This week Wall Street has been pushing the DOW to remain above 9500 on helium instead of it being supported by a true and strong wind current. The casino-style investment buying that allows large institutions to manipulate the market in order to pad their diminishing profits exists outside of the real economy.
Harvard law professor, Dr. Elizabeth Warren, the chair of the TARP Oversight Panel Committee appointed by Congress, and the only person directly affiliated with government accountability who is saying it like it really is, has warned us that the next big tsunami to sweep over the Wall Street Kool-Aid sippers is the commercial real estate collapse and coming foreclosures.
We all know where that would lead. Commercial real estate defaults would not get bailed out. There is no more money for bailouts. FDIC has already bailed out 81 banks just this year, and there are hundreds resting on the precipice of failure. FDIC is nearly broke. It has already used up its bank-rescue funds. Bernanke has already promised, pledged or issued $23T to the banking crime syndicate. How much more of the U.S. debt can he monetize? And, the Chinese have backed away from long term Treasury purchases.
As commercial real estate defaults, stores end up empty, malls become garbage dumps filled with weeds, and locust trees. Workers end up unemployed, and scared their mortgages may wind up in default, too! Consumers will tighten their spending belts even more. Treasury revenues will continue to decline.
Coming soon are more prime mortgage defaults as ARM-adjustable rate mortgages-come due. Many cannot afford the rise in the rates, and will end up walking away from the mortgages.
The financial crime syndicate’s chief financial officer (CFO), Bada Bing Bernanke, has been given a warm hug by the vacation president, Barack Obama. An endorsement that will extend Bernanke’s relationship with the financial crime syndicate’s crime bosses for another term. Bada Bing has done his best to threaten Congress from unraveling his disastrous web of worthless debt collected from his crime boss bankstas in exchange for hard cash at zero percent interest.
Back in November of 2008, Bloomberg News sued the Federal Reserve Bank of the United States, a private banking entity, yet, nevertheless, authorized by Congress to influence monetary and credit conditions, as well as the expansion and contraction of the money supply Bernanke refused to disclose any and all names of the financial companies he lent to. In addition, he would not disclose the amount of the loans, or the assets taken by the Fed as collateral under a wide range of programs. Secrecy is the bottom line. The Fed knows that if such information got out that the collateral they took in exchange for the cash give-away to the corrupt, and underwater financial institutions would likely cause the DOW to fall back to the 7000 mark or lower. This is Wall Street and the Fed’s way of window dressing the economy and making it look healthier than it really is.
Wall Street knows that these too-big-to-fail crime syndicate banks will never pay back their debts to the government. They just don’t care. If they lose stock market bets, it doesn’t matter to them, but to the average investor piggy-backing on their bets, it should matter. The Fed loaned them the betting capital at zero percent interest, while the average investor is using their precious earnings to ride the wave.
There will be no truth-telling here.
What we now have is Bernanke continuing to offer cash to these institutions allowing them to “Pump and Dump” stock prices. What the financial crime syndicate does is, no doubt, pump huge sums into specific stocks pushing up the stock prices, and then, once a price is reached that appeals to the manipulators, they sell, or dump. This pads their balance sheets. Their balance sheets have not been written down to disclose the trillions of dollars of residential toxic mortgages that they have been sitting on. They have been allowed to use imaginary market values to establish a make-believe market price for the worthless trash they claim has real value. Mark-to-market values no longer apply to them. They likely believe their toxic debt is worth 3 times what it is really worth. Their Cash-For-Toxic-Mortgage-Clunkers are not worth the actual 23 cents per dollar value, but instead they want a trade-in price of 80-90 cents per dollar value.
As they drive their investment banks down the road to fantasy recovery, what they refuse to see coming at them is a massive semi-tractor trailer filled with explosives labeled “Commercial real estate defaults”! By next year, Bank of America, PNC, Wells Fargo and Chase will see 50% of all residential mortgages underwater. Unemployment-underemployment figures will reach Depression Era levels of 20%. Mr. Barack Obama, Ben Bernanke, Congress and Wall Street will have to rope off the accident scene and perform triage. Will Mr. President decide that his vacation time has ended?
Such a scenario will create a second downturn in the economy, which will likely cause very damaging affects. I wouldn’t expect Wall Street to begin pouring the Kool-Aid anytime after that because the Kool-Aid would have turned sour. All the non-performing loans will implode like a blazing grass fire igniting the dry forest’s tree canopy.
What will happen in China when the second U.S. economic tsunami sweeps over? China has a significant overcapacity of goods, while it is busy inflating huge asset bubbles which could blow up in its face. Chinese bank regulators are telling bank lenders to increase their reserves of non-performing loans. In addition, the central bank has raised money-market rates in order to drain their liquidity swamp. Keep firing up the banking expansion. It doesn’t matter that many of their building projects have no tenants. China is determined to remain the world’s sweatshop, and anchor down deflation.
With only two years until a presidential election, and senate seat reelections, Congress may decide that the voters had had enough of the Ponzi Scheme, and the transference of wealth from working Americans into the hands of bankstas. We may just see Congress demand the Fed open its books before the primary election races. We may end up seeing Bernanke winning The World’s Most Hated Man award. He may have to shave his beard, dye his remaining hair red, and enter into the witness protection program where he will be relocated to Idaho, Montana, or Wyoming.
I keep wondering what would Truman do if he were President Obama? Knowing what I know about Harry Truman, he would not be gallivanting in Martha’s Vineyard, when the Rose Garden would have had to do.
Thanks for reading, jerry