25 April 2009

Anglo bankings off the freeway heading for a donkey track

The banking system is broken. Repeat it after me, the banking system is broken. Australian Banks will one day have to deal with falling housing prices, bad commercial real estate loans, high unemployment, credit card blowups and a loss of guaranteed funding via the Federal government.

Obviously these news attempts are offered to sooth the herd. We’ve got some news for Timmy. That bag of tricks and sleight of hand promulgated by our government, its lackies, minions, and the Goldman Sachs crowd, is in the open and on the table. Not only are the Sheeple getting the drift but we envision pitchforks and torches after our current Tea Parties. No wonder the Defense Department is training 80,000 troops to protect against domestic insurrection this summer.

Other signs of trauma related to these messes were provided yesterday by Mr. Ken Lewis, the CEO at Bank of America. This morning’s Wall Street Journal is splashed on page one with photos of Lewis, Hank Paulson and Chopper Ben Bernanke. This latest story is not a pretty one as Liz Rappaport (the WSJ writer) sez ‘ol Hank told Kenny to shut-up about undisclosed troubles at Merrill during BOA’s Merrill Lynch acquisition. It seems Hank forbid Mr. Lewis to disclose Merrill’s woes while the international financial system was drain diving. Now, Mr. Lewis is between a rock and hard place.

CNBC reported today that Mr. Lewis was instructed to do some things by Paulson that fly in the face of SEC Rules in an effort to keep the lid on the Merrill transaction. Lewis, it appears to us, violated these rules as instructed but is now wide-open to Merrill and BOA shareholder criticism. We noticed too, that Hank Paulson was quick to pin the blame (the government’s gag order to Lewis) on Chopper Ben, so he himself is not caught-up in this mess. What a circus!

As it turns out relative to these massive acquisitions, Lewis got stuck with two huge, stinking piles of dung; one was Merrill and it’s previous good name overloaded with derivatives. And, the second big mistake was his purchase of Countrywide Financial proving to be a worse turkey than several Enron’s combined. Now, we suspect Mr. Lewis loses his job for following Paulson’s orders.

Next, it appears judicial vultures have arrived and perched in rows on the fence at Wall & Broad. Perhaps Mr. Lewis is steering toward an early and unexpected retirement. But, his proposed beach and golf time might revert to something unkind if New York’s Attorney General has something to say about these things. And, this AG is looking with new interest and a magnifying glass as lots of this naughty stuff apparently happened in the Big Apple on New York AG Andrew Cuomo’s turf.

The United States Of Goldman Sachs, Inc.

Some how, some way, despite their reptilian attempts to smother and hide these scams, the light of day is getting much brighter-much faster. Paulson and Timmy along with Benny have conspired to reflate Goldman’s balance sheet tossing nearly, or over $200 Billion of taxpayer cash to AIG. Of course it’s not AIG that’s getting healed. Its Goldman getting most of the AIG funneled billions in derivative pay-offs leaving some other scraps for a few others. We saw an email from Germany yesterday indicating a majority of the top twenty banks were toast and that Goldman in particular was 1,000% underwater on derivatives versus capital. The original information source on this was Turner Radio but the delivery man remains unnamed. Is this just internet gossip? We doubt it.

Ya gotta wonder how many other fiscal tragedies were residing in this global derivatives debacle and were made whole by similar actions. We would suggest less than five major banks and their associated cohorts were the strongest beneficiaries from this honey pot of taxpayer benevolence.

When you have your key soldiers (Goldman) in every important economic, banking, and government controlling position in the western hemisphere, you not only own Wall Street but you own the US Government’s mint keys and all related media. The next big question is; how many more bad loans and debts are out there in the economic mist? We think only 10-15% has surfaced so far. Even if our estimate is mostly wrong, capitalization of the bigger banks is a goner. These banks are technically bankrupt right now. How bad does it get? We cannot tell and neither can anyone else.


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