What A Brilliant Solution!

Senator Dodd says could tweak mark-to-market
WASHINGTON (Reuters) - It might be possible to modify mark-to-market accounting rules for U.S. banks facing steep write-downs of troubled assets without abandoning the underlying accounting standard, a senior Senate Democrat said.

Sen. Christopher Dodd, the Democratic chairman of the Senate Banking Committee, told reporters on Wednesday evening after a panel hearing that at least one former bank regulator was discussing how to approach the difficult issue without "walking away from" mark-to-market standards.

The issue of how to value distressed assets held by U.S. banks has been one of the most difficult challenges in constructing a bank rescue plan, according to industry sources and lawmakers.

The Obama administration is expected to outline next week how it plans to handle the second $350 billion of a $700 billion financial rescue fund also known as the Troubled Asset Relief Program (TARP).

If the government buys some bad assets as part of the rescue, it could force banks to drastically write down billions of similar assets. That could create further instability unless changes are made to the accounting rule which requires assets to be valued at market prices.

"Temporary suspension of the mark-to-market rule will allow the goals of (the second phase of TARP) to be realized," said Scott Talbott, the Roundtable's senior vice president of government affairs.

"If uncorrected, the current accounting rule would trigger losses across the industry. These losses would weaken balance sheets and reduce the ability of banks to lend," he said.
http://www.reuters.com/article/politicsNews/idUSTRE51503A20090206?pageNumber=1&virtualBrandChannel=0

I found this nugget of nonsense in my Too Stoopid To Believe File this afternoon. My first thought was, "What a stoopid f**king idea." And then on second thought, "WHAT A STOOPID F**KING IDEA!"

When will America wake up to the flim-flam these Wizards Of Stoopidity on Capitol Hill keep coming up with to bamboozle them into believing they can fix this financial mess that they and their snake oil salesman pals on Wall Street concocted, and now hope to unload on the taxpayers.

What makes these Washington Knuckleheads think for a minute that investors will suddenly regain "confidence" in a bank because "all of a sudden" their losses magically disappear. This is beyond absurd. Have we forgotten Enron already?

Dan Norcini commenting on jsmineset.com said it best, "The idea is that if the banks can fudge the numbers on their books then they can present much improved balance sheets to observers and thus restore confidence to the market which in turn will supposedly lead to a loosening of credit and improved lending activity."

Isn't it a tiny bit alarming that the never ending focus of all the attempts to "fix the financial crisis" revolve around "lending" more money. Wasn't it "lending" that created this mess in the first place? And what makes these inept economists on Capitol Hill think that people want to borrow more money? Americans are waking up to the fact that they are in over their heads regarding debt. When will the "poor excuse for government" in Washington wake up to the fact that this country's national debt is COMPLETELY OUT OF CONTROL? The last thing this country needs is more lending [or spending for that matter]. IT IS TIME TO SAVE! THE COUNTRY IS BROKE!

America has been living beyond it's means for over 35 years now...ever since Richard Nixon closed the Gold Window and defaulted on the nations debt in 1971. Our economy is quite simply the Mother of All Ponzi Schemes. And the taxpayers, We the People, are the ones left holding the bag.

It is IMPOSSIBLE to spend your way to prosperity. But like crackheads and heroin addicts, Washington and Wall Street are determined to "get another fix". Unless, or until, Washington admits America has a debt problem, the problem will only get WORSE. There are no ifs, ands, or buts about it. It is a fact! Everything Washington has done to date to "bail out" the banks has failed. One fix after another, and America is still a debt junkie. Is the global financial system any better off today than it was one year ago? Hell NO! Go ahead then, and let the banks hide their monstrous losses in the closet. It won't fix anything. Just because the losses are out of sight doesn't mean they are out of mind.

The $4 Trillion Hallucination Driving Gold
The strategy for financing the new debt required for the TARP (Toxic Asset Relief Program) purchases and the stimulus packages calls for the expansion of debt instrument auctions across the entire maturity spectrum:

“Faced with such extraordinary financing needs, the Committee focused on the optimal potential size of each coupon issue, while not jeopardizing a successful auction process.

It was the Committee's recommendation that existing monthly 2-year and 3-year notes could be increased by $5 billion in size, to $45 billion and $35 billion, respectively.

