The Ruthless Truth blog

by Shah Gilani

Global Research, July 10, 2009

Money Morning

Just when you thought the U.S. banking system had regained its footing, the reality is that a carefully woven federal-government PR campaign may actually be masking the next phase of the worst financial crisis since the Great Depression.

Indeed, it’s what’s just out of sight that has some analysts and economists scared to death.

To rebuild public confidence in America’s ailing banks the government has greased the system’s liquidity wheels, directly injected capital, backstopped and guaranteed loan facilities, lowered banks’ cost of funds, changed accounting rules to make balance sheets look better, bestowed passing grades on high profile stress tests and then allowed the propped-up (but still not healthy) banks to pay back government loans.

Analysts and economists question whether this race to instill confidence will outpace rising unemployment and lagging economic data, or will trigger the next phase of the global financial crisis if shaky banks end up snapping borrower lifelines.

The big confidence game began with a single “relief” program. Now, many of the titanic banking system’s torpedoed institutions are remaining afloat only because of some rescue programs developed by the U.S. Federal Reserve and U.S. Treasury Department. Deemed absolutely necessary to prevent total financial collapse at the time of their hasty implementation, the legacy of these programs will be their indiscriminate reinforcement of weak links in the banking system and the acceptance of moral hazard. The Trouble With TARP

The granddaddy of all these rescue plans – the Troubled Asset Relief Program, or TARP – is a $700 billion program that was originally designed on fewer than four pages, and that was sold to Congress as a plan to buy toxic assets from sick banks.

That never happened.

Once passed, TARP immediately morphed into a direct-capital-infusion system for banks, allowing them to meet regulatory capital requirements and stay afloat. A wide variety of other relief programs followed. There were programs to backstop the commercial paper market, money market mutual funds, and issuers and purchasers of various asset-backed securities. There was a mortgage-relief initiative. And now there is even a re-constituted public-private partnership plan – worth between $1 trillion and $2 trillion – that is supposed to buy toxic assets from the same banks that still hold them.

With all the government backstopping going on directly and indirectly behind the scenes, what remains to be seen is whether the banks can succeed without the federal government cheerleading the public into believing that these institutions are actually standing on their own feet – when, in reality, many are still on their knees.

Without these plans, many banks would certainly be on their last legs.

Underlying all the relief programs, the U.S. Federal Reserve has done everything in its power to keep interest rates low – especially the benchmark Federal Funds Rate, the rate at which banks borrow from each other on an overnight basis.

One of the positive signs being pointed to lately by government public relations spinners is the positive net interest income being earned by banks. What they don’t point out is that it’s only as positive as it is because the government is artificially keeping banks’ “cost of funds” low through a 0.00% Fed Funds Rate policy, and by continuing to grease every lever of liquidity to keep funding cheap. What’s eventually likely to be overwhelming will be the impact on net interest income when artificially cheap funding dries up, interest rates rise and commercial-paper and money-market spigots are not gushing funds like they did before the global financial crisis took hold.

The combination of capital injections, relief programs and low interest rates was designed to work together to facilitate liquidity in the vast interwoven system of institutions and markets that makes business and finance possible. Banks are the singular linch-pin in the system, without whose proper functioning the entire system would seize up.

And yet, in spite of all that was being done to keep the banking system afloat, it was still sinking. Rock-Paper-Scissors

Not unlike the children’s game rock-paper-scissors, the Fed’s scissors that were used to cut out impediments to liquidity were smashed by the falling Rock of Gibraltar – namely the continuing erosion of trust in crumbling banks, to the point that only by papering over losses at banks could the game be won.

With a strong push from lobbyists, legislators threatened to make legal changes to accepted accounting standards. With a nod of approval from the highest government powers attempting to triage ailing banks, legal changes weren’t necessary. Instead, two amendments to U.S. Generally Accepted Accounting Principles (GAAP) were hastily approved by the Financial Accounting Standards Board (FASB):

* The first of the two amendments gave guidance to assist preparers on how to determine whether a market is not active and a transaction is not distressed, which provides allowances for sidestepping mark-to-market rules and essentially allows internal modeling of asset values. * The second amendment provides a neat trick that facilitates changes in the recognition and presentation of other-than-temporary impairments on debt instruments. In short, if you don’t want to declare losses in full view of the public, stick them in a walled-off section of your financials where you can pretend that they are going to be held to maturity and paid back in full. Scissors beats paper in the children’s game, and in the case of banks the scissors of any sharp accountant will eventually shred the paper façade that’s masking huge losses.

