I know there is a little election going on to distract us and stress us out. Let’s take a break and be stressed out by something else. Let’s take a quick look at the financial crisis. Yes, we are in a hidden financial crisis.
Yes, she was THE regulator most responsible for wall street banks along with the NY Fed governor. Fraud does not happen over night, it happens over decades.
Maybe she knew the report the Martens discuss today was coming out.
The New York Fed, long the quintessential keeper of secrets for the Wall Street megabanks that it has been bailing out since the financial crisis of 2008, has suddenly decided to come clean on a big threat to capital at these and other banks.
The New York Fed has created gasps in the corridors of power in the banking world by releasing a paper that documents how banks have ginned up their capital by “extending and pretending” on their underwater commercial real estate (CRE) loans.
The authors of this extend-and-pretend study, Crosignani and Prazad, are effectively doing what the Baum character in that scene from The Big Short did. They are yelling out in a public forum that this banking era of extend-and-pretend is unlikely to end well.
The “gasps” were not for the facts, but because the NY Fed is actually releasing this.
Why are we seeing this paper now?
Could the NY Fed be prepping for asking for the next massive bank bailout? Let’s scare the politicians. Let’s hold the entire economy hostage unless we are bailed out instead of finally being dealt with.
Please, can we just let wall street fail and wipe out their stocks and bonds first. Then bail out the bank deposit operations and let their derivatives default. It would be a “temporary hardship” but it is very political and I do not mean Left & Right, I mean Top (billionaires) and Politicians.
I used to call it the Political-Financial Complex.
And I wonder why gold is up 40% this year so far. Oh, I don’t really wonder.
Invest smart,
Michael Bond
Categories: Perspectives