Posted on 08/31/2009 7:35:27 AM PDT by FromLori
This morning I woke up to the media once again "spouting" about how the government had "made money" on the bank bailouts. MSNBC was spouting the mainstream lie, with the following from the NY Times:
Nearly a year after the federal rescue of the nation’s biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again.
The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.
The problem is that this "accounting" is terribly misleading. It ignores the more than $100 billion passed through AIG to Goldman Sachs and others, for example - money that is almost certain to never be recovered.
The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.
No really? Fannie and Freddie are a potential five trillion dollar bomb that the government has refused to take on its balance sheet for fear it may detonate on the US credit rating (yes, the rating of the NATION, not of a company.) This fear is not unfounded; with some 13% of all mortgages currently "non-performing" (either in default or foreclosure), a record, and a "cure rate" down from the 40% range to 6% for prime mortgages, there is every reason to believe that many of these losses will become realized.
“The taxpayers want their money back and they want the government out of our banking system,” Representative Jeb Hensarling, a Texas Republican and a member of the Congressional Oversight Panel examining the relief program, said in an interview.
The taxpayers aren't going to get their money back, and the government has done exactly nothing to force the disclosure of losses that are currently being hidden by accounting games and even outright fraud. Indeed, if anything, the government has encouraged and made possible even more games.
What's worse is that the largest banks now are operating in direct violation of laws intended to prevent "contagion" and systemic risk! Specifically, there are now multiple violators of the 10% deposit concentration rule, yet no demand for a break-up of that concentration of risk has been made. Instead the FDIC has conspired with these huge banks to get even bigger and has ignored the proscriptions in the law preventing this sort of concentration of risk! Yet Sheila Bair still has her job. Why?
This sort of misleading "reporting" is an outrage. It is one thing to be hopeful, but it is entirely different to publish things that you either know or should have known are absolutely false in an attempt to burnish the patina of a fraud-laced pair of Administrations in Washington DC along with the agencies that are their handmaidens.
America deserves better.
More importantly, we deserve the truth. The truth about asset quality, the truth about embedded losses, the truth about The Fed's and Treasury's actions. Every loan, every penny spent, where it went, what it covered and why. Those who wrote CDS without the ability to pay deserve to be treated as the fraudsters that they were and are, and those who aided and abetted backdoor bailouts deserve ejection from public life and, if there is a law we can find that applies, an indictment.
Every federal agency and individual who has conspired with and designed programs to circumvent regulations must be expelled from the government, and those firms who are in violation must be broken up, without exception. All of the exceptions to regulations, including the myriad "23A" letters from The Fed must be unwound.
We have not, as is commonly said, avoided systemic risk - we have in fact added more systemic risk, and shortened the fuse on the nuclear financial devices, placing them ever-closer together and dramatically increasing the risk of a chain-reaction meltdown.
Amazingly enough the media continues to talk about how "we're recovering" while at the same time ignoring the fact that we have not only done nothing to address these systemic risks in our financial system we have actually made them worse and set the hair trigger ever-tighter, raising the risk of a second-level meltdown far worse than anything we have seen thus far in this crisis.
We must interrupt the building chain reaction before we get a "China Syndrome" style outcome - a potential disaster that could literally be triggered at any time by any sort of external shock (caused by, say, a meltdown in the Chinese stock market. Uh, anyone look at Shanghai last night?)
Banks made money of free federal reserve printed money. Unfortunately the government cant print food and energy
Related
European shares fall as China plunges nearly 7 pct
Read more:
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/08/31/financial/f020608D08.DTL
http://market-ticker.denninger.net/archives/1388-An-Ill-Wind-Blows-From-Japan.html
Yeah, I heard this report from a Market Watch blurb on the local radio. I was suspicious of it.
This is nothing more than the corrupt MSM passing along the lies of the Obama administration for the sole purpose of trying to prop up Obama. Was this a Rahm Emmanual plant story??
