How You’re Going to Get Cornholed Thanks To Obama
by ilene - October 29th, 2010 3:22 pm
How You’re Going to Get Cornholed Thanks To Obama
Courtesy of Karl Denninger of The Market Ticker
The economy, that is.
This is a must-read from Chris Whalen. He’s spot-on, and I will reprint only the conclusions – read through for the why, what and how.
- The U.S. banking industry entering a new period of crisis where operating costs are rising dramatically due to foreclosures and loan repurchase expenses. We are less than ¼ of the way through foreclosures. The issue is recognizing existing losses ??not if a loss occurred.
- Failure by the Bush/Obama to restructure the largest banks during 2008?2009 period only means that this process is going to occur over next three to five years – whether we like it or not. Lower growth, employment are the cost of this lack of courage and vision.
- The largest U.S. banks remain insolvent and must continue to shrink until they are either restructured or the subsidies flowing from the Fed, Fannie Mae/Freddie Mac cover hidden losses. The latter course condemns Americans to years of economic malaise and further job losses.
Yep.
The bottom line folks is that the fraud – massive and outrageous concealment of losses, intentionally making bad loans in the mid-2000s (now admitted to under oath by Citibank’s chief underwriter, among others) and the selling of that paper everywhere and anywhere that the banks could manage, along with holding much of it themselves, condemns us.
The opportunity to take these banks into receivership in 2007 existed. It existed in 2008 too. I counseled on doing exactly this during those years.
Instead, both Bush and Obama decided to protect those who had committed these offenses. First by attempting to bail them out, and then when it became obvious that $700 billion of taxpayer money was literally trying to **** on a forest fire to put it out they decided instead to paper it over by extorting FASB so the losses could be swept under the carpet instead of recognized.
The problem is that unlike long-run spending problems like Social Security and Medicare, which will detonate in ten year or more, this is a current account cash-flow problem and the deterioration continues month-by-month as the payments are not made. It’s like a barrel of dead fish. The next morning it starts to stink. Every day it stinks worse. Putting a…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site