Furthermore, the Committee recommends that monthly 5-year notes have the greatest room for expansion given their liquidity and focus and should be increased by as much as $10 billion per issue. This would bring the monthly issuance size to as much as $40 billion.

And lastly, the committee recommends that the Treasury increase the size of the newly issued quarterly 10-year notes by $5 billion and by $4 billion when re-opened the two months following the new issue. In other words, the sizes of the 10-year issuances would increase from $20 billion, $16 billion and $16 billion each quarter to $25 billion, $20 billion and $20 billion, respectively.”

What a brilliant solution! In the absence of demand, and abundant supply, issue more supply!

And, in apparent support of the argument for diminishing demand for U.S.Dollar-denominated junk debt, the committee suggests that having a bigger “primary dealer community” would bolster the odds against future auction failures. The solution appears to be to hire more salesmen.

And finally, a larger primary dealer community would help to reduce on the margin the possibility of an undersubscribed auction(s). There currently are just 17 primary dealers, down from 30 a decade ago. Government bond trading desks at the dealers also are not immune from sector-wide capital/balance sheet issues and desks at many dealers are being encouraged to minimize risk.

What an operation! How can this charade be allowed to continue? The only explanation, and its glaringly obvious, is that nobody, from the executive administration level down to Joe the Plumber, is willing to step up and be first to pull the plug and the artificial standard of living we’ve created for ourselves at the current expense of foreign treasuries and at the future expense of our progeny.

What a sad statement as to the integrity of the human race.

But, whatever. We can't afford to sit around and pity ourselves just because we allowed the thieves of Wall Street and Washington administer this unlubricated broomstick to our collective backsides.

The only intelligent thing to do, and yes I do believe there is a "stuck record" frequency developing here, is to buy gold and silver. This $4 trillion hallucination on the part of the United States financial mismanagers is directly dilutive to the the value of any currency issued by that bankrupt nation, and is therefore a natural exponential driver for the gold price.
http://news.goldseek.com/GoldSeek/1233762178.php

US Treasury in plans for record debt sale
The US Treasury on Wednesday opened the floodgates of government bond issuance, revealing plans for a record debt sale in February and more frequent auctions in the months to come.

The announcement came amid growing fears about US government deficits and sent the yield on the benchmark 10-year Treasury note rising to 2.95 per cent, up from just over 2 per cent at the end of December.

The Treasury said it would sell $67bn (£46bn) in new securities next week, the largest ever quarterly refunding, beating the last peak in August 2003. It may also start monthly sales of all its benchmark Treasury securities.

At the end of February, the Treasury will start selling seven-year notes every month for the first time since the issue was discontinued in 1993. Sales of 30-year bonds will double to eight times a year and the Treasury will say in May whether the bond will be sold every month.
http://www.ft.com/cms/s/0/bdf4ee70-f2e4-11dd-abe6-0000779fd2ac.html?nclick_check=1

The Fed has already said they would buy the Treasury's debt, and in effect monetize that debt. Is that the sound of a toilet I hear swirling in the background? The debt junkies are going to be getting high on their own supply. That NEVER works...

And the saddest part of all this? There is nothing you, I, or our ignorant neighbors and coworkers can do to stop this madness. But we can fight it. We can buy Gold and Silver. A gun and ammo might not be a bad idea either.

Gold and Silver tore out of the gates this morning on continued poor economic data and the "worse" than expected new jobless claims numbers [maybe we should hide those in a closet somewhere too]. Prices peaked quickly as the news of a possible change in accounting rules ignited a rally in the financial stocks [yet one more hopeless rally in financial stocks], or so we were lead to believe by the clueless financial media.

The Gold Cartel have set a wall up at 925. They know full well the implications should Gold vault higher here. A move through 930/35 in Gold will expose the TRUTH about the future of the global financial system. A future crushed by hyper-inflation from coast to coast and around the world.

Silver was very stout today as it pierced resistance at 12.66 and began it's assault on 13. I smell a short squeeze...a ball crushing short squeeze.

The bullion banks will do EVERYTHING they can to prevent the inevitable. And here in these tiny markets, everything they do to prevent the rise of Gold and Silver will, ultimately, only make them rise higher. The currency markets are slowly beginning to recognize Gold and Silver as money now. The currency markets trade in excess of $3 TRILLION DAILY. Just a scrap of this cash leaving the monopoly money for the real money could send both Gold and Silver to unimaginable heights.

BUY THE DIPS!