Not content to try and get the public to merely notice things might be getting better, the federal government PR machine decided that bank stress tests would provide definitive proof that progress was being made. The result of the much-ballyhooed stress tests was, indeed, effective. The announcement – more like a pronouncement – proclaimed the system sound, saw a strengthening of institutions in general and only pointed to a few laggards.

But in a recent Bloomberg Markets article entitled, “Stress Management,” Janet Tavakoli, president of Structured Finance Inc., told writer Yalman Onaran that “the Federal Reserve, which designed the stress tests, used a 21% to 28% loss rate for subprime mortgages as a worst-case assumption. Already, almost 40% of such loans are 30 days or more overdue.”

Tavakoli predicts defaults actually might reach 55%. Positive Earnings or Positive Spin?

The release of the stress-test results coincided with some strong first quarter financials from banks. The markets rallied amid fertilized talk of “green shoots” and the actual arrival of spring. Now that’s really good PR. Too bad, like a lot of PR, it was managed to look that way.

Using the accountant’s scissors embedded in Onaran’s Bloomberg Markets article, Citigroup Inc. (NYSE: C) picked up 25% of its 2009 first quarter net income from a debt securities accounting rule change. It subsequently increased its loan-loss provisions more slowly – even as more loans were souring. Without the accounting changes Citi, would probably have posted a net loss of $2.5 billion for the quarter, concluded Martin Weiss, founder of the Jupiter, Fla.-based Weiss Research. Inc.

Weiss also found that “the new standards let Wells Fargo (NYSE: WFC) boost its capital $2.8 billion by reassessing the value of some $40 billion of bonds, and augmented net income by $334 million because of the effect of the rule on the value of debts held to maturity.”

In June, in a McKinsey Quarterly piece, writersLowell Bryan and Toos Daruvala are even more outspoken about the problems that accounting rules are masking, stating, “It might seem odd that accounting methodologies can make such a big difference. At the end of the day, what counts is the net present value of the cash flow from each asset, but those are unknowable until after a debt is repaid. Fair-value accounting, based on mark-to-market principles, immediately discounts assets when the expectation of a default arises and ability to trade the asset declines. Fair value therefore makes the holder of the asset look worse, sooner. Hold-to-maturity accounting works in reverse and makes the holder look better for a long time.” Looking Good is All That Matters

Why would 10 banks on the edge of the financial abyss only a few months ago want to pay back $68 billion in government bailout money when they have:

* No idea what the future holds for them? * Or if they’ll need to make a return visit to the taxpayer-filled rescue trough?

And why would the government, after all its bluster, let them pay the money back, especially in the face of a firestorm about extraordinarily excessive executive compensation at those same institutions?

Because it’s all about looking good.

It’s part of the PR spin to make banks look healthier than they are. And it just might spin out of control.

You can put lipstick on a pig, but you can’t make a silk purse out of a sow’s ear. Instead of admitting the depth of systemic risk we’re facing from teetering banks and making the hard decision to shut some of them down or break them up once and for all, the federal government would rather pretty up the picture to try and convince us to open our purses again and more-quickly recharge our consumer-driven economy.

The danger in this government PR campaign to make banks look healthy is that if another meaningful economic bump rattles consumer confidence in a banking system the government says is safe, the resulting fear of a separate reality might engender a run on banks that would make the Great Depression look like a walk in the park.

News and Related Story Links:

* Money Morning Special Investment Report: Money Morning’s Bank Stress Test Says These Three Banks Are the Strongest.
http://www.moneymorning.com/2009/04/30/bank-stress-tests-2
* About.com:  Confidence Game.
http://www.answers.com/topic/confidence-trick
* About.com:  Moral Hazard.
http://www.answers.com/topic/moral-hazard
* Wikipedia: Troubled Assets Relief Program.
http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
* Money Morning News Analysis: Motivations Abound for Federal Reserve’s Delayed Release of Bank Stress Test Results.
http://www.moneymorning.com/2009/05/04/bank-stress-test-results-2/
* Wikipedia: Toxic Assets.
http://en.wikipedia.org/wiki/Toxic_assets
* U.S. Federal Reserve: Federal Funds Rate.
http://www.federalreserve.gov/fomc/fundsrate.htm
* WiseGeek.com: Cost of Funds.
http://www.wisegeek.com/what-is-the-cost-of-funds.htm
* Wikipedia: Generally Accepted Accounting Principles.
http://en.wikipedia.org/wiki/Generally_Accepted_Accounting_Principles
* Wikipedia: Financial Accounting Standards Board.
http://en.wikipedia.org/wiki/FASB
* Financial Accounting Standards Board: Determining Fair Value of a Distressed
Security.
http://www.fasb.org/project/fas157_active_inactive_distressed.shtml
* Financial Accounting Standards Board: Other-Than-Temporary Financial Impairments.
http://www.fasb.org/project/other-than-temporary_impairments.shtml
* Money Morning News Analysis: By Relaxing “Mark-to-Market” Rules, Has the
U.S. Switched Off its Financial Crisis Early Warning System?
http://www.moneymorning.com/2008/10/08/fair-value-accounting/

