Stock Market is Rational Valuing Citigroup at 61% Fictional Book Value

That uncomfortable position is where some of the nation’s largest banks currently stand. For example, Citigroup shares are trading at 61 percent of its tangible book value, a measure of a bank’s equity that excludes items that are difficult to assess, like good will. And Bank of America stock trades at 75 percent of its tangible book value, down from a slight premium late last year.

Fictional Book Value, FBV, inaugurated here today.

Negative Interest Rates in Japan means the bad assets haven't cleared

Its darkest before the dawn but this More Americans Quitting Jobs as Labor Market Tightens headline is a very positive indicator for our economy and wage growth.  The bad assets swept under the rug with TARP have mostly cleared while those in Japan twenty five years ago have not.  Add Fukishima and the trashing of the country's nuclear utility investment and you have a mountain under a rug of denial.

Don’t Break Up the Banks so the Boys can keep on Playing with Themselves?

Financial institutions; banks in particular, require collateral to manage risk.  An unlimited stream of collateral deemed risk free fueled a growth in assets under management to a point where these banks are less efficient at allocating capital. To Big To Fail banks should be broken up into entities with less than one percent of GDP in assets under management to bring them back to their real purpose, which is to gather savings for real capital investment. Currently derivatives and the like are the investments the boys play at and our thirty year record of wealth and income concentration the result.