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Wow, what a difference a day makes!

Today, as a Recommended diary by soros, tells us, the NY Times is reporting that insiders are claiming that banks are in better shape than they thought they "might" be, and that all 19 major banks should pass their stress tests, even though they'll probably have to get bailed out even more down the road.

How odd that on Tuesday, Reuters reported that the results of the stress tests would be put off, so that the news wouldn't affect earnings season!  And that, and I quote, "The last thing Treasury wants to do is set off a panic."

Bottom line?  We're being lied to, big time.  Again.  By the administration that supposedly is of "hope and change".  

Well I'm hoping for some change myself right now.  I'm hoping that somebody wises up and gets rid of the professional-loser and failing-upwards and disaster-causer Summers and the equally hapless and incompetent Geithner.  In other words, I want Obama to wake the F up and realize that he's either being equally incompetent and stupid, or else he's been duped by whoever recommended he hire these losers and f'ing well fix it.  

I want what we were promised, which was "transparency".   Instead we're getting pissed on, again, and told that it's raining.  Shades of the Bush years.

WASHINGTON, April 7 (Reuters) - The U.S. Treasury Department is planning to delay the release of any completed bank stress test results until after the first-quarter earnings season to avoid complicating stock market reaction, a source familiar with Treasury's discussions said on Tuesday.

Don't you love how they put that?  To avoid "complicating" stock market reaction?  Good lord ...

Why is this so bad?  Well today the stock market is experiencing a signifigant rally based on a "profits" report from Wells Fargo which was far above expectations.

Wells Fargo is, as many have reported, most likely insolvent.  Yet with their infusion of billions TARP money, they are suddenly showing a "profit".  Wow.  Yeah, I took first grade math.  If I dump thousands of gallons of water into a badly leaking swimming pool, it will actually fill up.  For a while.  

So now millions of people are gonna get hammered from this rally, buying shares of a bank that is more than likely insolvent, because they're being lied to by our new government.  

How is this productive?  How could this possibly lead to anything good?  Sure, as of today, this morning, Wall Street is doing backflips.  So what?  When it all comes crashing down, again, who really gets hurt?  Mom and Pop retirees, like my own father, who is 74 and trying to live off his 401K for the rest of his life.

The source, speaking anonymously because the Treasury has not made a final decision on what to disclose, said officials do not want any test results released before the earnings season wraps up for most U.S. banks on April 24.

So they can't seem to figure out how to tell the truth to the public.

Officials realize it may be hard to keep the results under wraps, and they are looking for ways the banks could disclose some details without unduly disturbing the markets. They are also looking at providing some summary information about how the banks fared.

"Unduly"???? WTF do they mean by "unduly?"  If the banks are in trouble, that's a goddamn FACT, and the markets had damn well better be "disturbed" by it!  

What is WRONG with these people?   The sooner the truth about everything comes out, the sooner we can get back to normal.  "Normal" being where things should be, where they belong."

But officials are worried about how the market will react to the stress test results if there is not a clear recovery path for a bank that is deemed to have a large capital need.

The last thing Treasury wants to do is set off a panic, the source said.

So there you have it.  The story that seems to be the truth, and then the anonymous leaking today of the bullshit.

All for some short-term gains in the stock market.  And we all know the only people who benefit from that are the brokers who are in the know.  The rest of us?   Shit Out of Luck (SOL) as always!  

Originally posted to Inky99 on Thu Apr 09, 2009 at 12:22 PM PDT.

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Comment Preferences

  •  T/J I was really hoping (43+ / 0-)

    after Obama was elected, we could quit being outraged for at least a little while ...

    William Casey "We will know that we have succeeded when everything the public believes is false"

    by Inky99 on Thu Apr 09, 2009 at 12:23:41 PM PDT

    •  Treasury said they weren't going to close (4+ / 0-)
      Recommended by:
      jj32, pgm 01, Fonsia, ScientistSteve

      any banks as a result of their test, but that some will need additional help. That is pretty much the extent of what they said.

      The stock market is hyper sensitive to the actions that the Fed makes. Why should they NOT try to control how news is released? I think that by saying ahead of the findings that no banks will be closed (good news), but that some are still in bad shape (bad news)is not a horrible move nor a lie.

      Ablington is a scab at the bending factory. Relentless!

      by ablington on Thu Apr 09, 2009 at 12:46:50 PM PDT

      [ Parent ]

      •  they were NEVER (10+ / 0-)

        they were NEVER going to close any of these banks because of this test. Stress test is a bullshit misnomer like the Patriot act.

