The Market Ticker

Be warned - this is a long presentation, lasting more than an hour and a half.  It is worth every minute of your time and is in fact essential to understanding both what happened and more importantly why the economy cannot recover on a durable basis.  (Original Page)

That's William Black, the former liquidation director who was in charge of investigating the S&L disaster.

Note that one single bank, IndyMac, lost more money than all of the S&Ls combined.

Folks, the key "take away" here is what is called "control fraud."  In order for trust to be restored - that is, in order for markets to function normally, this fraud must be eradicated from the system so that normal levels of business trust can be restored.

It hasn't been.

Nobody is in the dock right now among the big banks.

The credit and equity markets, along with the economy, are hobbling along only because of the extraordinary actions, costing hundreds of billions of dollars a year, taken by The US Federal Government to "backstop" or "guarantee" economic activity - specifically, lending.  Absent those guarantees and backstops that activity WOULD NOT TAKE PLACE because THE BANKS ARE STILL LYING AND KNOW THEIR PEERS ARE AS WELL.

Let me make this perfectly clear: The Bezzle not only hasn't been eradicated it has increased in size and scope, transitioning from lying about what you're selling to lying about what you're retaining!

What Congress and President Obama fail to appreciate is that this sort of "economic boosterism" - that is, providing guarantees for firms that have and continue to commit control fraud, guarantees that there will be no durable economic recovery.

Larry Summers, Ben Bernanke, Tim Geithner: All of these individuals and in fact virtually every one of President Obama's economic advisors are in this up to their necks!  They were all in one form or fashion involved in crafting the absence of regulation and encouragement of control fraud that led to the present crisis.

Remember, Ben Bernanke, in response to my question (asked on PBS) said:

Bernanke's entire thesis is that the crack addict will be ok IF HE CAN JUST HAVE ONE MORE HIT OFF THE PIPE.

But the crack addict is currently on the ground grasping his chest, as he's suffering a heart attack.  Another hit of crack will not make the suffering addict better and in fact he can't get the pipe up to his lips even if he wanted to!

The evidence is in fact clear: Nate has put this all together in a form that is irrefutable and impossible to argue with.  Indeed, let's look at just a few of these facts:

Import and export prices - down huge.

But wait - I thought CPI was only down a tiny amount?  Hmmmmm...

Read the rest of Nate's thesis - it's worth it.

Here's the underlying problem: Bernanke and the Government are throwing literally $250 billion a quarter down the toilet simply trying to prevent an all-on deflationary collapse. 

Unfortunately that "prevention" only works so long as the $250 billion a quarter can continue to be spent - more than $1 trillion a year in annual deficit that must be continually added by borrowing from the Chinese and Japanese EACH AND EVERY QUARTER or THE SYSTEM WILL GO RIGHT BACK INTO COLLAPSE.

How long can this continue? 

Not all that much longer - and if the direction does not change before our rope runs out we face a future far worse than we did last fall had we done nothing.

Mr. President: Bill Black, myself and a significant number of others have been pounding the table on these issues for more than two years. 

There are solutions but they involve pissing off people with power and money - and people who are your advisors.  People who have continually gotten it wrong and yet have been rewarded for being wrong and hurting the American people, the Treasury and indeed The Federal Reserve.

We must, like it or not, face the music for our profligate spending and loose credit issuance and force the truth into the open.

We have avoided nothing and in fact have made the circumstances we face worse as our nation's financial position has been severely damaged through these "bailouts and handouts."

Time is running out.