Any premise that the "global bank bailout" scam could possibly work was dashed to pieces this morning.
The entirety of the European banking system was routed, with share price losses ranging from 50 to 75 percent - in one day. HSBC, Barclays and RBS were all decimated as the truth has started to leak out and is no longer able to be ignored.
This came following BAC, Citibank, Wells Fargo and others in the US being similarly destroyed on Friday, and now State Street (STT) has said they may have another $9 billion in "hidden" (unrealized and un-admitted) losses.
It is time to quit screwing around. If the politicians will not do it, we must force them by any means possible - and necessary.
The simple reality is that Bernanke and Paulson have between them guaranteed or "bought down" some seven trillion in debt thus far, and its not enough. Proof of this is found in the fact that the banks keep coming back to the well time after time.
I said close to two years ago right here on The Ticker that we were likely facing $2-3 trillion in residential real estate losses - real losses.
It appears I was too conservative and the actual losses in residential real estate alone will be at least double that amount.
We couldn't afford the original $2-3 trillion.
Why not?
Because it doesn't end with residential real estate.
The carnage also extends to commercial real estate, car loans, student loans, credit cards and more. In short, it is found in every area of debt, without exception. None of it is safe, and the money is simply not there, nor can it be conjured, to "put things right" with some sort of "tarp it over" scheme.
This must be stopped, and stopped now. To the extent we are able, we must recall the money that has been committed. We must eject from policy roles all who had a hand in this so-called "rescue attempt", and for those who threaten to continue it, they must face indictment for fraud - which is exactly what their policies, at this point, are.
We now know these approaches will not and cannot work. The math said they couldn't work at the outset, but now we can add proof that comes with time and experience - the actual experience now matches the projections, and it all sucks.
It is time for President Obama (as of tomorrow) to take the stand and say in a loud, clear voice - NO MORE.
If you're broke, you're broke. Its unfortunate but true. The bankruptcy provisions must be rolled back so that consumers, as well as businesses, can avail themselves of liquidation. It is what this nation - and indeed all nations - need.
As for the markets, Obama's "pretty candy from the rear end" rally may not come - and certainly, it may not last. If this is yet another attempt by the banks to twist his arm by manufacturing an "imminent crisis" that demands that he throw money at the problem, one can only hope that either he, or China, will simply say "uh uh" and halt the charade.
The fact of the matter is that we have been systematically looted so that a handful of people can steal their last bonus check to the tune of $70 billion, another $200 billion has been blown into a black hole of fraudulent accounting under the pretense that these securities "will come back" and all of it is gone. We have "promised" that which we cannot deliver, and the check is on the table.
Mellon had it right, and it is time for people to rally to this cry - "Liquidate, liquidate, liquidate. Liquidate it all."
There is a bottom folks. In the stock market, in real estate, in commercial space. It's just a hell of a lot further down than people want to admit, but until we do admit it, we will do further damage and dig the hole deeper.
The time to stop was in the spring of 2007 when I first called "BS" on WaMu's earnings report; the cops should have descended on them and other similarly-situated banks and shut 'em down. They refused, and we refused to force the issue.
Now we have proof through time that the approach taken was wrong - and I, along with the few other voices in the wilderness demanding that open, honest accounting along with bankruptcy were the only and proper course - were right.
When in a hole the first rule is to STOP DIGGING.