Global Research Articles by Shah Gilani

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by James Quinn

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Global Research, May 27, 2009

Prudent Bear – 2009-05-05

The conspiracy theorists of the world believe the U.S. government faked the landing of Apollo 11 on the moon. They also believe 9/11 was an inside job, ordered by operatives within the government. The rationale of these acts was to distract the masses from the disastrous Vietnam War and the plummeting stock market, while escalating their control over the American people.

I believe I have uncovered the largest conspiracy in history. The government wants you to believe that banks are recovering, housing has bottomed, stimulus works, borrowing leads to prosperity and war leads to peace. President Obama and his cronies at Treasury and the Federal Reserve are trying to mislead the public regarding the health of our banking system. If you believe their spin on these issues, I have a structurally deficient bridge in Brooklyn I’d like to sell you.

The government has something up its sleeve this time. They are perpetrating the greatest fraud in the history of the world. The conspirators are Barack Obama, Timothy Geithner and the Treasury Department, Ben Bernanke and the Fed, Sheila Baer and the FDIC, and Barney Frank and the Democratic Congress.

They have colluded to commit taxpayer funds to enrich bankers that brought down the financial system, without getting congressional approval. They have delayed foreclosures and have tried to artificially prop up the housing market. They have poured billions of stimulus pork into the states praying for some of it not to be wasted. They have confiscated billions in taxpayer funds, bestowed them on reckless banks and forced them to lend it to anyone with a pulse, again.

The outrage from the public during the Trouble Asset Relief Program (TARP) confiscation made it crystal clear to courageous congressmen they didn’t want to vote on something requiring fortitude and bravery again. They have outsourced their obligation to safeguard their citizen’s tax dollars to unelected bureaucrats at Treasury and the Federal Reserve. They have already sacrificed their obligation to declare war to the Presidential branch. What is the point of having a Congress? 

Nothing up their sleeve

Barack Obama and his henchmen in Treasury and the Fed have chosen to play for time, pretend the banking system is solvent, and hope that the average American doesn’t care. As long as the ATM still spits out $20 bills, everything is OK. The International Monetary Fund has estimated total credit write-downs of $4.1 trillion, with $2.7 trillion in U.S. institutions. McKinsey has concluded that there are still $2 trillion of toxic assets sitting on the books of U.S. banks. Economist Nouriel Roubini, who has been correct from the beginning, estimates total losses on loans made by U.S. financial firms and the fall in the market value of the assets they are holding will reach $3.6 trillion ($1.6 trillion for loans and $2 trillion for securities). The U.S. banks and broker dealers are exposed to half of this figure, or $1.8 trillion; the rest is borne by other financial institutions in the U.S. and abroad. With $2 trillion of write-offs to go, how could Treasury Secretary Geithner make the following statement to a Congressional panel late last month, "Currently, the vast majority of banks have more capital than they need to be considered well capitalized by their regulators."? Is he lying or shading the truth? Does it matter?

Roubini’s estimate of $1.8 trillion more losses for U.S. banks will cause a slight problem for the U.S. banking system. The entire U.S. banking system has only $1.4 trillion of capital. Therefore, the U.S. banking system is effectively insolvent. Mr. Geithner would contend that he was not lying. There are 8,500 banks in the United States. The top 19 banks control 45% of all the deposits in the country. These are the banks that are insolvent.

Mom & Pop Bank in Louisville, Ky., didn’t create toxic loan instruments that infected the worldwide economic system. The vast majority of the 8,500 banks in the country are in good shape. Citigroup, Bank of America, Wells Fargo and the other "Too Big To Fail" banks destroyed the economic system. The Fed, Treasury, and FDIC are already backstopping or supplying 70% of the entire banking system balance sheet. It is time to allow the well-run banks to take the deposits of the horribly run banks. The $1.8 billion of future losses do not include the commercial real estate losses, credit card losses and losses from the next wave of mortgage resets in 2010 that will wash over these banks. 

