Morning Capital Observations

  • I view Goldman's conversion to a bank as proof positive that something was/is not well.
  • GS and MS are now allowed not to mark to market. Maybe they will be able to ride out this crisis but due to their status as banks, during the next boom they will face restrictions limiting their profitability.
  • Australia has completely banned short selling.
  • When is the last time government manipulation in markets worked in the long run?
  • Do you see oil at $108? Will this be one of the unintended consequences of the bailout? Everyone is paying to save a few people.
  • Do you see the 10 year rate at 3.9%, up over 50 bps from last week? Another unintended consequence?
  • As Woody Allen likes to say "the most expensive sex is free sex". Ask any married man.
  • Does the same hold true for free money?
  • There is too much call buying for my taste. That does not bode well for a turnaround but the day is still young.

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