Thursday, June 4, 2009

Here is why bank still in deep trouble !!!

6/4/09

Bloomberg yesterday:.....

In a move that confirmed the suspicions of many analysts, the agency called off plans to start a $1 billion pilot program this month that was intended to help banks clean up their balance sheets and eventually sell off hundreds of billions of dollars worth of troubled mortgages and other loans.

Many banks have refused to sell their loans, in part because doing so would force them to mark down the value of those loans and book big losses. Even though the government was prepared to prop up prices by offering cheap financing to investors, the prices that banks were demanding have remained far higher than the prices that investors were willing to pay.

Translation:

The banks are still carrying these "assets" at well-above their actual market value. This means their balance sheets are showing them to be healthier than they really are.

The Government, which claimed it was going to "drain the swamp" and get the market moving again, tried everything short of the barrel of an M-16 in the mouth of people like Blankfein and Pandit, but couldn't get them to sell.

But rather than force the recognition of market prices on the balance sheets, which would force these banks to either sell or be FDIC'd (incidentally, the only correct pair of options the banks should have) the government instead is allowing the banks to continue to lie about the market value of these "assets" and carry them above what the market will pay - that is, they are allowing the continuing intentional distortion of so-called "book value", reserve ratios and soundness.

Of course this isn't how the government banking cartel (the same so-called "regulators" that allowed and even encouraged book-cooking when it came to reserves and deposits) sees it:

F.D.I.C. officials portrayed the change as a sign that banks were returning to health on their own.

Baloney. If the banks were returning to health on their own they wouldn't care if the market price was recognized on their balance sheets.

The FDIC is lying.

But some analysts said the banks’ reluctance to clean up their balance sheets meant they were merely postponing their day of reckoning. Indeed, some analysts said government policies had made it easier for banks to gloss over their bad loans.

"Gloss over" is another fancy word for fraudulent accounting practices, all made "legitimate" by our government.

No one knows exactly how many losses are buried in the troubled mortgages on banks’ books, but some analysts estimate that the unrecognized losses total more than $1 trillion. Under accounting rules, banks do not have to write down the value of most mortgages unless they sell them or they fall delinquent.

And, as Wells Fargo did last year, they can change the rules on when something is "delinquent"! That is, it can be 30 days behind today, 60 tomorrow, and three years next week. That's all ok, according to our so-called "regulators."

The Federal Reserve also is pumping hundreds of billions of dollars into mortgage-backed securities, and into other kinds of consumer and business lending. Starting next month, the Fed plans to offer cheap financing for investors who want to buy “legacy” securities backed by mortgages on commercial real estate.

Of course this simply means that the Federal Reserve (that is, you) will eat the loss.

Heh, its only your (tax) money, right?

No banker left behind, no fraud to be punished (ever) indeed.

PS: The deception cannot continue beyond where the cash flow ceases. In the end you can't pay your electric bill with phony capitalized interest that you will NEVER collect! That day, unfortunately, will likely coincide with the collapse of the FDIC, at which point every nickel you have in any bank anywhere will be GONE, courtesy of our government continuing to enable, allow and even participate in raw fraud. Its been going on now for more than two years folks, and the cops have all been bribed!

My comments: Now it seems the so called "regulators" are delaying the PPIP to eat the loss from banks. They bad assets are still in all banks book. It is a ticking bomb until next massive fault is coming anytime, folks, watch out ongoing. Economy and stock market must crash again because of this.

Wednesday, June 3, 2009

What a foolish dumb action our government keep doing!!

6/3/09

Read the following:

Yesterday, the 30 year yields closed at 44.89. At the end of December, the 30 year yields were only 25.19 ... that was a significant rise (see the chart below). 30 year mortgage rates got down as low as 4.5%, and yesterday they ranged from 5.25% to 5.375%.

When mortgage rates went to 5.25%, there was a 16% drop in mortgage applications. The point is, that the higher mortgage rates rise, the more a recovery in housing is going to be jeopardized.

So, the rise in mortgage rates has been going on for some time and yesterday .... rising mortgage rates finally got the attention of Washington which is now putting pressure on Bernanke to try and keep rates down.

We expect Ben to throw a lot of money at driving rates down in the short term. Longer term, it is a zero sum game for Ben as he has $300 billion left that is earmarked for keeping rates low and the reality is that he probably needs $1 billion to do the job in the next few months.

Why are rates going up? Part of the reason is that there is not enough money for the Government spending levels.

