Glug, glug. . . [updated]

When a bank’s stock drops by 10 percent in a single day, something is up. And this isn’t just Smoky Corners Savings & Loan, we’re talking the big guys, Bank of America, Citi, some Europeans, and so on. As some astute observers (whose views never seem to make it into the mainstream) have been saying for months, we are galloping toward a new banking crisis.

Wall Streeters have decided that they hate Obama’s guts, which is pretty ironic given that he saved them from being hung from lampposts by theirs in 2008 and may soon have to do so again. O has been the big banksters best friend since the day he took office—now he gets another chance to prove he’s got their back as the bloated vacuum cleaners of national wealth totter and again threaten collapse.

If BofA or some other ill-managed wreck does go belly up, Obama will have yet another opportunity to force the management out, tell stockholders they get bupkis (hey, that’s capitalism, you made a bad investment) and reorganize the whole sorry mess with the inevitable infusion of government, i.e. our, cash. But of course he won’t.

Far more likely, far more sad, and far more dangerous is this scenario: the Geithner-led Treasury will insist on throwing new trillions at these zombies while browbeating everyone that the economy will sink otherwise, and befuddled Democrats will go along with it while kissing their re-elections good-bye. Worse yet, the wacko brigade in Congress could easily block any action at all and fulfill their dreams of apocalypse, at which point Jesus of Nazareth will surely ride in on a fiery chariot to inaugurate the Last Days. Can’t wait.

[Update}: Watching the careening stock markets these days is such a vertigo-producing experience one should only attempt it after dosing with dramamine. A comment from some Important Person gooses the equities up; reality in the form of statistics on economic performance jerks them back down again as the Europeans try to keep their 17-nation currency zone afloat.

Some commentators are drawing a parallel between Europe’s tribulations today and those of the 13 newly independent American colonies when Alexander Hamilton struggled mightily to insist that the nascent republic had to absorb all revolutionary war debts, no matter who had issued them. Hamilton won and thus established the ‘full faith and credit’ concept by which the new U.S.A. stood behind these outstanding borrowings. However, Nouriel Roubini (‘Dr Doom’)—who turns out to be quite a wag—said that would work if Europe ‘were a country rather than a cacophony’. Har har, good one. Every time a message emerges from one end of that continent, someone contradicts it from the other end.

One important element of the current uncertainty is, well, the uncertainty. Banks on both sides of the Atlantic are getting slammed in part because no one has a good idea what is really on their books. This is one of the many ways by which the super-rich have managed to bite themselves in the ass—these mega-banks fought and whined and kicked and screamed so successfully against having to reveal their true net worth (shedding the ‘mark-to-market’ accounting of assets after the 2008 meltdown and winning permission from Obama/Geithner to get by on bluff) that now no one believes anything they say. Citibank, BofA, Morgan Stanley and no doubt others we haven’t heard of it are tanking badly, and they have no one to blame but themselves as investors dump their shares for safer havens.