Meredith Whitney And I Continue to Agree, Bailout Or No Bailout

By: TraderMark Tuesday, September 23, 2008 6:41 PM

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I've been on the same bandwagon (the anti Kool Aid bus) with Meredith for a long while now (Aug 4: Meredith Whitney Continues to be Negative on Financials (and Housing)) (Mar 26: I'm on Meredith Whitney's Side)

She continues to be negative. I continue to be. And away we go. Remember 2009 will be the year of the wave of US consumer personal bankruptcies as the juggling debt game ends, as credit card limits are hit and there is no place left to stuff the toxic waste (unlike our corporations, we do not bail out individuals). But nevermind that - buy bank stocks (corporate socialism works for them). It's the American thing to do.

The credit crisis that began last summer has intensified so much that any U.S. government bailout plan has "little hope" of improving core fundamentals over the near and medium term, said analyst Meredith Whitney. "Since the onset of the credit crisis, over $2 trillion less liquidity has flown through the U.S. domestic capital markets than during...a year prior," Whitney said.
The Oppenheimer & Co analyst cut her outlook for U.S. banks and forecast further dividend cuts and capital raises at banks.
"With that much less available capital, both consumers and corporations have and will spend less," she added. As the consumer comes under more pressure in the difficult economy, credit card debt may grow, Whitney wrote in a note to clients. Whitney, however, noted that tighter credit standards and credit line reductions have already strained more consumers into defaulting across the spectrum of lending products.
Oppenheimer's Whitney expects the country's GDP to take a hit from likely moves by state governments to cut costs.

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