Bernanke invincibility cloak runs out very recently.
BSC put is the one and only Bernanke put and there is no more.
My contact in the Fed (senior economist and aide to someone voting with Ben) has confirmed this and there is no "next one".
Everyone is now allowed to fail, including PMI, MTG, RDN, MBI, ABK, WB, WM, CFC, DSL, FED, BKUNA, CORS, and a few hundred other names that I happened not to short at the moment. The time bought was utilized heavily to raise capital and it's time to start making use of them against previously unrecorded liabilities. As for the GSE I know that a separate agreements have been discussed about what form of handout will be given to them but it is clear that no debt backstopping will be made. A direct equity handout is the most likely way in the form of "third company" to dump credit exposure to the taxpayers lap. This is excellent decision as it will create yet another target to buy puts against.
Of the names I think the final assault on MTG and ABK is the most interesting for me, with very high potential in WB for extracurricular work. But first I need to contact someone who worked there to send me a spreadsheet of their book so I can estimate the forward writedown.
Once I have that I will post a summary here, but indication points to me liking the #s very much, knowing where things trade and what this guy says they have (a PM over there).
The right enemy
5 years ago