The Day in Bad Financial News that Does Not Matter

Normally, I would create an entry here to post the continuing bad news that came out of world financial markets today, such as this morning's $10 billion bombshell from UBS, but since none of this bad news matters because....

1. The Fed will cut rates, and inject liquidity (e.g. print more worthless paper money to hand to the banks to salvage their balance sheets)
2. The Arabs will buy our assets on the cheap, providing a 'floor' for stock prices
3. The Fed will cut rates, and inject liquidity (e.g. print more worthless paper money to hand to the banks to salvage their balance sheets)
4. All bad news is 'priced into the financial stocks'
5. The Fed will cut rates, and inject liquidity (e.g. print more worthless paper money to hand to the banks to salvage their balance sheets)
6. The Asians will buy our assets on the cheap, providing a 'floor' for stock prices
7. The Fed is magical and can create unicorns when not cutting rates
8. We had kitchen sink disclosures in August, bathroom sink disclosures in October/November, but trust us guys this time we are serious - we have reached bedroom sink status, this is truly as bad as it gets, all up from here
9. The Fed will cut rates, and inject liquidity (e.g. print more worthless paper money to hand to the banks to salvage their balance sheets)
10. Nothing more to look at here folks, move on....
11. The Fed will cut rates, and inject liquidity (e.g. print more worthless paper money to hand to the banks to salvage their balance sheets)

.... I urge you to ignore small line items such as below, because truly they don't matter....

Washington Mutual Announces a Lot of Bad (but not important Stuff)

• Washington Mutual (WM), the U.S. savings and loan slammed by slumping mortgage markets, on Monday said it would slash its dividend (doesn't matter)
• cut more than 3,000 jobs (priced in)
• announced a $2.5 billion capital infusion (dilution? who cares - Arabs or Asians with the capital this time?)
• The Seattle-based bank also expects to report a net loss in the fourth quarter after recording non-cash write-downs of home loans segment goodwill. (not an issue)
• "I'm not at all surprised. It's just another casualty in the mortgage tsunami sweeping over the country," said Sean Egan, managing director of credit rating firm Egan-Jones Ratings Inc. (luckily the Fed has tsunami fighting procedures)
• it will stop lending through its subprime mortgage channel (why? our problems are contained? why quit now? the real victims here are once again, the American people. Specifically the American people who deserve $600K mortgages with $250 down and no documented income. Those are the people who lose by decisions like this from evil banks)
• close roughly 190 of its 336 home loan centers and sales offices (contained! job losses offset with new barbers and shoe shine specialists)
• shut down nine home loan processing and call centers (but we created nearly 100K jobs last month, so not an issue!)
• Fitch Ratings downgraded WaMu to A- (what's it take to get a freaking B+ around here? bankruptcy?)
• The company also currently expects quarterly loan loss provisions through the end of 2008 to remain elevated." (equity market says you're wrong, silly bank)

Thankfully, after this bedroom sink quarter - we are done with this issue once and for all! Whew! Just like we were done in August, and November, but this time, we really really mean it!

Bank of America Freezes It's (not a money market, but sounds like one) for Insitutional Investors (you know, the schrewd ones who are way smarter than little retail peon investors)

• Bank of America Corp. is liquidating an enhanced money fund amid withering losses on complex asset-backed securities, the bank said Monday.
• The Columbia Strategic Cash Portfolio fund for institutional investors that was worth $40 billion only a couple months ago currently has about $12 billion in assets, the Charlotte-based bank said. The fund will be closed off to new investors, it added. (thank you sir, may I have another?)
• The loss is related to the subprime-mortgage crisis that has rippled across the globe, Bank of America spokesman Jon Goldstein said. "The conditions have really weakened the performance across the industry, including this one," Goldstein said. (well if you had just waited 24 more hours, the unicorns, rainbows, and Fed cuts were about to be delivered and your $28 billion that you lost in a few months would re-appear. Like magic.)
• The enhanced money fund was a short-term investment pool that offered higher yields than a traditional money-market fund. Unlike traditional money-market funds, the Strategic Cash fund didn't offer investors a guarantee that it would maintain a $1-per-share net asset value, although the fund was managed toward that goal, Goldstein said. (it's always good to have goals - i.e. not losing money in a near money market equivalent - small goals... but goals)
• The Strategic Cash portfolio was open only to investors with a minimum of $25 million or more. Columbia Management is the bank's Boston-based asset management arm. (whew, just missed the cut by a few thousand dollars myself! Thank god I am not sophisticated enough to be involved in such dealings. I really seem to be missing out on a gravy train)

Credit Jitters Spread to Student Loan Market

• Credit-market tremors -- like the ones linked to the housing crisis -- are beginning to show up in the $85 billion student-loan market. So far, there is no apparent shortgage of loans available to college-bound Americans. But analysts say rising defaults, coupled with a new law that cuts federal subsidies to student lenders, are beginning to strain the industry. (what is going on here? If you guys would just remain patient for 1 more day, all our problems are solved - sheesh, all this fuss you raise over nothing)
• Student lenders are under increasing pressure, too. Following a crackdown by New York Attorney General Andrew Cuomo, they have been forced to alter the way they do business. For example, they are no longer allowed to offer gifts or share revenue with college financial-aid officers. (hah! nice! no conflict of interest there)
• It is against this backdrop that on Friday First Marblehead Corp's CEO cited "challenging times" as the company slashed its quarterly dividend to 12 cents a share from 27.5 cents a share, and said it would not bundle any more student loans for investors during the fourth quarter. As this activity shrinks, less money will be pumped into the private student-loan market, which makes up 20 percent of the overall student loan market. (yet another thing, sliced, diced, and 'bundled' - is there any thing left in America that was not 'securitized' and sold to savvy, sophisticated investors worldwide?)
• Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, said he sees "no evidence of any kind of looming crisis of access to capital" for students. (nope, just like we were told no crisis in the mortgage market by the top honchos themselves WAAAAAY back in August 2007)
• But some critics of the student-loan industry have said the sort of meltdown that racked the mortgage market could happen with student loans, especially the more expensive private loans. And many experts have predicted sharp increases in student-loan defaults in years to come. (contained! not an issue! move on!)

Now readers, if ANY of this mattered - I'd actually expect you to read this post and take heed. But since it's simply irrelevent in the greater scheme due to items 1 through 11 listed at the top of this entry, I hope you skipped this entire post and didn't waste your time. Remember - containted, Fed is here, unicorns, it's ok, not an issue, already priced into the stocks, tomorrow is a brighter day, it's not a bailout. Keep those terms near and dear and keep buying equities, and ignore the 'white noise' these banks and financial institutions keep trying to scare you with.