        (regarding the bank mess) They want to cure the patient but not deal with the disease.

        by dark daze on Thu Apr 09, 2009 at 12:50:03 PM PDT

        [ Parent ]

        •  Today I Heard Ed Schultz Losing HIs Creditability (1+ / 0-)
          Recommended by:
          JerichoJ8

          This is a sucker' rally.

          Even congenital thieving Wall Street Weasels with a good night's sleep and taking 'NODOZE' will need some time to consume a $2 trillion plate of food.

          But when it'd gone, they are going to be just as hungry as ever...

          RMD

          The Bushiter's Iraq 2004 - 1268 Dead, about 25K Medivacs and 9000 Maimed... It's the Bushiter Way, wasting other people's money and lives. And it's worse now.

          by RedMeatDem on Thu Apr 09, 2009 at 01:54:51 PM PDT

          [ Parent ]

          •  What was Schultz saying exactly? (0+ / 0-)
            •  Oh, He Was Trying To FLUFF WFB's 'Profit Report' (0+ / 0-)

              Wells Fargo Bank is going to pay back it's bailout money 'this year' some prognosticator's say.

              Yadda-yadda-yadda.

              Everybody paying attention to the last eight years of corporate news can recall all the whoop-de-doo-doo over corporate profits while working people lost ground.

              Now working people are tapped out and losing their jobs and homes and it ain't a gonna help that some fat-ass bankers engineered an accounting 'miracle'.

              I also lost a lot of respect for Ed Schultz when he started doing HUMMER commercials - for GOD's SAKE, fucking HUMMER commercials!!!

              This crap isn't going to fool many for long.

              RMD

              The Bushiter's Iraq 2004 - 1268 Dead, about 25K Medivacs and 9000 Maimed... It's the Bushiter Way, wasting other people's money and lives. And it's worse now.

              by RedMeatDem on Thu Apr 09, 2009 at 04:01:54 PM PDT

              [ Parent ]

            •  Eh, he was just boostin the administration. (0+ / 0-)

              This rally seems to me to be a bear trap.  I think we'll be hoverin in the 8500-7500 range for the next quarter.

              And btw, dont ask my why I think that, I might as well have pulled those numbers out of a hat.

              GOP supported their standard bearer and all they got was this lousy minority status.

              by AfroPonix on Thu Apr 09, 2009 at 04:03:41 PM PDT

              [ Parent ]

    •  I'm so sick of being lied to... (4+ / 0-)

      Part of me wishes that if the whole thing is going to collapse like a house of cards, they'd just cut the crap, and admit it. Then we could get down to business as a nation and figure out how to start over. Why keep pretending that everything is fine?

      Why are we still stuck with losers like Geithner? Obama is a brilliant man -- don't tell me he can't find someone better than this?

      Thanks for keeping us updated, even if it does mean more sleepless nights.

      I defy the tyranny of precedent. I cannot afford the luxury of a closed mind. I go for anything new that might improve the past. ~ Clara Barton

      by AuroraDawn on Thu Apr 09, 2009 at 01:14:47 PM PDT

      [ Parent ]

    •  Treasury's grading on a curve. n/t (0+ / 0-)

      Code Pink Rocks - Why are women the only one's with balls lately?

      by JerichoJ8 on Thu Apr 09, 2009 at 01:24:19 PM PDT

      [ Parent ]

  •  Calm . . . . Calm now. . . (6+ / 0-)

    As I said in a comment to soros:

    Criticisms of an Obama cabinet member or part of his economic team is beyond the pale.  Doncha know that it will lead to a resurgent republican party, prevent a Democratic majority, increase tooth decay and an acceptance of creationism.

    Distrust of authority should be the first civic duty. - Norman Douglas

    by Fossil on Thu Apr 09, 2009 at 12:28:36 PM PDT

    •  and this (5+ / 0-)
      Recommended by:
      xaxado, 0wn, Kristina40, JerichoJ8, AuroraDawn

      and this will effect all of us in the soup line how?

      (regarding the bank mess) They want to cure the patient but not deal with the disease.

      by dark daze on Thu Apr 09, 2009 at 12:30:33 PM PDT

      [ Parent ]

    •  You are wrong Fossil (2+ / 0-)
      Recommended by:
      Fonsia, ScientistSteve

      it is the way you criticizing the Obama Admin.

      When someone is saying that Obama is breaking the law.

      or

      Bottom line?  We're being lied to, big time.  Again.  By the administration that supposedly is of "hope and change".  

      You are making accusations.  This is going way past criticism -- why can't people understand that?

