Bank of America lost a billion Dollars in the last quarter and this gave Wall Street pause. Traders were milling about, pawing at the ground, not sure which way to run. One silly metaphor is a good as another when describing this circus. These Masters of the Universe are supposed to be the experts on how business works and how money is made. Yet the only businesses that are "making" money are these giant too big to fail Wall Street banks.
You don’t have to look very close to figure out that these banks aren’t really making any money at all. Their profits are entirely from "trading", you know like churning the stock market or driving up the price of gasoline. Anything that they do that must interact with the real economy is hemorrhaging money. Credit cards can’t be written off fast enough and home mortgage defaults that were already high are up another 20%. In the next three hours, 1300 Americans will lose their homes to foreclosure.
B of A actually posted $9.6 billion in permanent losses tied to an array of bad debt, including mortgages, home equity loans, credit cards and loans tied to commercial real estate. The thing is that this still doesn’t reveal how bad things really are since banks can wait months or even years to declare a loan uncollectible after the payments stop coming in.
Home lenders still haven’t revealed the extent of their exposure to loans that have a variable rate and have yet to reset or the "interest only" loans that are going further and further underwater. Credit cards have had their interest jacked up to beat the new Federal rules and this will put more people into default. They are trillions in the hole, not because of the "crash" but be cause they have been creating this bubble for years to hide their losses. They were taking hundreds of billions in bonuses and paying interest on bonds held by rich people like the Bush family when in fact they weren’t doing anything that made money. It’s been a thirty year Ponzi scheme and they don’t see any reason to stop now. Welcome to the Ponzi-onomy. www.prairie2.com