On top of the fact that the large major banks are borrowing or taking the free money from the central banks, they are also buying U.S. Treasuries, stocks, and other investments. They also operate a credit card business that charges an average of 17.0 percent interest to their customers. These banks do not have to write down their toxic assets which range in the trillions of dollars. That is correct, it is in the trillions with a 'T'. How are these banks ever going to fix there balance sheets? Well, they really don't have to fix their balance sheets with the accounting rules that are in place. This is worst than the accounting that was used by Enron, Global Crossing, or any of the other corrupt stocks on the early 2000's that went belly up after using fraudulent accounting. The only difference this time between the banks balance sheet and Enron's balance sheet is that the bank's balance sheet is actually legal. The rules have been changed in the middle of the game by the powers that be so that they can operate and remain in business. Meanwhile, small regional banks go out of business every week creating less competition for the big boys who manipulate the whole game. What a racket this is.
How can such a system exist in a so called capitalist society? What ever happened to supply and demand as the driver of prices? These days the Federal Reserve Bank buys an average of $8 billion in U.S. Treasuries everyday via their POMO (permanent open market operation). This creates cash reserves and inflates the markets, hence our stock market rally. Oh well, we shall ride the wave while it lasts, this really is the market of make believe.
Chief Market Strategist
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