      Obama has 90-95% approval ratings with the Dems.

      •  99% (13+ / 0-)

        99% of the public has no understanding of the banking system in this nation

        (regarding the bank mess) They want to cure the patient but not deal with the disease.

        by dark daze on Thu Apr 09, 2009 at 12:33:48 PM PDT

        [ Parent ]

      •  Your point is well made, except (3+ / 0-)
        Recommended by:
        Tin hat mafia, JerichoJ8, AuroraDawn

        for adding the approval ratings at the end.  If 90% of people approve of someone's job performance, it doesn't make every decision made by that person right, or immune from criticism.  That said, I think Preident Obama is doing rather well with the real world circumstances he faces, and he gets plenty of this rhetoric ("supposedly is of 'hope and change'")from the Hannitys and Savages.  We, as his allies, should criticize more constructively.

        George W Bush: 8 years of Presidency, 13 Years of War (and counting...).

        by XNeeOhCon on Thu Apr 09, 2009 at 12:38:48 PM PDT

        [ Parent ]

        •  True Xneeohcon (1+ / 0-)
          Recommended by:
          XNeeOhCon

          If 90% of people approve of someone's job performance, it doesn't make every decision made by that person right, or immune from criticism

          This is true-- that would be consider a fallacious argument by numbers.

          However, my intent was not to say Obama was right based on his high approval rating, my intent was to let the poster and diarist know, that they represent a very small group of the dem party.

          •  I agree with that statement, (0+ / 0-)

            when added in the context of your other post it seemed like you were trying to make the "all your friends are doing it" argument about not criticising Obama for anything.  

            I agree with the criticism to some extent, just not the tone of the diarist.

            George W Bush: 8 years of Presidency, 13 Years of War (and counting...).

            by XNeeOhCon on Thu Apr 09, 2009 at 12:47:41 PM PDT

            [ Parent ]

      •  Lies . . . damned lies . . . and Shadow Stats (9+ / 0-)

        To see just how we are being lied to, try checking out the information at Shadow Stats.

        I see every attempt by Obama's economic team to cherry pick and use deliberately biased analysis in an attempt to mislead.  The fact that CPI has been deliberately biased along with singular use of E3 for a number of administrations does not excuse the current administration from continuing that charade.

        So, when banks were allowed to determine the "stress test" models applied to them, or no inspector actually looked into the actual assets they are holding, I see just another layer of obfuscation.

        Then there is the deliberate social distortion that the stock market = the economy.

        I call shenanigans on all this bullshit and want transparency and accountability as the Oversight Committee supports.

        Distrust of authority should be the first civic duty. - Norman Douglas

        by Fossil on Thu Apr 09, 2009 at 12:40:44 PM PDT

        [ Parent ]

        •  we cant handle the truth (6+ / 0-)

          "It is well enough that people of the nation do not understand
          our banking and monetary system, for if they did,
          I believe there would be a revolution before tomorrow morning."

          - Henry Ford

          (regarding the bank mess) They want to cure the patient but not deal with the disease.

          by dark daze on Thu Apr 09, 2009 at 12:42:37 PM PDT

          [ Parent ]

          •  Once again Fossil and Dark Daze (0+ / 0-)

            Roubini disagrees.

            I do not accept the trojan horse evil plan theory.

            •  I Trust Elizabeth Warren To A Greater Extent (5+ / 0-)

              I admire Roubini for seeing the housing bubble, but his assessment is filled with many contingencies.  I think Warren is spot-on because she is able to frame the issues, provide a scope of the problem, and suggest reasonable alternatives.

              Distrust of authority should be the first civic duty. - Norman Douglas

              by Fossil on Thu Apr 09, 2009 at 12:57:45 PM PDT

              [ Parent ]

              •  housing bubble (0+ / 0-)

                cost of housing doubles and triples while wages remain stagnant, you had to be an idiot NOT to see the bubble.

                (regarding the bank mess) They want to cure the patient but not deal with the disease.

                by dark daze on Thu Apr 09, 2009 at 01:02:00 PM PDT

                [ Parent ]

                •  Yep - I don't know . . . (2+ / 0-)
                  Recommended by:
                  slinkerwink, dark daze

                  why people thought that the economic fundamentals of house ownership didn't apply to them.

                  There is a whole group of housing bubble bloggers such as Dr Housing Bubble who saw this and still see the reasons why we are not creating the conditions for a turn-around of our sputtering economy.

