The Big Four bounced back yesterday. “Investor confidence has returned”, says News.com.au. The banks each rose between 2.7% and 3.7%.
Investor stupidity has returned, say we. Gullibility and blind faith in the financial sector rose between 2.7% and 3.7% yesterday.
The spring under this bounce came from US investment bank Merrill Lynch. It wrote down US$5.7 billion of plummeting CDO assets. In the process, it basically acknowledged that its mortgage-based CDO assets are worth around 22 cents on the dollar.
Oh, joy. This is a grand thing for Australian banks. Investors loved it. They heard that Merrill was also raising $8.5 billion through a stock sale. Oh quick, buy a bank. The financial crisis is over.