Of course we all know that the "Too Big To Fail" banks all reported profits better than expected in recent weeks. CNBC said so. Let’s examine these tremendous profits at one of the banks, Bank of America. It reported profits of $4.2 billion. This included: $1.9 billion came from the gain on sale of CCB shares; $2.2 billion came from marking to market adjustments of Merrill Lynch notes; and non-performing assets that were $25.7 billion compared to $7.8 billion one year ago, a 329% increase in one year. Without these convenient accounting adjustments, Bank of America would have lost money.

Andrew Ross Sorkin pointed out in a recent New York Times article: "With Goldman Sachs, the disappearing month of December didn’t quite disappear (it changed its reporting calendar, effectively erasing the impact of a $1.5 billion loss that month); JP Morgan Chase reported a dazzling profit partly because the price of its bonds dropped (theoretically, they could retire them and buy them back at a cheaper price; that’s sort of like saying you’re richer because the value of your home has dropped); Citigroup pulled the same trick."

In other words, the first-quarter bank profits were faked. They were manufactured as a public relations effort to convince the country that the big banks are in fine shape.

If the banks are in such good shape, why has the government had to use taxpayer funds to rollout the two dozen rescue plans? And now we breathlessly await the results of the stress tests. The FSP (Financial Stability Plan for those not in the know) rolled out by Geithner was supposed to save our banking system. The plan was described by Treasury as:

Increased Transparency and Disclosure: Increased transparency will facilitate a more effective use of market discipline in financial markets. The Treasury Department will work with bank supervisors and the Securities and Exchange Commission and accounting standard setters in their efforts to improve public disclosure by banks. This effort will include measures to improve the disclosure of the exposures on bank balance sheets. In conducting these exercises, supervisors recognize the need not to adopt an overly conservative posture or take steps that could inappropriately constrain lending.

Coordinated, Accurate, and Realistic Assessment: All relevant financial regulators — the Federal Reserve, FDIC, OCC, and OTS — will work together in a coordinated way to bring more consistent, realistic and forward looking assessment of exposures on the balance sheet of financial institutions.
Forward Looking Assessment – Stress Test: A key component of the Capital Assistance Program is a forward looking comprehensive "stress test" that requires an assessment of whether major financial institutions have the capital necessary to continue lending and to absorb the potential losses that could result from a more severe decline in the economy than projected.

It is fascinating that in the first paragraph they specifically state they don’t want to be overly conservative. Which of the top 19 banks in the country have run their businesses in an overly conservative manner in the last 10 years? Has the Federal Reserve been overly conservative in the last 10 years? Have the SEC and FDIC been overly conservative in the last 10 years? Have consumers, homebuilders, credit card companies and retailers been overly conservative for the last ten years? If there was ever a time to be overly conservative, it is now.

It is also nice to know Treasury wants accuracy and better disclosure, but then twists the arm of the Financial Accounting Standards Board to relax mark-to-market rules, so banks can continue to lie about the value of "assets" on their books. They allow Goldman Sachs to bury the fact that they left December out of their financial results deep in their footnotes. Shockingly, Goldman lost $1.5 billion in December. They continue to allow banks to report one time gains as part of ongoing operations, but billions in losses that are recorded quarter after quarter are not from ongoing operations. The folks at CNBC report whatever the banks say, no questions asked.

Stress-Test Sham

This brings us to the stress tests for the 19 biggest banks in the land. The most stressful conditions are supposed to be 10% unemployment and a 20% further fall in home prices. That doesn’t sound too stressful to me. Considering the government reported figures are a manipulated lie, we already have unemployment between 15% and 20% in the real world. A 20% further decline in home prices is a given. The Case Shiller futures index forecasts that the New York Metro area will fall by 31% by the end of 2010. The massive overhang of housing inventory, the coming onslaught of mortgage resets in 2010, and the millions of foreclosures in the pipeline guarantee at least 20% further downside in housing prices. I have a feeling these 19 banks are going to need to study a little harder for their test. Professor Geithner is giving them an open book take home exam and gave them the answers. They will still flunk.

