Friday, March 19, 2010

The Mayan accountants had it right

The bank seizing business picked up today after languishing for the last couple of weeks where we saw only smaller bank seizures totaling a few hundred billion in losses. Today’s haul was seven different chains of banks costing the FDIC at least a billion USD but the final amount is unknown with the largest of the banks being un-saleable. The FDIC will mail checks to depositors in that bank who aren’t over the insured limit and at least 250 million USD will go uncompensated.

The current pace of bank failures is already two and a half times what it was last year and there are press reports today that the seizures are about to really pick up speed. These bank failures are driven by the losses from commercial loans and not mortgage defaults. The problem is that we are no where near the peak of commercial loan defaults that will come sometime in the next two or three years. Also to come in 2012 is the beginning of the collapse of the junk bond bubble estimated to be at least a trillion dollars. Junk bonds are corporate bonds issued to pay for the leveraged buyouts of companies that made people like Mitt Romney very, very rich.

An LBO is where you buy a company using some of your money but mostly debt arranged by a Wall Street bank who gets a large fee, you liquidate the assets of the acquired company and send the jobs to China. Then you take your money back plus the entire net worth of the company as profit for yourself and say “so long suckers!” Often the amount taken is based on an inflated value of assets so there would be no chance of the company surviving even if the economy wasn’t tanking. Much of corporate America has been hollowed out in this manner.

These rich parasites have drained America until there is no life in the economy. That is why they really want to pull off the final takeover before the average American figures out what they have done. The economy is coasting along on credit from China and if that stops before they have complete control it will be awkward for them. The Mayan accountants were right about 2012. By the way, the Mayans balanced their books with human sacrifice.


Ronmac said...

LBOs,Wall Street banks,junk bonds, corporate bonds, bailouts, bubbles, collapse, trillion dollars, assets liquidation...I said it before and I`ll say it again. Where is Pol Pot when you really need him.

RobertM said...

The Automatic Earth has a post up that fits in well with you're saying. Maybe 2012 *is* the year.