Printing more money won't solve America’s problems; quite the opposite. It's going to damage the economy further. And these effects will be lasting. You will see them soon. At the very least, we are going to encounter a long period of massive inflation. At worst, these problems could lead to war. I feel this to be a very likely outcome as I’ve stated previously.
As far as the banks go, nationalization is the only real remedy. But you shouldn't expect this to come without a fight to the bitter end by Summers, Geithner and their friends at the Federal Reserve. The stress test is just another gimmick to try and fool people into thinking the banks won’t need much more money on a worst case-scenario. This is simply not true, as we shall see.
Now listen to what ABC’s official "GMA financial correspondent” has to say about the stress test....
"The big answer is, your money is safe. This isn't a solvency issue; this is a certainty issue."
What a ridiculous claim. It IS a solvency issue. All of the big banks are insolvent; period; end of story. Apparently, this “journalist” is not only a Wall Street hack, but she appears to be a moron. However, these two characteristics work in her favor since she can’t really be accused of lying if she’s too ignorant to realize what she’s saying isn’t true.
Your money isn't safe just because the Fed keeps printing more dollars. Excess printing can, has, and will continue to diminish the buying power of the dollar. So her statement is absolutely false. You can decide for yourself whether she realizes what she’s saying is false, or if she’s just too ignorant to know any better.
"The government wants to be certain that the 19 largest banks can withstand a doomsday-type scenario, of an unemployment rate of 10.3%."
Are you kidding me? If 10.3% unemployment is a “doomsday” scenario, then get ready for double doomsday because I’ll guarantee you unemployment will exceed that figure. In fact, the current real unemployment rate (if it’s calculated the RIGHT way) is already around 18%.
I'm completely disgusted by this reporter. She looks, acts and lies like she works for CNBC. Perhaps she’s competing with Erin Burnette for the “Wall Street Hack of the Year Award.” Prediction: she will be working for CNBC in the future.
The claims made by the Federal Reserve and Washington that a “stronger” financial system is paramount to an economic recovery is an admission that America has a Ponzi scheme economy requiring a banking system on “steroids” to fuel its excess consumption. But someone has to finance this spending.
In the past, Washington has relied on massive foreign capital to keep the Ponzi scheme going. Well guess what. That game is over. Foreign nations have had it with being patsies for toxic investments. And the Federal Reserve’s weak dollar policy is only going to make this reality more devastating. So they had better figure out a new game.
Alternatively, they could create a real and permanent fix starting with a complete overhaul of free trade policies and banning all lobbyist activities. But of course, corporate America would never allow these real solutions.
How can the same guys who missed this financial meltdown - the same guys who have been running around chasing their tail - have the slightest clue how to devise a proper stress test for the financial system? Before you can do this you need to know what’s going on. You also need to have a good idea what’s going to happen. It’s called forecasting; something Washington economists are incapable of.
The assumptions used by these bozos – the guys whose loyalty lies only with the banks - are ridiculously conservative. In fact, one could argue that claims made by Washington officials that these are legitimate stress tests could be considered fraud. But Geithner wasn't even indicted for cheating the IRS; he was rewarded by his appointment to the U.S Treasury (which oversees the IRS). So don't expect his latest criminal activity to be recognized as such.
It’s all part of the same smoke-and-mirrors deceit that’s been used by Washington and the Federal Reserve for decades. And the mainstream media is helping out by failing to raise difficult questions, while promoting myths stated by Washington and looking past the accountability of Wall Street’s criminal activities.
I continue to be shocked of the kind of bologna the media keeps coming up with. You'd think they'd have gotten a wake up call from the financial woes seen in the newspaper industry. Then again, they don't even realize the industry is being flushed down the drain due to the lack of valuable and unbiased content. Media executive bozos actually think it all has to do with the economy. That shows you how stupid they really are.
“Officials hope the tests will restore investors' confidence that not all banks are weak, and that even those that are can be strengthened. They have said none of the banks will be allowed to fail.”
THIS is really what the stress test was all about; restoring investor and consumer confidence. But this economic meltdown has less to do with confidence and more to do with reality. Apparently, many investors have been fooled. It makes one wonder how people can be so gullible after being fooled over and over again by the same criminals. It’s really mind-boggling.
For those of you who think an investment in the banks represents “compelling value;” for those who think the banks are a “safe” investment because Washington and the Fed refuse to allow them to “fail” - you need to consider the massive shareholder dilution (which will continue) and shedding of their “engines of profit” (their assets).
What this means is that it will take several years before earnings per share become respectable. And if the banks encounter more difficulties (which I am confident they will) things will be much worse. I made this same commentary nearly a year ago, and haven’t altered my stance since.
Finally, for the minority who understand the real picture, you’re now positioned to profit from this hype. But more important, you’ll be able to spot signs of a market sell-off once the sheep realize the illusion that’s been created. Until then, enjoy the ride up.
Copyright © 2009. Mike Stathis. All Rights Reserved.
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