The final nail in the fund’s coffin was the move by one of its lead sponsors, Citigroup, to bring some of its SIV exposure onto its own balance sheet rather than utlilize the SuperSIV.

Well that was a little bit of delusion that died hard. But how about this read on the death of the "superfund" (which, by the way, is a word that means "publicly-funded toxic waste cleanup site", apparently unbeknownst to Hank Paulson):

The fact that the banks feel it is no longer needed is very good news indeed, according to value investor Todd Sullivan, writing on SeekingAlpha. “It means the write downs for the SIV’s at the institutions can’t go much lower. These things ARE worth something. ”

Ah, the permabulls. Their optimism is quaint. But what if the banks have scrapped the super-SIV bailout for any number of other reasons, such as the market and shareholders not going for it, or the likelihood of failure without unanimity from peer banks, or the logistic difficulties of renegotiating terms?

Perhaps the banks do think the writedowns are just about over. They're an optimistic lot too. But a more cynical term for that might be "self-delusional". So what if the credit markets are fundamentally impaired, and these vehicles will be ailing for the long term?

In that case, we would not quite yet be scouring the banking sector for "deals".

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