pater_tenebrarum

Are U.S. Banks Really Worthless?

my back-of-the envelope calculation shows that the losses they have admitted to so far (which are only a small fraction of the true losses, since a lot of stuff has been hidden under the level 3 accounting rug or remains off balance sheet) amount to more than twice the capital of the entire US banking system at the end of 2007. several large banks (such as C and BAC) are de facto insolvent, and would have been in chapter 11 proceedings for quite some time already if not for the treasury guaranteeing their losses and keeping these zombies on artificial life support with tax payer funded capital injections. shareholders continue to trun the risk to be diluted into oblivion as the losses continue to mount in the ongoing global depression. outright nationalization of the zombie banks down the road is practically assured. the collateral backing their huge exposure to mortgage debt continues to falter at accelerating rates of change. house prices are likely to fall anopther 20 to 40%, and the markit indexes show already that the entire sub-prime loan area is a COMPLETE write-off.
AAA rated debt pools trade for 35 cents on the dollar. leveraged corporate loans are likewise going down the drain, and so are increasingly credit card loans and other consumer loans. there's no mileage in pretending that things are not what they are. the system is kaput - which is why Bernanke announces today that he will print up another $1,1 TRILLION in new 'money'. good luck with that! ( oh , and the rubes all just got poorer again courtesy of the Fed diluting the value of their savings).