Friday, June 22, 2012
Beaver Friday and bank robbers in reverse
Maybe we should call this little guy lucky beaver since he doesn't have to deal with banks. The Mafia on their best day couldn't have figured out a way to rob the world population like they're doing right now. Where to begin? First all the rules that prevented another Great Depression were pulled away leaving the children on the playground to piss away everybody's house and retirement. And when that wasn't enough they got their allowance with bonus only to do it again. Step back from all the hand wringing and cheers of joy with this Kabuki theater this is a Ponzi scheme plane and simple. Only the suckers haven't realized they are being taken for a ride. And it's not over yet. You recall the rating agencies? Those wonderful folks who gave a passing grade to subprime mortgages. And when call out on it denied it by saying it was the banks' fault. (Nothing like passing the buck when there's no real buck to be passed or would that be termed plausible deniability?) At any rate to add gasoline to the already burning fire this rating agency has just lowered the ratings on 15 major banks worldwide. You may be thinking good a slap on the wrist for this band of thieves. But once again they are not stupid as most of the dumbest criminals. By deeming them less than worthy the banks will have no choice but to raise rates to their borrowers and depositors as the money they steal er borrow will be more expensive. For those who wish to read more
A word about capitalization as I understand it. For every dollar that you let them hold in your account nine dollars is lend out on that buck. It's called leverage. In essence it's owning more assets than you could otherwise own much like a mortgage. Problem is the banks are at present only holding less than 3% in working capital. When the government requested that they increase this amount to cover potential losses you'd have thought it was a request for a right arm. The banks refused and of course our congress being bought and paid for by the banks pressed the issue no farther.
So what does this mean on the grand scheme of things? For the countries facing default it's the nail in the coffin. Nothing like expecting to try and deal with one amount of debt then have the rate increased even before you could calculate the pay back. Whether or not this will be joyous news for the boys on Wall Street we will see. While they have tooted the horn about how bail outs are great (for them of course) the rest of the world has missed the real inside sick joke here. Thank you sir may I have another as the economic paddle is about to hit us square in the rear.
We haven't seen any major bank fail but the game is far from over. I'll fill you in on the smaller ones later as always.
Update: It appears the banks are taking this news with a bit of glee as their stock have risen today. Nothing like a bit of what should be bad news get turned around into a great Christmas bonus. So it's more fleecing of the Peonage with higher interest rates. They must be loving this. They get the elevator we get the shaft.