Bad Loans on the Books of Bad Behaving Banks – Liquidity Questions Arise

Many in the banking sector and analysts which follow it are watching the challenges in the US, and whereas, things are a lot better here than in other places in the world, we are not home free yet either. As we review the FED minutes, economic data, and watch our trading partners, allies, and other aligned nations work through their difficulties, we are reminded how inter-connected we all are on the global level. But we must focus onĀ  ourselves first and foremost, we need honesty, integrity, and we need our banks to be boring once again. boccaccioravello

Not long ago, an acquaintance reminded me that we have some challenges on Wall Street and in the banking sector, namely questionable assets on the books. Yes, we already all know this, and the banks are working through the second largest massive deleveraging in the history of the US Economy. Slowly but surely, they are working to create profits, and reduce their liabilities. My acquaintance noted:

“If they were to be forced to declare those securities at Fair Value, then the smoke will be cleared, and the banks will be forced to impair those securities, which will effectively take them off the market and the game will be done. Banks don’t want that to happen.”

My answer was simple; well, neither do I, right now at least. Still, we must also understand that you can’t hide illiquidity in the fog of war forever, as that is how Ponzi Schemes develop out of originally well intentioned business investments and opportunities right – sure it is. And speaking of which I’d sure put the US Banking System and economic strength up against the likes of the EU, China, Japan, or just about any nation in Africa, coloradoskihome or Middle East.

Seriously, god help China, as their banks unfortunately have learned far too much from the sneaky off-balance sheet accounting game-playing on the global banking scene. And whereas, in China it might be “Glorious to be Rich” if it comes at the expense of collapsing the monetary system, everyone loses, the whole world loses, and that’s why there is lack of transparency.

“Where there is lack of transparency, one only has to follow the money a very short distance to see the real short falls,” – Lance 2010. For more info please visit these sites :-

Nevertheless, as things come back into compliance, and as the strength of our banks fully recovers, we will see our economy do the same, slowly but surely. Yes, some serious political policy mistakes have been made in our economy, but this is one heck of a resilient nation, no one can deny that.


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