Finally Merrill Lynch (MER) did the dirty deed; selling off assets at 22 cents on the dollar. You can almost hear the shuddering across the other banks as this now marks "fair value" on this junk. Folks, some of these guys still have assets market at the full dollar because they are guaranteed by Ambak (ABK) and MBIA (MBI) and their "triple A rating" which are essentially neutered. It's all a big joke.

Already CNBC has on their home page for the upteempth time "Is the Bottom in Sight?" It has now been a YEAR since the first calls for the "kitchen sink quarter" and "the bottom is in sight". Keep saying it folks and one day you will nail it! While I think this is actually a good transaction because (a) it rids MER of risk and (b) it was not a government bailout and (c) Lone Star Funds is going to make a lot of money because even if the assets are only worth 44 cents on the dollar they will make 100% (plus Merrill is guaranteeing some kickbacks).... this points to the hypocrisy on the Street. John Thain has promised us over and over and over that the firm did not need to raise more capital. Even 2 weeks ago during earnings report when they sold off Bloomberg instead of Blackrock. (Jul 17: Blackrock Earnings Excellent as Usual; Merrill Lynch Won't Be Selling) What did I say at the time, having zero access to Merrill's balance sheet and not being the CEO? Just a few days later in our weekly summary I opined

I cut (to raise cash) a lot of the remaining Blackrock (BLK) after a stellar earnings and even more importantly the news that Merrill Lynch (MER) won't be selling its stake at this time. I still have some doubt that they won't be forced to sell some of their position to stay afloat as we get into 2009.