                  Distrust of authority should be the first civic duty. - Norman Douglas

                  by Fossil on Thu Apr 09, 2009 at 01:04:37 PM PDT

                  [ Parent ]

                  •  i agree (1+ / 0-)
                    Recommended by:
                    Badabing

                    sad to say, I see no reason as to why this economy will turn around.  This is all about jobs and I dont see any sector being the rocket fuel we need to create the 10's of millions of good paying middle class jobs.

                    Its gonna be a Katrina recovery,  whole sectors and large swaths of people and areas are gonna be destroyed,  but the msm and the americans that do hold their jobs will just try their damndest to ignore them.

                    Right NOW..1 in 5 kids in america lives in poverty.  1 out of every 10 american are on food stamps.  
                    and its gonna get much worse...

                    Yet all we get is... Pirates in the open sea...  woohoo look over there..

                    (regarding the bank mess) They want to cure the patient but not deal with the disease.

                    by dark daze on Thu Apr 09, 2009 at 01:09:02 PM PDT

                    [ Parent ]

                    •  ps (0+ / 0-)

                      ps. and you'll notice when they talk about Pirates, they'll never report on why people there resort to such things. or About how the IMF and Banks have fucked over these countries etc..

                      (regarding the bank mess) They want to cure the patient but not deal with the disease.

                      by dark daze on Thu Apr 09, 2009 at 01:11:08 PM PDT

                      [ Parent ]

                •  Inflation Greenspan style (0+ / 0-)

                  Keep working wages low and workers insecure while you inflate equity and housing bubbles.

                  Claim that inflation is low and sure as Hell don't EVER point out that when housing prices double and triple that's some pretty brutal fucking inflation.

            •  well (0+ / 0-)

              I do not accept the trojan horse evil plan theory.

               then you havent been paying attention this last year? what did you think caused this historic crisis?

              (regarding the bank mess) They want to cure the patient but not deal with the disease.

              by dark daze on Thu Apr 09, 2009 at 01:05:06 PM PDT

              [ Parent ]

              •  No dark daze -- you are missing my point (0+ / 0-)

                I do no believe that Geithner is some evil person-- who secretly has a plan to screw the middle class and secretly gets wealthy.

                If a person disagrees with our approaches-- that does not always mean they are evil  and sell outs.

                •  he is part (1+ / 0-)
                  Recommended by:
                  Sparhawk

                  he is part of the crowd that created and went along with this bullshit for decades.  He is not someone who is gonna clean it up. He just wants to get teh scam back up and running for his goldman buddies.

                  (regarding the bank mess) They want to cure the patient but not deal with the disease.

                  by dark daze on Thu Apr 09, 2009 at 01:25:14 PM PDT

                  [ Parent ]

                  •  I like you Dark Daze (0+ / 0-)

                    you seem like a good and reasonable person-- who genuinely cares about the middle class

                    but to say

                    He just wants to get teh scam back up and running for his goldman buddies.

                    It's very hard to take you serious.

            •  With solvent banks only. Not BofA and Citi quag- (0+ / 0-)

              quagmires.

              Code Pink Rocks - Why are women the only one's with balls lately?

              by JerichoJ8 on Thu Apr 09, 2009 at 01:13:10 PM PDT

              [ Parent ]

            •  just deal with the facts (0+ / 0-)

              you don't have to drag in any conspiracy theories.

              •  huh? (0+ / 0-)

                do you understand how the market works? Its by conspiracy.

                One example.  i am a large fund manager, I want to get in a large short position, I call my friends and contacts at some papers, think tanks, sites and have them pass on a bullshit rumor which will drive down a certain stock ( the stock I am now short in)

                Bingo, markets reacts, stock goes down, I cover my short position and make a nice amount of money.  THIS HAPPENS ALL THE TIME.

                That is just one example with reagrds to your fucking wall street. It manipulated by the power at large for their own gain all the time.  

                (regarding the bank mess) They want to cure the patient but not deal with the disease.

                by dark daze on Thu Apr 09, 2009 at 01:22:06 PM PDT

                [ Parent ]

                •  agreed 100%, my point is this is how they operate (0+ / 0-)

                  there really is no conspiracy, it's normal operating mode for these guys.

                  They should be in jail for it.  And instead Geithner is bailing out the crooks.  

                  Realityworld's comment about not believing in the "trojan horse evil plan" shows that s/he thinks that the banks and Geithner are acting in something based on the PUBLIC interest.  

                  You and I know that Geithner and the banks don't give a flying fuck about the public interest.  I can see why some people would think of this as conspiracy.  My point is that it's so obvious that it's not really even hidden at all.

