Why the Morgans are up the creek without a paddle

MarketWatch’s  Cody Willard writes: Let’s get right to it: I’m adding short positions to our Revolution Investing portfolio in two banks whose exposure to scandal looks set to explode. The rot at the banks has finally caught up to them, and I think this is a major historical inflection point. As I wrote this weekend in The Cody Word :

“I think shorting the financials right here right now is probably a terrific bet. At worse, it’s an excellent hedge to whenever these endless financial crises that these banks created finally come home to roost.”

What’s bringing the chickens home is the Libor scandal. If you didn’t know about Libor from the financial crisis, you should definitely know about it now. The London interbank offered rate, in very simplified terms, is the rate banks charge each other. Banks get a call, they say what they would charge to lend their banking brethren, and those numbers are averaged. After years of rumors that the rate was being manipulated, regulators slapped Barclays BCS +1.11%  with a $450M fine . Libor is pretty darn important, it’s a bellwether of stress in the lending system, and it underpins everything from Mark Zuckerberg’s mortgage to municipal bonds ….

Find out more at http://www.marketwatch.com/story/the-morgans-are-in-big-trouble-2012-07-17?mod=premiumstoriesnotti&link=djmc_frontpage_module1