Wednesday, January 12, 2011

The Blind Panic of US Banks & Politicians

Moral hazard neglected as phony profits are being made thanks to corrupt accountants supported by mafia regulators and cheered on by fraudulent politicians and scary bankers.

Apparently only a few people "scratch their heads". The rest lives the lie.

Our society, as we know it, is "toast".

"Why would this be a problem", one could argue. "They rescued the world from a financial collapse?" Yes, but consider this:
  • the collapse will happen anyway; they are postponing the inevitable.
  • the "repair" is not transparent, no consultation at all but in the highest echelons of government & Wall street
  • the "repair" favours a few insiders; the well-connected, to become billionaires and future rulers
  • fraud is rife, rules and laws are being ignored: where are the law suits?
  • regulators, the watch dogs have been neutered; consider the SEC and accountancy profession which have been ordered to "cook the books".
  • Without consultation, the middleclass will foot the bill for the repair, 20-30 trillion US$ till now and empoverish them;
  • After the "repair", total costs will be 80-90 US$ Trillion and Wall street will continue their paper game
  • they are creating a fascist state in which physical and mind control will rule;
  • there is no way back to "democracy".
That's why we are TOAST. And do not think this post is not directed to you as you are not living in the US. Our financial & poltical world is too interconnected.

UPDATE: Threats from everywhere, not only for the middle class, now also for the "elite": the OMERTA has been broken! Code RED. If you talk, you're dead. Politicians, bankers and wealthy of this world are corrupt to the core: Swiss operation Officer of Julius Baer decides to talk, leak documents on internal policies to Wikileaks.

UPDATE1: Sorry, not 80-90 Trillion, but US$ 100 Trillion to clean up the mess. I was close, but not "on the spot". Sorry, but what's US$ 10-20 Trillion between friends?

UPDATE2: Damn! Wrong again. According to the World Economic Forum (WEF) we need US$ 210 Trillion for the coming 10 years just to retain GDP growth.

US Banks Report Phantom Income on $1.4 Trillion Delinquent Mortgages

Huffington Post

The giant US banks have been bailed out again from huge potential write-offs by loosey-goosey accounting accepted by the accounting profession and the regulators.

They are allowed to accrue interest on non-performing mortgages until the actual foreclosure takes place, which on average takes about 16 months.

All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a result, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off the books of the banks.

This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due to them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.

Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.

The potential write-offs could be even larger should home prices continue to weaken, placing more homes in the nonperforming category on bank balance sheets.

About 6 million homes are still at risk, according to Schnapp, and at least 10% of them are 25% underwater, meaning their market value is 25% less than the mortgage -- but the owners are still paying interest to their banks.

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