What that tells me is that not everything is fine when
we are 2 years into the largest bailout in the history of
bailouts and we have banks defaulting, remember only the
"strongest banks" were getting bailed out, and bank
closures are accelerating as well. All of this while the
pundits talk about "the greatest V shaped recovery in
history" which is laughable. If we were in recovery mode
wouldn't these banks be earning their way out of this mess?
They have the greatest accounting gimmick, mark to model,
at their disposal and they are defaulting and being taken
over by regulators at an increasing rate. How can that be?
Perhaps the system is not as strong as we are told, that
sounds about right to me.
We have to face the facts and the fact is that the data
does not lie, banks are defaulting and failing. Real estate
prices, both residential and-- especially-- commercial are
falling, which means more problems for banks. The banking
industry as a whole is much larger than Citi (
), Bank of America (
) and JP Morgan (
), and I am hard pressed to make the statement that those
banks are largely benefiting from proprietary trading,
government bond underwriting and the ability to mark to
model. In other words, the bailout failed with the
exception of the too big to fails and, as we already knew,
the bailout was really just a selective bailout anyhow.
How could Bear Stearns be allowed to be acquired, but
Lehman fail? Just days after Lehman fails [[AIG]] gets
bailed out, the proof is pretty overwhelming about the
selectivity of the bailouts, in my opinion, and TARP was
designed to make the big banks flourish and the rest of the
banks, well who cares because no one cares about the rest
of the banks. I mean, who ever heard of Midwest Banc
Holdings anyhow, except for the depositors.
So, as the ECB gets ready to release useless stress test
results, which I am sure will show Greek and Spanish banks
in trouble, but everything else hunky dory, consider the
fact that our stress test and bailouts were completely and
utterly useless. In other words, if you cannot trust our
results, it has taken almost 2 years for the failures to
show up, how can you trust the ECB's results? Geithner
knows this, which is why he pushed for the stress test. He
knew you can fool the markets for a little while with
useless stress tests and a seemingly huge bailout fund.
However, the results cannot be hidden forever and our
results are public, for those willing to look for the
statistics, and prove that their strategy just kicks the
can down the road and still leads to failure. Unless you
consider accelerating defaults and closures a success, I am
sure some talking head somewhere will see it as a stunning
success, but in the real world most people see escalating
failure for what it is, failure.
Yield Curve Says: Slow Growth, But No Recession