What if the sky doesn't fall?

What really aggravates me about a scary time period like the past year or so is that no one ever makes an apology for wrongfully scaring-everyone-to-death. I am not generally a conspiracy theorist but this time I think we were had, so to speak, by the hedge funds and investment banks.

In 2007 it was common knowledge that big traders were short almost everything except commodities. That means they had made huge bets that most company stocks and indices would fall like rocks in the near future. The only problem: they were refusing to fall in value so the fund managers were losing money. What could they do?

First, they admitted they sold the world at least a half trillion dollars worth of dung disguised as investment grade mortgage packages and second, made everyone think that at least half of all mortgages in America would definitely default and your neighborhood would soon be a dustbowl, and times would get so tough that teenagers could not afford the latest version of Grand Theft Auto (and rape, pillage, etc.)?

These packages were made up of different mortgage tranches, levels with exotic sounding names like Senior Super-Duper Secured Nifty B-II and such. Doesn’t even the word tranche sound like some form of dung? (It is obviously French for dung.)

Anyway, Howard Ruff fans are going to be heartbroken because the miscreants described hereinabove have milked all of the profit they could on shorting our economy and the dollar. Now they are shorting commodities like oil, gold and silver, industrial metals and are buying back financials. At least you will be able to fill your tank again.

Some of the banks and investment firms are being forced to buy back the manure they spread earlier, but only now that the Federal Reserve Board and the Federal Government (that’s the real meaning of You and Us – taxpayers!) have guaranteed that no one who was doing the manure-spreading will lose any money. Did you really think that Citigroup, Bank of America and the swell fellows that run them were going to be left hanging out to dry?

Can you cut yourself in on at least part of the deal? I believe that it is now safe to buy bank stock again. Why? Even after writing down their assets for doubtful mortgage and other investment positions on their books, our financial friends on every street corner are still making obscene profits on everything else they do with our money. If Congress is looking for windfall profits, take a look at these guys. (Don’t tax oil companies because you get less of what you tax more highly. Didn’t any of you take Econ 101 in college?)

Bank of America (BAC) has rebounded to $33 a share from a low a few weeks ago of $18.44. Do not cry about what you did not do in July. At this price you receive a dividend of almost 8 percent. Seen any CD’s in that range? That is reason number two. Number three is that as everyone else realizes the sky will not be falling just yet, they will pile back onto these stocks and the price will return to 50-plus a share. That will produce a long term gain in excess of 50 percent someday. Consider also Barclays Bank (BCS).

Hopefully the new Congress will not consider that to be a windfall profit and raise the tax on you, you greedy investor.