                  •  i would bet (0+ / 0-)

                    i would bet 99.9 of americans do not even know what selling short is, let alone how option traders and large fund managers manipulate things.

                    Again if they did, as Henry Ford said, we would have a revolution by morning.

                    (regarding the bank mess) They want to cure the patient but not deal with the disease.

                    by dark daze on Thu Apr 09, 2009 at 01:28:33 PM PDT

                    [ Parent ]

      •  I'll pass this warning on once more (2+ / 0-)
        Recommended by:
        3goldens, JerichoJ8

        Many (most?) of us who are deeply disturbed by the direction things are headed would still choose "approve" in a binary, unnuanced poll like that.

        I demand prosecutions for torture.

        by heart of a quince on Thu Apr 09, 2009 at 01:20:48 PM PDT

        [ Parent ]

      •  william black (1+ / 0-)
        Recommended by:
        JerichoJ8

        william black says fraud.

        what's wrong with making accusations? we ARE being lied to.

      •  My criticism of Obama's Economic Plan (1+ / 0-)
        Recommended by:
        Sparhawk

        is not one that countenances conspiracies or accuses anybody of diregarding the law (after all I have to scrupulously follow 21 CFR myself).

        Perhaps you do not see the satire in my statement.  What I have tried to point out, and will continue to do so, is that unlike his other actions, Obama seems to be profoundly tone deaf to solutions other than those coming from the wall-street-government revolving door.  There are very good economists that have explained to me, very clearly, how we can have recovery with great transparency to the taxpayers.  I contrast this with the Bushco reprise that Geithner and Obama's economic advisors are foisting upon us.  I positively suport restoration of a functioning financial system that is far less a part of the GDP than it is now.  I do not support propping up institutions.  And, yes, I have been critical of Obama for neglecting any consideration of functional recovery in his haste to support institutions and those, like Geithner, who have been allowed to fail up at every opportunity.  Is Obama so unconcerned about the sense of entitlement these people have that he would risk our economy for them?

        I am also critical about Obama's neglect of long-term solutions along with short term assistance to those savaged by our loss of productive, wealth creating, manufacturing.  Without this it is my contention that we have little hope of a sustainable recovery and see us becoming a resource colony (that is if we can still grow enough food as the agricultural food belts move northward due to anthropocentric climate change).  But, unwinding disastrous trade policy and reindustrializing America takes time and I am witholding judgement on those issues.

        Anyway, Obamabots seem to think that any criticism of Obama is a wholesale damnation of his presidency.  I will have none of it.

        Distrust of authority should be the first civic duty. - Norman Douglas

        by Fossil on Thu Apr 09, 2009 at 01:47:39 PM PDT

        [ Parent ]

        •  ps - in addition (0+ / 0-)

          I do think we are being directly misled, otherwise Obama would correct the use of distorted conclusions for CPI and Unemployment, among other biases that creep up in government stats.

          Distrust of authority should be the first civic duty. - Norman Douglas

          by Fossil on Thu Apr 09, 2009 at 01:51:48 PM PDT

          [ Parent ]

  •  So are you blindly believing the msm? (2+ / 0-)
    Recommended by:
    caps lock on, Fonsia

    WASHINGTON, April 7 (Reuters) - The U.S. Treasury Department is planning to delay the release of any completed bank stress test results until after the first-quarter earnings season to avoid complicating stock market reaction, a source familiar with Treasury's discussions said on Tuesday.

    I remember when msm said Obama was not going to raise 100 mil in September too.

    Pls don't believe everything you read.

  •  agree (6+ / 0-)

    it really pathetic,  there solution to this crisis is to throw money at it, and to push propaganda happy talk.

    Going into further debt to solve a debt problem is ludicrous.

    The government is going to take money from us to give to the banks so the banks can lend that money back to us, with interest?  wtf..

    (regarding the bank mess) They want to cure the patient but not deal with the disease.

    by dark daze on Thu Apr 09, 2009 at 12:29:54 PM PDT

  •  Face it kids (1+ / 0-)
    Recommended by:
    Fulcrum21

    We've been played. Again. By the very Democrats who promised Hope and Change.

    "Such are promises: all lies and jest. Still, a man hears what he wants to hear and disregards the rest."

    Paul Simon/Art Garfunkel

    •  obama (2+ / 0-)
      Recommended by:
      northsylvania, Fossil

      Obama is just the best we could hope for in a broken system.

       Like going to turd sandwich day,  even the best turd sandwich still tastes like...

