Monday, November 10, 2008

The next thing to collapse in America

...will be our regional banks. One after another will blow up. There are indexes that track regional banks (such as XLF) which can be shorted by proxy, but I don't think it is worth it. Yes, the investment will do very well, but there are easier calls that will take bigger swings (like foreign markets) that are bigger and thus not as susceptible to government bailouts.

The funny thing about this is that it isn't the residential real estate that will get them...it will be commercial real estate that kills them off. That market is only just now rolling off the cliff. No one sees its impact on the regional banks coming. Commercial RE was always thought to be the safer play, but that is what will deliver the fatal blow.

You'd think we'd finally see how "too big to fail" is a bad thing...yet all we are doing is blowing up regional banks and consolidating all of our nations banking into just three or four "superbanks" like Bank of America and Citi.

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