[quote=Arraya]http://market-ticker.denninger.net/
So Wells comes out this morning and says they’re going to make a “record” profit, claiming an expected 55 cents (.vs. mid 30s expectation)
It must be nice to be able to keep loans on the books at whatever price you feel like, receive billions of taxpayer money including “assistance” in rolling up Wachovia, and then turn out to not need it, right?
That is, if these numbers are accurate.
Wells premarket is ramping from $14.89 at the close yesterday and now trading premarket at $18.10, up over $3 or some 30%.
This leads one inescapably to the following:
Either Wells is lying (obfuscating losses through unrealistic marks, etc) OR
These “bailouts” were no such thing – they were a simple and transparent looting operation by the banks that is now showing up directly in “earnings” (and will shortly show up in the bonuses of executives too!)
So which is it folks?
“Is this $3 billion profit before or after you account for the $25 billion in bailout money. Revenue is $20 billion, we gave them $25 billion, that’s a net of -$5 billion. Where’s the $3 billion in profit coming from?”
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This post is unintentionally hysterical.
First of all, to Karl’s point about lying or looting… IF the results are “real” (and that’s a big “if”)… isn’t that a good thing? Don’t we want to get our TARP money repaid as taxpayers? And don’t we want to see the banks we’ve made investments in making more money so that they can pay us back? I hate these big pigs, but, hell, they can’t win at this point. If they lose money, they lose OUR money, which is bad. If they make money, then they didn’t need our money, which is bad. But at least in the latter case we’re more likely to get paid back. Again, they’re damned if they do and damned if they don’t. If the results had been poorer than expected, then Karl would have been saying, “See, we’re never going to see our money again!!” Personally, I’d like to get paid back. So, I’d rather see better results – even “black box better” – than poor results.
Regarding the “profit” math above… somebody doesn’t understand the first thing about accounting. The bailout money is CAPITAL. Not REVENUE. Capital is on the balance sheet. Revenue is on the income statement. Whoever wrote that passage should be barred from ever posting anything on a financial topic until they take Accounting 101. Lawzy, lawzy, lawzy. Words escape me. Wow.
