Posted on 04/21/2009 7:23:55 PM PDT by St. Louis Conservative
Accounting rules change.
Sudden profits
Must be a coincidence.
Gordon Brown and Alistair Darling are growing increasingly concerned over America's failure to clean up the "toxic" debts of many of its major banks despite repeated attempts to do so.
[snip]
Posted By: Edmund Conway at Apr 21, 2009 at 17:16:47
A month ago the International Monetary Fund was charged by the G20 finance ministers with finding out precisely how the balance sheets of the world's major banks would look if they were to get back to lending again at more or less the rate they were in the pre-crisis days. Today the Fund delivered its verdict and it is both clear and terrifying.
The simple truth is laid out in page 33 of the Global Financial Stability Report, published today in Washington: "if banks were to bring forward to today loss provisions for the next two years, before expected earnings, US and European banks in aggregate would have tangible equity close to zero."
In other words, the entire global banking system would be bankrupt - kaput - if its institutions immediately wrote off all the toxic assets still sitting in their vaults without any government assistance. And bear in mind this already takes into account the money we have already thrown at the banks. So even after all this has been spent the financial system remains, effectively, insolvent, bearing in mind the amount of cash the banks have lost as a result of the bubble of the 2000s.
[snip]
The scale of the losses associated with the financial crisis are set to mount to $4.1 trillion (£2.8 trillion) - more than $630 for every man, woman and child on the planet, according to a new report from the International Monetary Fund.
[snip]
Knowing these guys pushed and got their mark to market rules the way they wanted them, I’d say the NYT’s right on the money here.
"At some point, investors will realise that bank losses are massive, and that some banks are insolvent. Deleveraging by highly leveraged firms -- such as hedge funds -- will lead them to sell illiquid assets in illiquid markets. And some emerging market economies -- despite massive IMF support -- will experience a severe financial crisis with contagious effects on other economies."
Text from this was sent to me in e-mail. I checked Snopes & found nothing about it.
http://www.wikiprotest.com/index.php?title=A_Phone_Call_With_The_Federal_Reserve
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