JP via RSS
The Prodigal Son: Federal Reserve Bankruptcy; Silver Lining or Wall Street Marvel?
Bank analysts who called the Bank Panic of 2008, know banks have many times more toxic assets hidden in the closet. It turns out stellar first quarter bank earnings were mostly a taxpayer bailout shell game which may not last.
Anyone who can read a balance sheet knows suspending mark to market pricing on toxic assets was fantasy fiction to allow banks to raise more good money after bad, before sending it on to profitable counterparties, including hedge funds on the right side of the markets.
What does it say that the Chairman of the Board of the Federal Reserve Bank of New York recently resigned to return to Goldman Sachs, the largest Wall Street Trader?
http://www.newyorkfed.org/newsevents/news/aboutthefed/2009/oa090507.html
While failed regulators stood on the sidelines and promised reform, politicians who could not understand a financial report talked about recovery.
Who are they kidding? And for how long?
As Honest Abe said, They can fool some of the people some of the time, but not all of the people all of the time.
As this is written, big money is again loading up on now inexpensive Credit Default Swaps, awaiting the second inning of creative financial destruction brought on by too much financial alchemy.
Only this time, CDSs may default again like AIG if the US balance sheet, US Treasury, Taxpayers and Federal Reserve are too tapped out to rescue them again.
It is suggestive that CDS rates on Campbell Soup today were .274%, while CDS rates on five year Treasury Notes were .437%, leading to an extreme headline asking: Are canned goods safer than U.S. government bonds?
http://www.reuters.com/article/newsOne/idUSTRE5574G620090608