William Black is a former senior bank regulator. He is currently an associate professor of economics and law at the University of Missouri. Mr. Black held a variety of senior regulatory positions during the S&L crisis. He managed investigations with teams of examiners reporting to him, redesigned how exams were conducted, and trained examiners. He calls the stress tests conducted on the 19 biggest banks in the country a complete sham. In his own words:

• "You can’t conduct a meaningful stress test without reviewing (sampling) the underlying loan files and it seems likely that the purchasers of securitized instruments (not just mortgages) do not even have the loan file data. Moreover, loss ratios vary enormously depending on the issuer, so even a bank that originates (or has purchased a bank that originates) similar product cannot simply take its own loss rate and extrapolate it to the measure the risk on the value of securitized credit instruments.

• "It is vastly more difficult to examine a bank that is engaged in accounting control fraud. You can’t rely on the bank’s books and records. It doesn’t simply take more, far more [employees]. It takes examiners with experience, care, courage, and investigative instincts and abilities. Very few folks earning $60,000 are willing to get in the face of the CEO and CFO making $25 million annually and tell them that they are running a fraudulent bank and they are liars. FYI, this is one of the reasons why having "resident examiners" never works.

• "Examiners certainly can’t do the stress testing that Geithner describes or evaluate the reliability of a large bank’s proprietary stress test. If they were serious about constructing reliable stress tests, which they aren’t, you’d require their analytics to be made public. You’d have the industry fund independent investigations by rocket scientists chosen by a committee selected by the regulators of the soundness of the analytics. You’d also have the industry fund competitions to rip them apart (a bit like we hire legit hackers to test security by trying to defeat it) and show where they produce absurd results. The concept that there are 100 examiners with these skills, suddenly freed up from all other duties, assigned to CONDUCT stress tests is a lie."

On Thursday, we will see how much transparency and disclosure the Treasury and Fed will provide regarding the not-so-stressful tests. Obama’s minions have been hinting that six banks have failed. Sheila Baer stated that the $110 billion left in the TARP kitty should be enough to cover the capital shortfalls. This is a lie.

As we saw previously, the U.S. banking system will need close to $1 trillion more capital to stay viable. If the Fed was so keen on disclosure and transparency, why hasn’t it released the names of the banks that have borrowed from them, and the collateral provided for the loans? Because the Fed has taken worthless toxic paper onto their books and loaned newly printed dollars against the worthless paper. The taxpayers are on the hook.

James Quinn is a Philadelphia-based writer specializing in economic analysis.

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Global Research, April 16, 2009

Forbes

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Joshua Zumbrun, 04.14.09, 12:01 AM ET

WASHINGTON, D.C. — As Wall Street reports earnings this week, the Federal Reserve is finishing work on its "stress tests" of America’s biggest banks. The White House has hinted repeatedly that the banks may need more money, yet Congress seems unwilling to back any new bailouts.

With trillions of dollars of Troubled Asset Relief Programs already announced, it seems as if the White House could find itself pinched. But an analysis of the TARP funding shows that, despite headlines to the contrary, the Obama administration has hundreds of billions of dollars in potential wiggle room with which to work.

Good thing. Since the election, appetite for the bailout has diminished. When it came to releasing the second half of the $700 billion fund in January, the Senate vote was 52-42. This was enough to release the remaining funds, but any new money would require 60 senators in support.

The White House has yet to request additional money, but it hinted in its budget process that it might. The budget that the White House submitted to Congress included a $250 billion "placeholder" that may be needed for additional bank rescuing. That $250 billion placeholder actually implies a much larger request.

The original bailout was included in the White House budget as a $250 billion cost as well. Although the bailout has a sticker price of $700 billion, much of that money–perhaps the vast majority of it, will be repaid. The final bill to taxpayers will be smaller. The bailout placeholder is scored with the same logic. Thus the White House has contemplated asking for at least an additional $700 billion.

Congress was not willing to sign off, even tentatively, on a new bailout. White House estimates that the cost would be much smaller were ignored. When the Senate and House passed their budget resolutions, they signaled their feelings on additional money for bank bailouts by simply removing the "placeholder" from budget plans.

Before the Treasury has to beg Congress for more money, they can try to squeeze more blood from the original $700 billion fund–and the fund is not as anemic as it seems.