      (regarding the bank mess) They want to cure the patient but not deal with the disease.

      by dark daze on Thu Apr 09, 2009 at 12:34:54 PM PDT

      [ Parent ]

    •  You say this as though nothing has changed. (0+ / 0-)

      As if putting W back in the game would net the same result.  It sounds pretty cynical, but I would expect that from people that are used to dissapointment.  If 98% percent of what Obama does is an improvement over Bush, then should we find him guilty of being 'more of the same' for the other 2%

      George W Bush: 8 years of Presidency, 13 Years of War (and counting...).

      by XNeeOhCon on Thu Apr 09, 2009 at 12:44:23 PM PDT

      [ Parent ]

      •  But Obama Has Put Bush Back In The Game (4+ / 0-)
        - - at least with economic policy.  We are getting the same, same old, with a new name.

        And, DAMN! People like me who wirte our congresscritters asking them to at least listen and weigh practical plans from dissenting economists, many of them who are able to explain to me more practically how things will impact my life, are judged as harsh and unreasoning critics of Obama.

        I lose if Obama fails and I do not want to see repub troglodytes in positions of power.  So what am I to do when I see the economic hope of so many Americans ground under the heels of the banksters who this administration is supporting?  Cynicism?  Anger?  The only options when Obama is tone deaf to alternate ways of approaching economic rescue without trying to inflate another asset bubbble in a nation that no longer creates wealth through manufactuing.

        Distrust of authority should be the first civic duty. - Norman Douglas

        by Fossil on Thu Apr 09, 2009 at 12:53:32 PM PDT

        [ Parent ]

        •  That helps me understand your position so much (1+ / 0-)
          Recommended by:
          beforedawn

          better.  I came to the errant conclusion that you were one of those 'they're all the same!' throw up your hands and condemn all politician types.  Obviously you, as I, care deeply about the nuance of governance and wish only to correct specific parts of Obama's approach.  I am also sickened by the continued influence Tim and Larry hold, and want to avoid watering down criticism of this aspect of the administration with the language of all or nothing condemnation that I often see here.  Keep on those congresscritters and hopefully we'll eventually scrub washington clean of financial sector oligarcy.

          George W Bush: 8 years of Presidency, 13 Years of War (and counting...).

          by XNeeOhCon on Thu Apr 09, 2009 at 01:03:26 PM PDT

          [ Parent ]

  •  wells fargo's 4% gains (3+ / 0-)
    Recommended by:
    slinkerwink, Badabing, smellybeast

    The Wells Fargo story is interesting because it shows the additional Fed propping up of the banks that goes largely hidden.

    Wells Fargo borrows money for essentially 0% and lends it out for 4%.  Pure profit because Bernanke's Fed has dropped banks lending expenses to 0%.  All the banks need to do is hold on for another few years, and the gift of a 4% profit will let them pay off their losses on bad investments.  The Geithner plan is just a bonus on top of the 4%.

    My understanding, though, is that people don't believe Wells Fargo is insolvent, or at least it's pretty close to solvent.  It's Citibank and BofA that people are convinced are bankrupt.  Wells Fargo, on the other hand, is just riding the bailout for a nice profit.

    •  it smells (2+ / 0-)
      Recommended by:
      slinkerwink, notcaesar

      if I had to guess, the profit is purely creative accounting.

      (regarding the bank mess) They want to cure the patient but not deal with the disease.

      by dark daze on Thu Apr 09, 2009 at 12:35:45 PM PDT

      [ Parent ]

      •  no (0+ / 0-)

        WF didn't want to be bailed out in the first place because it knew & said then that it would turn a profit--this profit.  It took the bailout $ at the government's insistence because the government wanted as many banks as possible pumping out more cash to borrowers.

        If I say it makes sense to trust Obama, whom we had almost two years to assess, I know I'll be denounced here for uncritical thinking.  So let me turn it around: Faith in a few economists, based only on what they themselves tell us, is not uncritical thinking?  

        Look what Krugman did with the numbers about this (how many banks are insolvent) a month ago on his blog:

        "One objection you keep hearing to nationalization pre-privatization as part of a bank restructuring effort is that the US  financial system is just too big and complex. Here’s Obama himself, presumably repeating what his advisers told him:

        Sweden, on the other hand, had a problem like this. They took over the banks, nationalized them, got rid of the bad assets, resold the banks and, a couple years later, they were going again. So you’d think looking at it, Sweden looks like a good model. Here’s the problem; Sweden had like five banks. [LAUGHS] We’ve got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would — our assessment was that it wouldn’t make sense.

