Think this is over? Not by a long shot.

It should be obvious to most now that the "green shoots"... and yes... that phrase is as exciting to me as... oh... painting a barn white... um... the "green shoots" are just a figment of the stimulus-loving media... CNBC .

Now I could go on and on quoting this "secondary indicator" and that "turning point" and this "still negative but not AS negative" garbage... or I could cut to the chase. Show of hands anyone??

I thought so. So let's sift through all the B.S. with one simple article...

United Western Bancorp, Inc. Reports Sale of Mortgaged-Backed Securities

Something this simple escapes the "brilliant" minds in Washington and Central Bankers' offices world-wide. I encourage you to read it, but basically it's a standard "this bank sold these securities for this amount" but what is astounding and absolutely frightening is the devil in the details:

"United Western Bancorp, Inc. (NASDAQ: UWBK - News) (the “Company”), a Denver-based holding company whose principal subsidiary, United Western Bank® (the “Bank”), is a community bank focused on expansion across Colorado’s Front Range market and selected mountain communities, today announced that the Bank sold mortgage-backed securities with an unpaid principal balance of $47.3 million of lower tranche mortgage backed securities secured primarily by “option-adjustable-rate” mortgage loans (the “Option ARM Securities”) to an unaffiliated third party. Total consideration received for the Option ARM Securities was $378,000. "

Hmmm... so let's see... This bank found an interested third party to buy $47,300,000 worth of Option ARM mortgages for.... drum roll please... $378,000. Yep... that's .08% of their face value.

What??? Reeeeallly??? Now... a quick recap of Chapter 1 on "How to Value a Pile of Crap"...

If you have a big pile of crap on your front lawn and you put a sign out that says:

CRAP FOR SALE - $100 or best offer

and after about 2 years someone offers you ONE PENNY for it.... what was it worth?

Now... let's think about this... this small unknown bank was able to find a buyer that would take their 47 MILLION dollars worth of crap for oh... a 99% haircut.

What was their crap really worth?

Now let's think about Bank of America, who has HUNDREDS OF BILLIONS OF DOLLARS of this same CRAP (Option ARM Mortgages) on their books thanks to the Countrywide purchase...

and...

Wells Fargo, who originated HUNDREDS OF BILLIONS OF DOLLARS of this SAME CRAP on their own before swallowing Wachovia, which origniated HUNDREDS OF BILLIONS OF DOLLARS of this SAME CRAP on THEIR own before SWALLOWING Golden West/World Savings, which proudly boasted for years that they ORIGINATED THE IDEA OF THIS CRAP as well as ORIGINATING HUNDREDS OF BILLIONS OF DOLLARS of this SAME CRAP

and....

IndyMac Bank, which LOVED THIS CRAP and then failed... and Washington Mutual, which LOVED THIS CRAP and then failed...

and....

well... HOLY CRAP.


I'd say the market just told us that Wells, BofA and anyone else with this CRAP on their books is pretty likely to take a 99% haircut.

Let's not forget that Option Arm Mortgage defaults are also rising at an exponential rate as foreclosures filed in the latest quarters set... oh... another record. It's getting better out their, isn't it?

And what do they say this crap is worth? Have you seen the earnings reports they cooked up? Hmmmm.... who's lying now????


WAKE UP AMERICA... OUR BANKS HAVE FAILED... OUR SYSTEM IS COMPROMISED.... IT'S TIME TO TAKE IT BACK.

Reality Has Become The Perception

In this scene from "Wall Street" Gordon Gekko reminds us that most of what we see in he financial world is an illusion. The perception has become reality. "I create nothing; I OWN."

I believe what we are witnessing in this historic time is that reality eventually wins. The problem, however, is that when reality IS the perception, the let-down is even greater than the original ruse. Why? Because we watch those that created the "reality" crumble under the perception that they have failed.

Calls for the bottom are overly optimistic. The reality here is that... sometimes, Reality Bites.

The End Game is Near

Imagine yourself on a pristine beach, watching the seagulls soaring above, the dolphins feeding in the distance all the while feeling that warm, comforting breeze blowing inland. Salt spray caresses your senses and the soft sand beneath your feet comforts your soul.

Gazing seaward, you notice a small vessel on the horizon. As you focus your eyes on the boat, you notice what seems to be a small wave working it's way from the back of your view towards the hapless craft. Thinking nothing of it, you blink, only to discover that the wave has swallowed the boat and nothing is left. You curl your toes in the sand and a slightly uneasy feeling drifts over you. Your concern is mostly for the souls lost when the sea took the vessel to the bottom.

But the smell of the sea and the light breeze soon settle your soul once more. Casting your eyes once again towards the sea, you notice the wave has grown to a small bump, nearer than the horizon. "Must've been a big one... glad it's not near the shore..." you think to yourself.

Sitting down on the sand, you begin to feel comforted again by the fact that you are so far away from this event that it could not possibly affect you. As the seconds pass, you begin to realize that the shore line has extended itself about 500 yards further down the beach. Remembering something you saw on TV a few years back, you come to the realization that this isn't good. Just as you begin to think you should leave the beach, you look up and........................................

Countrywide, Indymac, Bear Stearns, Lehman Brothers, Merrill Lynch, AIG, Wachovia, Washington Mutual, National City and over 280 mortgage companies... GONE or GOING TO BE GONE.

Who thinks this crisis is near bottom? Show of hands....