U.S. Bought and Sold

Here's a real good article today from Paul Farrell of Marketwatch.com titled "Democracy is dead ... lobbyists rule America."

http://www.marketwatch.com/story/16-credos-for-our-new-lobbyist-nation-2009-09-01

It's so true, too. After all, everyone at this point knows the change in Financial Accounting Standards Board rules now make insolvent banks look solvent. Plus, if there were mark-to-market rules still, I was told by one of my sources close to the situation that 3,000 banks would fail right now. That's right--3,000 BANKS out of 8,000 would fail right now based on assets that are worth far less because property values dropped.

So, when you hear that Shittybank turned a profit or made any sort of revenue, look up FAS 157 in the accounting books to see how they were able to make loan losses into gains. This is a joke. 3,000 banks are insolvent, we'll find out that unemployment increased considerably last month, the stock market is on the verge of another downfall by about 1,000 points--at least--and there are no new jobs out there.

On top of that, consumer spending was not as good as thought. August month-over-month spending declined and year-over-year fell as well. From Ken Denninger's Market Ticker today:

ICSC-Goldman Store Sales
Released on 9/1/2009 7:45:00 AM For wk8/29, 2009
Prior
Actual
Store Sales - W/W change
0.6 %
-0.5 %
Store Sales - Y/Y
-0.2 %
-0.7 %
HighlightsAugust chain-store sales ended up being a disappointment, according to ICSC-Goldman's same-store tally which fell 0.5 percent in the Aug. 29 week for a minus 0.7 percent year-on-year rate.

The report down plays the impact of back-to-school calendar shifts and stresses the overall trend which it said is not improving. The report isn't making a call for month-to-month sales. Redbook is up next.

Definition: This weekly measure of comparable store sales at major retail chains, published by the International Council of Shopping Centers, is related to the general merchandise portion of retail sales. It accounts for roughly 10 percent of total retail sales. Why Investors Care

As Denninger said: What back-to-school sales?

That's right. Can you say "deflation"? Knew you could. How about this one: "Japan's Lost Decade." See what happened there earlier this week? A major political overhaul. Let's face it, the Japanese are getting tired of living through a 20-year recession. Well, guess what our future is going to be?

You see, the person very close to what is going on not only told me that 3,000 banks would fail under normal FASB mark-to-market rules but he also said that changing the accounting rules and trying to hide all the bad loans is exactly what Japan did when the same thing happened to them in the late 1980s. It is the same thing we are doing now.

Get ready for a lost decade--possibly more--unless something can be done about these useless assets that, in some cases, may never get back to their original value. Another source very close to the action said he sees property values not returning to 2007 levels until 10-15 years down the road. Just how long can we go without businesses getting loans so that they can employ people with borrowed money?

On the bright side, my source said Neil Barofsky's report on the $24.7 trillion the Fed could spend on this crisis would mean that everyone of these crappy assets were worth zero and that just is not the case. Still, one-fourth of that amount, 25 percent, is more than $6.1 trillion. If assets will not return to 2007 value until 2019-2024, what are these banks going to do? What is the federal government going to do?

However, my source did say the Congressional Oversight Panel's August report on the Risk of Continued Troubled Assets is worth the reading. Elizabeth Warren, who I very much admire as does my source, and her group hit the nail on the head--something needs to be done about these assets or else. How did that song go? I think I'm turning Japanese, I think I'm turning Japanese--I really think so. Very prophetic.

So, how does this relate to Paul Farrell's article. The guys who created these toxic assets, the ones now holding these assets, are not only bailed out to do the same thing, but they're getting rewarded for screwing up the entire economy. They not only still have jobs while millions of others don't, they're getting bonuses.

As for the future of this country, so far, it business as usual in D.C.

If you're an executive still trading derivatives or the ones who packaged crappy loans on Wall Street, or a government executive running the country, way to go--you'll still have an abundance of wealth even though you helped completely screw up the economy. But, of course, you understand it, so we need you to fix it. Right.

In this greedy bizarro world called the U.S., failure is success for the entitled class.

Meanwhile, you can yell at your kids' teachers, who won't make near the amount of money you're making, use your money and influence to get your kid an A when they really deserved an F. After all, you're entitled. You got the same deal from the Treasury and Federal Reserve.