        But are we really thinking about thousands of banks? Here’s Martin Wolf, today:

        The four biggest US commercial banks – JPMorgan Chase, Citigroup, Bank of America and Wells Fargo – possess 64 per cent of the assets of US commercial banks (see chart) [chart not available online]. If creditors of these businesses cannot suffer significant losses, this is not much of a market economy.

        So as far as this discussion is concerned, we’ve got, like, four banks. The “thousands of banks” line is just a diversion."

        Except that Wells Fargo is projecting a $3 billion profit this quarter, and always stressed it wasn't in the same position as troubled banks. That hugely shrinks the percentage of assets described by Wolf, doesn't it? Meaning Obama was correct, this is not about "like, four" banks.  

        Examples abound, and I've given others here before. I guess I need to stop reading the backs of those Kool-Aid packets.

        •  ugh, bungled my point (0+ / 0-)

          Which is: If you read that 4 banks own 64% of the assets, that's such a big number you focus on that rather than how many banks might comprise the other 36%.  But since no one believed WF was a zombie, it didn't belong on Krugman's list of 4. So why not say that 3 insolvent institutions own (I'm supposing) around 40% of the assets?  It's much harder to think about the other 60% and not suppose Obama was correct in his estimate.  I believe the math misshapes the percentages to create a distortion.  

  •  Duly disturbed... (2+ / 0-)
    Recommended by:
    copithorne, northsylvania

    ...our financial system is a house of cards -- consumer confidence, credit, gambling and socialization of loss, privatization of gain.

    If accurate news is enough to set off a market panic, then what in the hell is consumer confidence supposed to be based on? And what is citizenship worth when about all it has gotten most of us is up to our eyeballs in hock to a handful of banking casinos?

    There's going to be a panic, all right...and it's going to be justified by this pretense that everything's okay if you only believe it is. Snap your heels together and repeat, there's no place like home.

  •  maybe not (1+ / 0-)
    Recommended by:
    Seeds

    Suppose Wells Fargo was smart and has a relatively small portfolio of the worst loans and CDOs/CDSs.  They still have losses (and they've officially written down a bunch), but not enough to break the company.

    A 4% return on all of Wells Fargo's assets is a huge amount of money.  If a more typical number might be 2%, the extra 2% is pure gravy and can cover a lot of losses.  (I don't know what a typical number is, so the 2% is a of a guess.)

  •  I think this snippet in soros' diary (9+ / 0-)

    is telling

     

    Banks aren't reselling many foreclosed homes

       A vast "shadow inventory" of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.

       Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

       "We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes.

    The banks aren't selling the houses, because they are worth more on the books than in the market.  This is the fucking same as the 'mark to market' shit.  If they aren't in the market, they can claim that they are still worth what they were appraised for when the initial mortgages were made, rather than what they would appraise for today.  That way, their 'stress test' which no doubt is little more than an unquestioning cursory glance at their balance sheets, will result in rosy results across the board.

    I have little faith, however, that anything will be done without the backing of the Wall Street overlords. They fucked us, and they will walk away scott free with more of our tax money.

    (-8.50, -7.54) Only the educated are free. -Epictetus

    by Tin hat mafia on Thu Apr 09, 2009 at 12:52:00 PM PDT

  •  Just wait until it becomes common knowledge... (3+ / 0-)
    Recommended by:
    smellybeast, Kristina40, beforedawn

    that the banks are now holding onto hundreds of thousands of foreclosed-upon homes that are not yet listed on MLS as available for sale:

    "We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures.

    "There is a real danger that there is much more (foreclosure) inventory than we are measuring," said Celia Chen, director of housing economics at Moody’s Economy.com.

    Not only that. Normal market forces are just waiting to explode:

    All the news on the housing market is about as bad as it can possibly be right now. However, in the event that the market does start to turn later in the year, a flood of hidden inventory will likely come on the market and further depress prices.

    The evidence for this hidden inventory can be found in both the new home sales data and the existing homes data. In the case of new homes, the inventory of started and completed homes for sale has fallen by 121,000 (28.4 percent) even though housing starts have consistently outpaced sales over this period. This indicates that builders may not be putting their homes up for sale in the current environment. The median months for sale of a new home rose to 9.3 in January, compared with a median period of just 4.0 months in 2005 at the peak of the bubble.

    The story with existing homes is that the inventory of unsold homes has fallen by 970,000 from July to January even though the annual rate for monthly sales over this period was 4,800,000. Given the current population, this rate is approximately the sustainable rate of existing home sales (ignoring the extraordinary economic times), which means that the drop in inventory likely represents homes that people expect to put on the market when they perceive conditions as improving.

