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I was just in Scotland and all I saw was for rent and for sale signs on buildings. The economy in Europe looked like a mess to me. That probably bodes poorly for these guys.

I do disagree with the increase in US interest rates, though it really bears little impact on the subject at hand. Inflation is not what it appears, we are having commodity price increases, which is very different than inflation. I see the next move as possibly another cut in '09, especially if Europe starts cutting like they need to. We might have inflation if the government decides to start printing money to cover the bank losses (FRE, FNM, BSC) which is a good possibility. Just have to keep our eyes open for it. Plus, inflation requires rising wages, which is absolutely not happening.

I had some puts in this dog that went out worthless a few months back. Since that time I have started purchasing longer horizon puts. These banks are doing so much manipulation that we just don't know when the final shoe will drop. Their purpose is to string it out as long as possible just so that they can survive.