The Treasury has announced a wide array of programs. The tally thus far includes: $250 billion to put capital directly in banks, $100 billion for a Fed program known as the TALF to restart lending, $100 billion for the public-private investment plan to buy toxic assets from banks, $50 billion for mortgage prevention, $30 billion for the automakers and their suppliers, $15 billion for small-business lending, and $122 billion in a variety of loans and guarantees for AIG, Citigroup and Bank of America. That’s a total of $667 billion pledged, or only $33 billion left to spend, according to the Government Accountability Office.

By Treasury Secretary Tim Geithner’s own calculations, however, some of those commitments have already been rethought. In March, Geithner told ABC’s This Week that $135 billion remained uncommitted. No major changes have been announced to the legislation since Geithner made the statement.

And even less of the money has actually been spent. Treasury can continue to lower its commitment to various programs. For example, the Treasury said it would spend $250 billion to put capital into banks, but as of April 10, had injected only $199 billion, according to the Treasury’s Office of Financial Stability.

According to Treasury’s monthly statement, by the end of March, only $293 billion has actually been spent. Far more than $135 billion in wiggle room remains.

Of the bank injections, $442 million of that has already been repaid, and on Monday, Goldman Sachs announced that it had managed a $1.8 billion profit in the first three months of 2008 and would move to repay the $10 billion it received. The amount in capital purchases is shrinking, not growing.

Other programs are extremely unlikely to reach their target size. The TALF program was set to use $100 billion of Treasury money and $900 billion from the Federal Reserve. So far, it’s off to a very slow start, with $6 billion in requests, less than 1% of the announced total. The administration’s mortgage foreclosure plan is unlikely to have enough eligible borrowers to reach its full cost.

The Treasury did not respond to calls and an e-mail requesting comment. The administration has been extremely tight-lipped about what might happen after the stress tests. The expectation has been that they need to ask Congress for more money. The surprise may be that they have enough

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Bailouts and Manipulations: Save Wall Street, at the Expense of Main Street

by Larry Chin

Global Research, April 14, 2009

Online Journal

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Wall Street is in the midst of a huge rally, primarily sparked by two recent occurrences.

The first was the “surprising” announcement that Citigroup, JP Morgan Chase and Bank of America — major “zombie” banks laden with “toxic assets,” on the verge of collapse, and the recipients of billions in government (US taxpayer) bailout money — mysteriously posted profits this year. Wells Fargo, regarded as one of the healthier big banks, and a recipient of $25 billion, also reported a profit last week, rallying the stock markets again before the Easter holiday.

We now know, based on insider reports from securities traders, that a massive fraud and manipulation by AIG funneled “bailout” funds (US taxpayer money) to AIG’s counterparties, the very same big “toxic” banks that are now posting profits: Exclusive: Big Banks’ Recent Profitability Due to AIG Scam?

The second big event occurred when the Obama administration and Congress threw out the “Mark to Market” rules. Banks and financial institutions, which by law were previously obligated to price, or “mark,” the toxic holdings to the current market price (honestly take huge losses), now have carte blanche to magically erase all of these losses, and price these toxic assets however they wish.

In other words, Wall Street has been given the green light to lie — with the full blessing of the Obama administration and Congress. “Toxic assets”? Gone, just like that.

In yet another example of collusion and cover-up, federal regulators have told the nation’s largest banks to “keep quiet” about their performance in the Obama administration’s “stress tests”: Feds tell banks to keep quiet on outcome of stress tests

This blatant cover-up, ordered at the top, prevents negative news from spoiling the bogus Wall Street rally. Obama himself will announce the results later, after he and his economic minions have had a chance to “manage” the data.

So much for accountability. So much for transparency and disclosure. So much for the populist hot air and propaganda gases spewing from the Obama administration, Ben Bernanke’s Federal Reserve, Tim Geithner, and Larry Summers.

The momentum from the latest fabrication and the latest fraud must not be broken. The worst is over, according to the new noise, and the constant “are we there yet?” yammering from CNBC. No, it’s already time for The Recovery, despite the fact that the worst economic crisis since the Great Depression began mere months ago, and despite the fact that the “toxins” — the magnificent bubble of derivatives, leverage, hedging and other interlocking Ponzi finance schemes that began the crisis to begin with — are still out there, still unpopped.

The books are cooked and the numbers are faked anyway. Why not? Who’s going to know?

So while the US auto industry is strong-armed into massive restructuring, and the common people of Main Street are told to get used to the suffering, Wall Street is not only given a free pass, but the additional gift of back-door swindles and a massive cover-up.

Larry Chin is a frequent contributor to Global Research. Global Research Articles by Larry Chin

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