Optimism Question

Basically, over the past month, when everyone was thinking "When will the rally end?", the rally continued to kill the bears with much vengeance. The thing I don't understand is, what is the basis for optimism? Because Citi and BoA are profitable? Because they can avoid writedowns since FASB loosened M2M? Because Geithner created PPIP using taxpayer money on the backdrop? Because the market was overdepressed?

Frankly, I think all the points above are invalid. The core businesses of the banks are made to be profitable without the risky betting, collecting deposits without extensive lending. If they are profitable, they should be able to handle writedowns based on M2M, even if they have assets that are unjustifiably depressed. Why? Because these assets are the same assets that make them money when the wind is behind their back, which is when the assets mature. If they overpaid for it, they ought to lose money. That is why I say FASB and the banks have cheated again.

As for PPIP, why should it be a cheer? Geithner basically did the same thing as Paulson, except Paulson created a "holding" rather than a casino like Geithner. The problem now is that the banker is the banks, because the good ones will not be sold and the bad ones will be overpaid for. So just like my previous comment against FASB's ridiculous changes, if I writedown 1 million when the market is down and make 10 million when the market is back up, why should I worry? The solid banks should have done enough homework to prevent the writedowns from bringing them down. Its like the logic of "not investing more than you can spare". So the big firms are like the typical overspending American? I must say, overspending in not an issue isolated to USA, though it started here, that's for sure.

Well, the market is depressed, but I don't think they are at the fair value level, so overdepressed, no. GDP will fall because the government spending is falling into the pockets of the rich. What will the jobless do now? Why should one buy a home they cannot afford? If they want to increase social benefit, then they should have created more grassroot programs rather than a blanket money spray. I may not be the best educated person on economics, but I don't feel my logic is far off.