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Friday, November 1, 2013


As Bullion continues to sink - (or retrace - depending on your perspective) and stocks continue to soar, and the rich get richer, and banks rake in trillions in 'profits' it seems easy to forget the little glitch that happened way way way back in 2008. 

Ancient history for Americans.  Crisis.  What crisis?  O yeah, you mean that nothing that happened five years ago.  The Fed took care of that.  Remember?  Everything's cool now.  Just look at Bank profits.  Can't you read numbers?

And it's true.  If you look at  Bank profits the economy looks great.  And that's how our government fixed the crisis.  They suspended all accounting standards and implemented something called FAS 157,which said that "assets" no longer have to be valued at a price at which they can be sold on the open market.  They can be valued according to any old model that that a bank come up with.  Don't worry, we'll trust you.  Just tell us what you think the price of your assets are valued at, and that's good enough from now on.

In the words of John Hussman:

"The crisis ended – and in hindsight, ended precisely – on March 16, 2009, when the Financial Accounting Standards Board abandoned mark-to-market rules, in response to Congressional pressure by the House Committee on Financial Services on March 12, 2009. The decision by the FASB gave banks “substantial discretion” in the values that they assigned to assets. With that discretion, banks could use cash-flow models (“mark-to-model”) or other methods (“mark-to-unicorn”)."

Meanwhile the Fed has taken anywhere between 3 and 18 trillion dollars of failed loans onto their balance sheet, Fannie Mae is still issuing mortgages, and all the banks that failed are awarding their officers tremendous bonuses while gambling furiously in the risk markets.

Nothing has changed.  The crisis went away because we changed the meaning of BANKRUPT.  Now BANKRUPT only occurs when the Fed and the Government says it has occured.  Which is never.  If you happen to be a bank or a government.

If you're a person, well, that's too bad.  You can go bankrupt and any moment.

But if you're a bank or the government or any of the big corporations surrounding the banks and the government, there's never going to be a crisis again.  Until all the private citizens starve.

Then there might be another crisis.

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