[Porsche-O-Phile]

Although WAMU shares are cheap right now (relatively), I have a real problem with them. I think a long position on WAMU would be a very amateurish/naive play, and the guys over at Motley Fool tend to agree with that logic.

Conventionally, anytime a company is slated to get bought out, a long position is generally a good thing as the buyee's stock jumps up and a short position on the buyer is generally a good thing as the buyer's stock jumps down. Not always, but usually.

WAMU seems like the Countrywide of the banking world. They not only drank the housing bubble kool-aid, they chugged it. And actually went to the kitchen to brew up some more and chugged that too. I suspect they are in very serious trouble - more than they're letting on right now. I honestly wouldn't be surprised to see them go under in 2009 or 2010, if they last that long.

I don't honestly know who would want to buy Washington Mutual. Citi? B of A? All the big players have their own housing bubble toxicity problems and are trying to distance themselves from subprime and MBSes and SIVs. I don't know if they'd be thrilled to swallow a very-poisoned Washington Mutual. . . Heck, nobody has even made a play for E*Trade yet, and they're DIRT cheap at the moment. Same reason I suspect. And I also think THEY are in real trouble and wouldn't be surprised to see them go "poof" before 2010 also.

This housing bubble thing has been very, very bad. I hate to be all "doom and gloom", but this rabbit hole goes very deep and I think we're only just scratching the surface insofar as seeing as just how bad it really is and how much damage all this stupidity has done to various sectors of the economy.