For every dollar being spent in Washington, only 54% is being funded by taxes. That requires the Government to borrow 46 cents for every dollar spent. (Isn't this the formula that got U.S. consumers over leveraged and in trouble in the first place?)

As reluctance to buy bonds and lend to the U.S. Gov. increases, rates have to go higher to compensate for the higher risks.

[To get an approximation of where interest rates should be relative to the TYX 30 year yields:
Take the TYX and divide it by 10 (44.89/10 = 4.489). Then add .761 to .886 to that number. That will give you a range of 5.25% to 5.375% for yesterday's rates. The .761 to .886 are not set in stone ... they represent the current "spread" that banks are marking up long term rates, on mortgages, so they can make a profit. This spread can have a larger change over different time periods reflecting changing market conditions.]

My comments: Whether the rate is 4% or 5% or 6%. The problem is who will qualify the rate anyway?! And now our stuiped government is trying to control the rate. It only means pushing us closer to the cliffs. Yes, every damn action white house is drawing our blood dry. We will all be doomed and thats 100% for sure. The question is when we will payback. For each corporate, banks, and household, we are overly leverage our spending by borrowing too damn much future$$$. Our government is throwing the proved-fail tactic, means doing exactly that keep spending huge, WTF, spending and printing money is the only thing I see coming from our current administration. I so sorry to be not professional writing the blog here with impication of foul languages. However, I am full of angry how our government doing to avert this mess.

Tuesday, June 2, 2009

Look who is next ask for Obama bail out??!

6/2/09

Not surprisingly, look who will be next for Obama bail out? It is the state of California. Read the following:

""Declaring that "California's day of reckoning is here," Gov. Arnold Schwarzenegger said today the state should turn its dire budget straits into an opportunity to make government more efficient.

Speaking to a relatively unusual joint session of the Legislature and other constitutional officers, Schwarzenegger acknowledged the billions of dollars in spending cuts he has proposed to close a $24.3 billion hole in the budget will be devastating to millions of Californians.

"People come up to me all the time, pleading 'governor, please don't cut my program,'" he said. "They tell me how the cuts will affect them and their loved ones. I see the pain in their eyes and hear the fear in their voice. It's an awful feeling. But we have no choice.

"Our wallet is empty. Our bank is closed. Our credit is dried up."

The short-term problem faced by lawmakers is closing the budget gap in time for state officials to go the private investment markets and borrow billions of dollars to get the state through the first months of the fiscal year that starts July 1.

State Controller John Chiang has warned that without such loans, the state's coffers will run dry by the end of July. Chiang said last week that as a practical matter, the budget must be patched up by mid-June in order to give officials time to borrow the money.

To do that, Schwarzenegger has proposed a plan that relies partially on accounting maneuvers and borrowing funds from coming fiscal years, but mainly on deep cuts in nearly every program funded by state government.

Those range from cutting spending on K-12 schools, community colleges, the University of California; releasing some non-violent prisoners a year early; closing 80 percent of the state's parks, and wiping out or paring back on health and social service programs for California's neediest residents. ""

My comments: Are you all ready Mr. President will be the superman again to waste our money to bail out state of California very soon. Whats your bet? I see he will very soon. In term of production measured by territory GDP. Aside state of California's GDP is ranked #5 in whole global world. Yes, you are right. It is even bigger than India, England, France,...whatever countris you can think of. It is another gaint blackhole that our government is going to dump US$$$ away. WTF, WTF......Are we insane??! I am not but white house people do not care. Good luck to everyone especially people living in Sunshine State California. Have you recently enjoy any fruits from CA??!

Monday, June 1, 2009

Now, its official!! Welcome to "Government Motor"

6/1/09

As everyone expected, General Motor is now officially become "Government Motor". Our government love to own every piece of our living. Indeed, after mortgage gaints, FRE & FNM, insurance leader, AIG, banks like C and BAC, now the GM. What else do we expect our government go to bail out more? We are keep printing more and more $$ to save those garbage companies that should be liquidated. However, it does create very damn good excuse for polictians and companies directors to draw our taxpayers money into their huge piggy bank. Do you expect auto sales will rebounce coming months and years?! Even Toyota has trouble to foresee future. How could GM can reply over$50 billion money back to us?! If so, in 5 years. I do not believe this shit. WTF, another gaint black hole to waste our $$$. I am very pissed off by this non-sense but I cannot do anything rather express my feeling here. Good luck to America and good luck to us. I do not see bright future anymore as our government drawing the deficit higher and higher to no end land. Another Trillion here and there.