My guess is the next act in the play will be massive bank asset deals, which will buy time until clauses get triggered. If no clauses trigger then they win the bet. If they lose the bet (which I think they know they will), they may have to buy $X.XX back - using $ they will have raised in the upcoming secondary offerings - provided that the market rallies on the MER-model asset spinoff news. If we see a LEH deal for assets, then this market could rally hard into the sunset as this could be the new model, real or perceived. That could occur in concert with the global central bank-coordinated strength in the USD (if this story pans out).

In a period of duress, people overlook fuckery, such as when Americans wouldn’t let Dubai buy our ports, but had no problem with the Abu Dhabi Citigroup bailout - 19 months later. If the banks run out of money to finance future deals similar to MER’s, then the American public will allow sovereign wealth to extend liquidity. If this were to happen, Sovereign Wealth funds would hold more of our debts, in a direct way that every American is painfully aware of after this mortgage debacle. If the debts default, would they own the assets? If this were the case, Americans would be forced to get their fucking asses in gear and pay their fucking bills. Output would increase as we work harder than ever before. This increase in productivity from the fear of losing our assets (or at least owing money) to foreigners, will kill millions from stress, before they are old enough to be a drain on the system. The current crop of old people will die off soon anyway, in this future. The middle class will be so busy working that only the rich and the poor will reproduce.

I know; rapidly defaulting debt, inflation, unemployment, fucked earnings, fucked guidance, FDIC seizures, Dillution, Commodities…

It could be ignored, except for high oil prices or a bank failure without a bullshit safety net. How many egregious numbers have you seen ignored recently? Market psychology is human psychology. The market becomes desensitized to bad news, just like a soldier becomes desensitized to killing, just like a husband becomes desensitized to his wife’s voice (he just interprets threat level by her tone). There is a law of diminishing returns in terms of how market reacts to bad news of a recurring nature. Iran just said “FUCK YOU” to the G5+1 and oil shrugged it off. We’ll see how long that lasts… Look at this and this and this and this. Bernanke recently said that the perception of inflation is significant, as it can affect market decisions. I assume that the perception of anything is significant - maybe more so than the truth.

So, all it takes to move the market is for enough people to believe the new story, like the one I just made up… possibly until the new president is sworn in. The linchpin is Iran, and I’m sure there’s already a plan for how that’s going to play out.

(This is the last known location of the Britney I used to know. I am saddened by this loss, and I don’t feel that the beaver shot made up for anything.)