to put the summary out in the public domain. This company is a text book business failure waiting to happen, and is a monument to the consequences of not diversifying your revenue stream.
If Greece follows in the footsteps of Argentina (which is quite possible) many financial institutions will be in a world of hurt - forced to take 60-70% losses on instruments that they levered up 20x on. We're talking real pain here people, and it is highly unlikely Greece will be the only one. For all of those who may call me a doomsayer, let's walk through the numbers...
Guess who may be exposed to what? We will probably dig a little deeper into this if the market doesn't punish the company before positions can be expanded, in the mean time their is plenty for subscribers to chew on. I have included much food for thought for non-subscribers as well. Oh yeah, as I type this, futures are down 28 as the global markets drop 3 to 5% (again), all due to what I warned about since January yet the pundits said was "contained". Yeah, globally contained!
Spain is starting to show its true colors re: the NPAs in its banking system. When the dam bursts, one should expect a mini-daisy chain reaction to kick off due to the contagion effect. The only question is, which of the PIIGS group will come clean first? Or will they all keep sweeping the NPAs under the carpet until there is no more carpet to sweep under? In the mean time, those bank options are up 300% to 400% and counting...
Although early stage delinquencies are improving in the aggregate, the mass of both early and later stage delinquencies are continuing the trend of moving from the usual suspects of the sunshine belt boom states of Florida, California to middle America and states such as VA, NC and RI, who lead the loss pack in several categories - even beating FL and CA for several quarters running. Take note that some of these states never experience a big boom, but are suffering the bust anyway...
It may take a while, but the fictitious valuations of CRE REITs will eventually come to reflect what is actually going on in the actual physical real estate world. It may be like matter meets anti-matter, investment banking secondary offering meets bricks and mortar reality. After all, the antics in Germany and greater Europe are not doing anything to actually help the debt markets.
I think I feel another "I told'ja so" coming on...
First a glance at the macro scene in China and then a look at how our China short thesis has played out thus far. Feel free to compare my work to Goldman and the other big banks, the challenge is welcome.
You heard my warnings about the "best of breed", "incomparable on the Street" (and all of the other groupie talk, worshiping phrases thrown at this company) Goldman pillaging clients and of their excessive overvaluation for over two years in BoomBustBlog, yet now the mainstream media is starting to catch on as Goldman's stock plummets (down over $5 yesterday and over 20% for the month, with more to go). I wonder when they will get around to the other investment banks and FIRE sector companies that I warned about. Let's reminisce...
The Asset Securitization Crisis begat the Sovereign Debt Crisis at a time when many believed (and still do) that we are pulling out of a global recession with a roaring bull market. In reality, we are at the tail end of the synthetic high borne from unprecedented global fiscal and monetary stimulus, and it is time to pay the piper - world wide! Enter the final phase of the Great Global Macro Experiment, laid out for you in a analytical spreadsheet!
This is a European bank that is thoroughly insolvent, and this is without counting the fact that its sovereign debt holdings will probably drag it 3 fathoms below sea level, yet it is trading at one of the highest premiums in all of European bankdom!
I have decided to release the Greek Banking Fundamental Tear Sheet to the public. It was released as a summary of a more verbose document designed to inform subscribers which of the Greek banks we felt were worth putting short positions on as of 02/17/2010.
How many of those Greek, Portuguese, Irish and Spanish bondholders have factored the near guaranteed "additional" haircut (/scalping) they will receive having to stand behind the IMF in the event of a (probably guaranteed) default or restructuring? Do you think the investors of European banks (that includes central banks) that are holding/and currently still buying a boat load of these bonds have factored this into their valuations?
