Montag, 4. April 2011

"Extend and Pretend": The Severe Ramifications of Wall Street's Game

Dringende Leseempfehlung:

"Extend and Pretend": The Severe Ramifications of Wall Street's Game"

The big four of JPMorgan (JPM), Citigroup (C), Bank of America (BAC), and Wells Fargo (WFC) should have undergone orderly bankruptcy liquidation in 2008. They took on a vast amount of leverage and a vast amount of risk. Their greedy bets went bad. In a true capitalist system, they would have failed. Instead, in our crony capitalist system, they were bailed out by taxpayers and continue to function as zombie banks pretending to be healthy. They reported profits of $34.4 billion in 2010. Every dime of these profits was generated through accounting entries that relieved their provisions for loan losses. The CEOs who virtually destroyed the worldwide financial system in 2008, looked into their crystal balls and decided their loan losses in the future would be dramatically lower. I’ll take the other side of that bet. I dug into their SEC filings to get the information in the chart below. Just the fact that Citicorp and Bank of America have still not filed their 10K reports after three months tells a story.

...

The game of extend and pretend at the expense of the American working middle class is growing old. When this game is over, Wall Street will be looking for another bailout. But the American people won't fall for all this again."

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