Shutdown Zombie Banks
Sharon | 31.03.2008 12:15 | London | South Coast
The walking dead still stalk Canary Wharf and the Square Mile. Propped up solely by the support of the central banks how long will it be before they admit their condition. The credit implosion is not about a few overstretched borrowers- at it s root is systematic global mortgage fraud.
The FSA and Bank of England acted quickly to head off the 'malicious lies' being spread about the state of the books at HBOS and Lloyds. Markets calmed as traders listened to the soothing tones of these institutions who were equally reassuring when they declared Northern Wreck/Crock/Cock fundamentally solvent. Today we are told of the losses at NR which has now had to come clean. Its report contains some very pessimistic statements regarding the likelihood of many of its loans being repaid. Are we really to believe that this bank was the only bad apple.
The media and these venerable bodies are desperately trying to breathe life back into the banks, endlessly prattling on about confidence and trying to deny the fact that some the big banks died and they have taken the rest with them. The simple fact of the matter is that world debt has overshot the value of the global economys assets by light years. Central banks cannot bail out any more banks- the next big one to fall will not be caught- their pockets are simply not that deep. Capitalism as we know it is officially dead- its just that we're in denial.
The financial systems killer has turned out to be systematic mortgage fraud. Imagine if you will that you belong to an organized crime syndicate or even a large corporation. The bank that holds on to your cash from your drugs deals and money laundering operations mentions that other banks are giving out loans no questions asked to all comers. So you ask yourself- hey why don't I get some of those wiseguys in the neighbourhood to get some people together to you know like borrow some of this cash and buy some of those newly built condos. Then we lie about the cost of the property on the mortgage application, they default on the loan and we split the difference.
Then we find that the fraud trail leads right to the top of US megabank JP Morgan Chase whose staff were instucted as to how to get loans through the banks loan approval system by faking info on their clients incomes.
http://ftalphaville.ft.com/blog/2008/03/28/11898/jpmorgan-chases-zippy-cheats-and-tricks-memo/
The point is that if the politicians and the banks won't admit of their predicament then they obviously need help.
The media and these venerable bodies are desperately trying to breathe life back into the banks, endlessly prattling on about confidence and trying to deny the fact that some the big banks died and they have taken the rest with them. The simple fact of the matter is that world debt has overshot the value of the global economys assets by light years. Central banks cannot bail out any more banks- the next big one to fall will not be caught- their pockets are simply not that deep. Capitalism as we know it is officially dead- its just that we're in denial.
The financial systems killer has turned out to be systematic mortgage fraud. Imagine if you will that you belong to an organized crime syndicate or even a large corporation. The bank that holds on to your cash from your drugs deals and money laundering operations mentions that other banks are giving out loans no questions asked to all comers. So you ask yourself- hey why don't I get some of those wiseguys in the neighbourhood to get some people together to you know like borrow some of this cash and buy some of those newly built condos. Then we lie about the cost of the property on the mortgage application, they default on the loan and we split the difference.
Then we find that the fraud trail leads right to the top of US megabank JP Morgan Chase whose staff were instucted as to how to get loans through the banks loan approval system by faking info on their clients incomes.
http://ftalphaville.ft.com/blog/2008/03/28/11898/jpmorgan-chases-zippy-cheats-and-tricks-memo/ The point is that if the politicians and the banks won't admit of their predicament then they obviously need help.
Sharon
Comments
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chase morgan,g8 trilateral commission meet washington soon
31.03.2008 15:04
James
The Fundamentals are Sound
01.04.2008 03:32
Banks now create credit on the basis of deposits - nothing new in that. A subtle difference is that the credit is to be paid back over a number of years and that the bank forecasts this as profit. Credit has become deferred profit. It is not a loan to be repaid, with a risk attached, but a growth forecast. Where the Banks once invested deposits, they have taken to hoarding the deposits - in order to underwrite the future profit. This is a fundamental element of the "credit crunch." Even with fractional reserve banking, there is a perpetual need to have larger deposits, in order to create more credit, in order to have growth of future profit. Even with the hoarding of increased deposits, the banks can create only a certain amount of deferred profit (or credit as they call it). In order to sustain such a system, there is a necessity for full employment in the biggest creditor regions of the globe.
Those creditor regions used to be South America and the "developing" nations. Now, those creditor regions are the personal debt of European and US Citizens. The banks are not really capable of negotiation - as the recent bank charges fiasco has demonstrated. Indeed, the banks do not really have a negotiating position.
You can take your debt (their deferred profit) anywhere you want. That is the nature of the credit crunch. It is a profit crunch: your debt is mobile but banks must hoard. So, by being a rate tart you impact financial institutions by reducing their deferred profit. A worse behaviour would be to reduce your personal debt (say, declaring bankruptcy). The whole credit crunch is a catastrophe for banking because it requires longer working hours, full employment - with rising wages - and higher paying jobs while at the same time, the maximisation of profit requires just the opposite.
Hugo Blunkett