    I know the special interests and lobbyists are gearing up for a fight as we speak.
    My message to them is this: So am I -- President Barack Obama

    by Jimdotz on Thu Apr 09, 2009 at 12:56:46 PM PDT

  •  That article by (0+ / 0-)

    Dash in the NYT was an incomprehensible mess. Truth is, he made one contradictory statement after another. So I'm not so sure why anyone is paying attention to it.

    And those short-terms gains in the stock market - they're what your Dad's 401k is built on right now. Sure there are wealthy stockholders. But a crash in the market affects us all - BIG TIME.

  •  I guess transparency costs extra (2+ / 0-)
    Recommended by:
    slinkerwink, JerichoJ8

    As usual, Yves Smith does the take-down on this farce that the banks are just fine, thank you . . . they just need more taxpayer money.

    The comments on the nakedcapitalism.com posting are also well worth reading.

  •  When regulations were stripped by the Bush (1+ / 0-)
    Recommended by:
    Fossil

    Administration that protected Americans for hundreds of years, that house of cards was hit by a tornado of greedy insane gamblers....What I find interesting is how David X. Li has 'moved back to China' after giving these Wall Street crooks a 'fake formula' on the credit derivative swap markets.  

    David X. Li (born in the 1960s, China[1]) is a quantitative analyst and a qualified actuary who in the early 2000's pioneered the use of Gaussian copula models for the pricing of collateralized debt obligations (CDOs).

    Li was born and raised in a rural part of China during the 1960's.[1] He received a master's degree in economics from Nankai University. After leaving China he earned an MBA from Laval University in Quebec and a PhD in statistics from University of Waterloo in Ontario.[1] His financial career began in 1997 at Canadian Imperial Bank of Commerce. In 2004 he moved to Barclays Capital and headed up the quantitative analytics team.[1] In 2008 Li moved to Bejing where he works for China International Capital Corporation as head of the risk-management department.[1]

    Li's paper "On Default Correlation: A Copula Function Approach"[2] (2000) was the first appearance of the Gaussian copula applied to CDO's, which quickly became a tool for financial institutions to correlate associations between multiple securities.[1] This allowed for CDOs to be accurately priced for a wide range of investments that were previously too complex to price, such as mortgages. However in the aftermath of the Global financial crisis of 2008–2009 the model has been seen as fundamentally flawed and a "recipe for disaster".[1] According to Nassim Nicholas Taleb, "People got very excited about the Gaussian copula because of its mathematical elegance, but the thing never worked. Co-association between securities is not measurable using correlation," in other words because past history is not predictive of the future. "Anything that relies on correlation is charlatanism."[1] Li himself always understood the limitation of his model, in 2005 saying "Very few people understand the essence of the model."[3] Kai Gilkes of CreditSights says "Li can't be blamed", although he invented the model, it was the bankers who misinterpreted it.[1]

    I don't think the bankers 'misinterpreted it'...I think they just didn't give a shit and were stealing money as fast as their greedy hands could get it.  The FED is the one making the most money, because they are charging interest to the taxpayers and Treasury and all that money goes to the 12 private family banks that own the FED.  David X. Li must be laughing his ass off every day with his 'homeboys' in China saying things like, "can you believe these assholes took the bait so easily?" Of course he moved home to China. Why stay here now that we've been Enroned to death by our own Financial Wizards of the Universe.

    "What we have is something perilously close to a dictatorship of the Fed and the Treasury, acting in the interests of Wall Street," Robert Kuttner

    by Badabing on Thu Apr 09, 2009 at 01:50:02 PM PDT

  •  The Automatic Earth (0+ / 0-)

    If you really want to know how bad it is you can go read The Automatic Earth, who have been doing an outstanding job of tracking this issue for the last couple of years.

    "Not dead ... yet. Still have ... things to do." -Liet Kynes

    by Stranded Wind on Thu Apr 09, 2009 at 02:26:46 PM PDT

  •  speaking truth to power (0+ / 0-)

    Change is the only Constant - moi

    by Fulcrum21 on Thu Apr 09, 2009 at 02:32:48 PM PDT

  •  Not setting off panic = Universal principle (0+ / 0-)

    Those in positions of authorities almost always place "Not Setting Off Panic" ahead of what the rest of us might think would be a wise course.

    For example, reassuring the population that the air at 9/11 Ground Zero was not dangerous.............

    Media Reform Action Link http://stopbigmedia.com/

    by LNK on Thu Apr 09, 2009 at 03:00:22 PM PDT

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