"We need a merger partner or we’re not going to make it." -John Mack, CEO of Morgan Stanley

As Fears Grow, Wall St. Titans See Shares Fall: "Even Morgan Stanley and Goldman Sachs, the two last titans left standing on Wall Street, are no longer immune.

To the surprise of executives within those firms, and their rivals, the stocks of these powerful companies were drawn into the crisis of investor confidence on Wednesday. Morgan Stanley, whose stock fell almost 25 percent, was considering a merger with Wachovia or another bank to help shore up its finances. Goldman Sachs’s stock fell almost 14 percent, and it had to rebuff rumors that it was seeking a capital infusion."

I said it in this morning's post Financials: Stay Short: Morgan Stanley Next Domino.

This looks serious and this looks DESPERATE.

"“We need a merger partner or we’re not going to make it,” Mr. Mack told Mr. Pandit, according to two people briefed on the talks. Mr. Pandit, a former senior investment banker at Morgan Stanley, said Citigroup was not interested. It is thinking of deals it can strike with consumer banks, like buying the struggling Washington Mutual out of bankruptcy if its reported efforts to auction itself should fail, that would provide it with cheaper deposit funding. A Citigroup spokeswoman declined to comment.

Having failed at that, Mr. Mack entered into discussions on Wednesday with Wachovia and several other banks, people briefed on those discussions said. The talks with Wachovia are preliminary and a deal may not emerge. The banks declined to comment."

First of all Citigroup (C) can't afford to acquire anybody. Citigroup is dead. They have the kind of balance sheet that makes you vomit. You see, C is the king of Level 3 assets. How much does C have in Level 3 assets? Just THE MOST.

See Bulltrap: ABCP and Level 3 Bombs to see how much.
See Level 3 Rules to better understand the scam.

Second, the banks might as well wait and collect the same assets for pennies on the dollar AFTER a bankruptcy. Much like Barcley's just did with Lehman...

Honestly, this is what probably happened: C had two options. The first was to insult Morgan Stanley (MS) by saying the don't want to merge. The second was to openly acknowledge they cannot afford to buy them because they are about to die themselves. They took the path of least resistance.

C is the third largest component in the UltraShort ProShares Financials ETF (SKF).

People, especially the talking heads on Bubble Vision (CNBC) keep blaming these mythical short seller ninjas for these disasters...

I have one simple question for all the clowns that blame short sellers: "Isn't that a bit like blaming the flies for the shit?"

Explain to me why the Bulltards can't just absolutely smash the evil shorts in these stocks? Hmmmm? If these companies are so fine, why won't the 'smart money' swoop in and just eat the shorts? Just squeeze them until they squeal like little girls?

You know EXACTLY why. The flies are there because they smell nothing but SHIT.

End of story.