Probably
Go out there: take a look for yourself. Right now, almost 40% of today's total NYSE volume is in Citigroup, Fannie Mae, Freddie Mac, and Bank of America. That's it: vast sums of money are being used to buy and sell over and over the same shares of companies and quasi-government enterprises that are all giant Ponzi schemes propped up by the taxpayer. But don't worry: Paul Krugman assures us that trillions in dollars of debt is a good thing, and he's a Nobel lauriate and all. Yeah: and I'm Henry VIII.
With all the wondrous economic miracles Obama is said to be performing (if you were to believe anything MSM says anyway)how does MSM explain the steady drop in the markets over the past 2 months, when we have supposedly seen the bottom of this recession, and are now climbing the prosperity tree?
Obamanomics, I guess the peasantry is just too dumb to understand these wondrous works.
Prieur du Plessis
Aug 31, 2009 10:20 am
The Chinese Shanghai Composite Index has now recorded four consecutive down-weeks. The Index witnessed another massive sell-off this morning, declining by a further 6.7% to take its total loss since the peak of August 4 to 23.2%.
[snip]
Never in modern times has there been such a flat contradiction between the euphoria of markets and the stern warnings of officialdom at central banks and financial watchdogs.
By Ambrose Evans-Pritchard
Published: 10:00PM BST 29 Aug 2009
Corporate credit has seen the steepest rally in almost a hundred years, according to Morgan Stanley. Hedge funds are reviving the final bubble play of early 2007, writing put options on long-dated "volatility" contracts to wring out extra profit.
It is as if the Great Contraction – as the Bank of England now calls it – was just a random shock, as if we should naturally expect "V-shaped" resurgence to take us back to where we were. Yet that is what precisely we are being told will not and cannot happen.
"The current financial crisis is unlike any others," says the Bank for International Settlements. Lasting damage has been done. The "cumulative output loss" is likely to reach 20pc of GDP in the major economies.
[snip]
They are systematically sucking every last dime out of this country, and not only that, every last dime out of the pockets of future generations as well.
I just hope Soro's is made to pay every last dime back then hung when this country is finally taken back from these Marxist traitor criminals.
The Federal Reserve is nothing but a group of international bankers.
The money is not 'free', however it's value is controlled by those bankers.
It’s the brokerage houses who are doing the bidding of Mr. Soros and others in this market. I’ve never seen anything quite like it: we have no earnings, no consumer spending, no growth prospects, no employment gains... and the market just keeps ratcheting up-up-up on volume centered around what are essentially Penny Stocks. Mark my words: it will not end well.
It has certainly alarmed US retail tycoon Howard Davidowitz. “As a country we are out of control, we’re in a death spiral,” he said.
Absolutely! Thanks Bill
RE :”The money is not ‘free’, however it’s value is controlled by those bankers.’
Sorry, what I mean by ‘free’ was that they got it at near zero interest rates, then loaned it out at low interest rates, or high in the case of risky credit cards. It’s like if the feds rented you a house for free, and you subrented it to someone on welfare section 8. You would still make money. Of course something is missing. There is a future cost to all this.
Ummm, reporters can't do math - it's easy for scammers to pull the wool over their eyes.
Insider Trading and Investor Sentiment Signaling U.S. Stock Market Top
Insider Selling in August Soars to 30.6 Times Insider Buying, Highest Level Since TrimTabs Began Tracking in 2004. NYSE Short Interest Plunges 10.3%, While Margin Debt Spikes 5.9%
SAUSALITO, Calif., Aug. 28 /PRNewswire/ — TrimTabs Investment Research reported that selling by corporate insiders in August has surged to $6.1 billion, the highest amount since May 2008. The ratio of insider selling to insider buying hit 30.6, the highest level since TrimTabs began tracking the data in 2004.
“The best-informed market participants are sending a clear signal that the party on Wall Street is going to end soon,” said Charles Biderman, CEO of TrimTabs.
:)
In related news, early reports from Bernie Madoff’s investors show that they made money too. I have written off the entire stimulus/TARP package as a total loss, and I consider that optimistic. If that’s all we lose on obama/Pelosi’s socialism, we will have done well.
Yup. The people closest to the action and the first to know what's happening in business are , "running for the hills.'
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