The U.S. banking system has now been exposed to the world as the emperor wearing no clothes. CNBC’s Charlie Gasparino reported last evening that the Bad Bank plan has stalled, with “no consensus on how such an entity would work, or whether a plan could materialize anytime soon, or possibly ever.”
The Problem? If the toxic assets are bought at market value, it will trigger massive write downs. capital shortfalls, and insolvency. ie: Bankruptcy.
The Alternative? Buy them above market value and massively further subsidize the U.S. banking system.
And how big could that subsidy be? How about another $2, to $4 trillion dollars.
$4 trillion dollars is equal to 1/3rd of total U.S. GDP. A number that will undoubtedly rock currency, bond, and equity markets around the world.
Goldman Sachs is using a $4 trillion dollar estimate. But, their number only includes bad mortgage and consumer debt paper. It does not include troubled commercial real estate loans, or other asset classes, which would cause that $4 trillion dollar number to soar!
New York Senator Chuck Schumer is also floating the $4 trillion dollar number.
But why aren’t we just using the Sweden Model? That’s where all troubled banks are nationalized, their balance sheets are cleaned up, and the remaining good assets are sold to the private sector. Not only did the Sweden Model work, and work quickly, it actually made a profit for the Swedish taxpayers!
The ultimate cost of any plan to taxpayers will be dependent upon how the deal is structured.
There’s also a very big piece to this puzzle that I believe the mainstream media is missing. U.S. Treasury Secretary Tim Geithner is not pulling the stings here, he is dangling at the end of one.
And who’s pulling the strings?
The IMF…
Here’s a story from “Der Spiegel” that should have dominated the headlines in the US Press, but hardly caused a ripple… IMF to X-Ray Audit entire U.S. Financial System.
“Officials with the International Monetary Fund (IMF) informed Fed Chairman Ben Bernanke about a plan that would have been unheard-of in the past: a general examination of the US financial system. The IMF’s board of directors has ruled that a so-called Financial Sector Assessment Program (FSAP) is to be carried out in the United States. It is nothing less than an X-ray of the entire US financial system.
As part of the assessment, the Fed, the Securities and Exchange Commission (SEC), the major investment banks, mortgage banks and hedge funds will be asked to hand over confidential documents to the IMF team. They will be required to answer the questions they are asked during interviews. Their databases will be subjected to so-called stress tests — worst-case scenarios designed to simulate the broader effects of failures of other major financial institutions or a continuing decline of the dollar.
Under its bylaws, the IMF is charged with the supervision of the international monetary system. Roughly two-thirds of IMF members — but never the United States — have already endured this painful procedure.
For seven years, US President George W. Bush refused to allow the IMF to conduct its assessment. Even now, he has only given the IMF board his consent under one important condition. The review can begin in Bush’s last year in office, but it may not be completed until he has left the White House. This is bad news for the Fed chairman.
When the final report on the risks of the US financial system is released in 2010 — and it is likely to cause a stir internationally — only one of the people in positions of responsibility today will still be in office: Ben Bernanke.”
While the IMF’s final report is not due out until 2010, it would be entirely naive to not think that as the U.S. undergoes the most significant restructuring in modern financial history, that the IMF is not pulling the strings.
And by the way… have you noticed that “Dr Doom” Nouriel Roubini has recently ratcheted up his dire predictions for the U.S. economy another notch? Do you think that perhaps Dr. Doom has had a peek, or received a leak, about the IMF audit?
My take?
This is “the crisis” that the globalists from the CFR have been waiting for. I truly believe that the “End Game” will be that a new global financial structure will be instituted, including a push for the “North American Union” and a new regional currency such as the Amero.
And remember what Henry Kissinger said on the floor of the NYSE about the opportunity that this financial crisis offered President Obama:
“His task will be to develop an overall strategy for America in this period, when really a “New World Order” can be created. It’s a great opportunity, not just a crisis.”
Fasten your chin straps people, because this is going to be quite a ride. You are about to watch what was formerly derided as conspiracy theory, unfold into reality right before you eyes.
Got gold?
SliderOnTheBlack
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