Wednesday, November 23, 2011

More FEDERAL RESERVE Bullshit in the Form of New Stress Tests

More BS from the masters of spin. Now doing forward damage control. Excellent piece on "naked capitalism" http://www.nakedcapitalism.com/2011/11/the-fed-stress-tests-while-europe-starts-to-burn.html

Bankers have absolutely no interest in ever disclosing the truth about their insolvency. Why? Because if there is ever a hint of insolvency, thousands of people run to their bank and draw out all of their money. That money is needed to support fractional reserve lending. Without it, banks collapse. Investors sell banking stock like it's on fire and drive the price down. Bankers and their shareholder boards- don't like that.

Therefore, if you were a banker, what incentive would you have to tell the truth when your bank is leaking oil?

Answer- none. In fact, bankers would be motivated to lie. Which is precisely what has been going on since 2007. Kick the can and hope things improve.

My favorite lying and thieving bank is Bank of America. I told readers right here, (search the archives) to short this bank two years ago around 18. It now trades for 5 and change. Now even the great Warren Buffett has sunk 5 billion into that oil leaking piece of banking junk. Sometimes Warren you eat the bear- sometimes the bear eats you. With the BAC investment- I'll refer to Warren as "dinner."

I am not kidding you one bit when I tell you that big banks are still valuing real estate that they own at 2006 prices. These ridiculous and inflated asset valuations are the only method that banks can use to create the appearance of solvency. If these banks were forced to value "assets" at real and current prices- all hell would break loose again.

By law, bankers are allowed to engage in some of the greatest and most deceptive accounting standards ever devised. Let me call them what they are. Bullshit. Mark to fantasy accounting. Who designed the laws that allow this? Bank financed congressmen. Funny how that works. The FED encourages this practice because they too, operate under a cloak of secrecy designed to make you think they can bail out the world with the secret trillions they have in reserve. That is another fantastic piece of bullshit. A freedom of information act request revealed that our Federal Reserve loaned 16 trillion dollars at the height of the banking collapse in 2008. That is 16,000 billion. If you  actually think the FED just happens to have 16 trillion laying around waiting to bail out the world, you might need a CAT scan. http://www.rawstory.com/rs/2011/07/21/audit-fed-gave-16-trillion-in-emergency-loans/

So how did they do it? Quite simply, they add electronic zeroes to balance sheets. 

So now the unelected 4th branch of government which runs the world- is asking for new stress tests. Stress tests for American banks so that they can calm all of you American sheep depositors or investors and keep you from repeating what you did in 2008 when european banks begin to fail. http://www.businessweek.com/news/2011-11-23/fed-seeks-to-bolster-confidence-in-banks-with-stress-tests.html

American banks are exposed (derivatives) and levered to/with european banks. So the FED is going to engage in another round of make believe stress tests. Tests designed to calm all of our fears, bolster confidence, and avoid another mad dash for bullion. If you think for one second, that any big American bank will fail any of these stress tests, I will personally find the highest bridge in America and jump off. They'll even find a way to polish that big turd- Bank of America. You watch and see.

It's been nearly 5 years since the bankers socialized their losses and stuck American taxpayers with the bill. The Wizard of Oz, Ben Bernanke, is busy pulling levers and continuing to engage in cheer leading exercises. Exercises designed to help politicians get re-elected. The euro and european union are on the verge of complete collapse. If you think American banks are insulated from that mess you are wrong. The FED's actions are so predictable- that they are laughable. I am in absolute awe that they have managed to maintain this charade of solvency for 5 years. That all of these new stress tests are designed to do- is to extend that charade. In the meantime, the US Debt clock keeps churning away.

http://www.usdebtclock.org/

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