In the dark wood we wait for Virgil, but he is a no-show. We have become well acquainted with the beasts ahead.
We see in the media the deceptive spots of the leopard.
We see in our foreign policy the sharp teeth of the lion.
But again, it is the she-wolf which frightens us the most. Our insatiable lust for money is even now unquenchable. Even now, the people we put trust in are deceiving us.
We find ourselves at the gates of hell, but unlike Dante, we have no guide.
Here is a primitive graph of how much money we have thrown at the banking crisis:
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Here is the effect it has had:
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Today, the stock market crashed through the previous bear lows, and if you are into technical analysis, that means we start the whole process over again of seeking a bottom, and then retesting it in the hope that it holds.
It offers a tangible gauge as to where we are in this 'recession', but it is just a relative indicator that says things are worse than 6 months ago. It gives no hint as to how far along we are.
We know what doesn't seem to work, and that is deception. For 6 months we have danced around the issue of bank insolvency, and have done exactly what we acknowledge is the wrong thing to do, and that is to keep zombie banks alive.
Geithner, whom Wiki doesn't say is a deceptive fucking moron, has first-hand, close-up experience with Japan's lost decade. He claims to know how much zombie banks hurt their recovery, much the same as Bernanke claims to understand the dynamics of the great depression.
If I smell dogshit, I check my shoes and scrape it off. I don't walk around on the carpet telling everybody that I am going to send my shoe out to be tested for dogshit.
If I have a headache, I take aspirin to get rid of it. I don't go looking for a test to see if in fact I have a headache.
Here is a light-weight description of how the government might deal with Citi.
I am a little more critical of the Capital Assistance Program. The biggest question it leaves unresolved is why do you fucking hate America so much?
What did we ever do to Obama's economic team to deserve the lies and outright theft that is being done to us?
Conversion of preferred shares to common equity. What does this mean? Do they really expect the average person to understand what the significance of that is? Make no mistake: this not limited to Citi; this is going to be policy going forward. Here is what the Fed said today:
"We announced on February 10, 2009, a Capital Assistance Program to ensure that our banking institutions are appropriately capitalized, with high-quality capital. Under this program, which will be initiated on February 25, the capital needs of the major U.S. banking institutions will be evaluated under a more challenging economic environment. Should that assessment indicate that an additional capital buffer is warranted, institutions will have an opportunity to turn first to private sources of capital. Otherwise, the temporary capital buffer will be made available from the government. This additional capital does not imply a new capital standard and it is not expected to be maintained on an ongoing basis. Instead, it is available to provide a cushion against larger than expected future losses, should they occur due to a more severe economic environment, and to support lending to creditworthy borrowers. Any government capital will be in the form of mandatory convertible preferred shares, which would be converted into common equity shares only as needed over time to keep banks in a well-capitalized position and can be retired under improved financial conditions before the conversion becomes mandatory. Previous capital injections under the Troubled Asset Relief Program will also be eligible to be exchanged for the mandatory convertible preferred shares. The conversion feature will enable institutions to maintain or enhance the quality of their capital.
In the case of Citi, we are going to pay 4.5 times the entire market cap of Citi for 40% of the shares. In what universe does this not qualify as grand theft? How stupid does Obama's team think we are?
How much corrupt bullshit are we going to take?
40% conveniently leaves management in place, or even new management to keep stringing things along. The reason why an increase in common shares is desired is because it allows the banks to measure favorably against a metric called TCE, or Tangible Common Equity. This is a metric that will carry a high weight in the bank stress tests.
In other words, the government is facilitating accounting fraud to ensure that the banks pass the test, and they are doing so by grossly overpaying for new common shares.
Obama better get scum like Geithner under control or he is going to be wishing for the good ol' days when we only had a banking crisis on our hands.
He should have taken a lesson away from the last 8 years, and that is deception ruins credibility. He will quickly find himself in the position where nothing he says is believable.