Friday, June 22, 2012

Bankrupt the Banks


(Combination of news feeds) … Wall Street appeared headed for a higher opening, a day after the Dow sustained its second-worst loss of the year. Dow Jones industrial futures rose 0.4 percent to 12,546 and S&P 500 futures added 0.4 percent to 1,323.50.
Sentiment was also shaken after Moody's Investors Service lowered the credit ratings of 15 major banks, including Bank of America, JPMorgan Chase and Goldman Sachs, saying their long-term prospects for profitability and growth are shrinking.
Downgrades generally make it more costly for banks to raise money by selling debt because investors demand higher interest in return for taking on riskier debt.
"Of course, they deserve it for years of mismanagement and speculative trading activities ... and also the exposure to sovereign bank debt," said Francis Lun, managing director of Lyncean Holdings in Hong Kong. "So, as a result, all these major international banks are being downgraded to a more realistic level."

Welcome to the world of banking. Speculation and risk-taking on a par not seen in fifty or sixty years. Why?  They want to make more and more money to feed the greed of Wall Street. A greed that is out of control.


Now to be honest, I am not anti-banking nor am I anti-profit. I invest in the stock market. I believe in the free enterprise system and I have a place in my heart for making money. BUT enough is enough.  We have grown a system that is feeding itself, it is gorging itself. And when it gets reprimanded for faulty practices, it sulks and retrenches, bringing the entire market down in its wake.

Here’s some news to use. DO NOT INVEST IN BANKS. They are going to have a very rough time in the next few months (maybe years). And if they get into trouble again, don’t count on Congress to come to their rescue. Washington is tired of their sad song. So, too is Main Street.

Three days ago the stock market was sailing along, recovering from a very bumpy May, when all of a sudden it took the second worst dive in the year. Had ExxonMobil gone out of business? Had Chevron’s profits fallen through the floor? Had Hershey quit making candy bars? Had Apple’s launched a dud?  Did ford have to recall every car it ever made? The answer is no to all of these questions. And it would be no to about any company on the big board or Nasdaq. The Dow was doing just fine. Profits up, dividends peaking and business growing, even in the midst of a sputtering economy.

So what happened? 

 Moody’s slapped the banking industry and basically said, “You guys are screwing up. Again. Get your house in order or you are not going to be able to borrow money as cheaply as you want to.” And when thier hands got slapped the cryed and the market slid down a coulle of billion dollars in value. Really?  I don't think so. I think American companies were worth just as much yesterday as they were the day before. What came down was the greed factor – and banker's egos.

By the way, this is the same industry that got huge TARP bailouts from Uncle Sam only to pay themselves and their like-minded banker brothers huge sums to get out of debt. I owe you, you owe me, so let's pay each other off and clean our books up. Very, very little of this precious tax-payer money went to actually helping real people with mortgage or upside down personal or business loans, which it was supposed to.

And while they were getting bailouts that were bigger than most countries’ GNPs, the CEO’s at the seven largest banks all gave themselves raises.  Let me repeat that. While you and I bailed these idiots out, they gave themselves raises. And I’m not talking about two and three thousand dollar raises either. We’re dealing with millions. Each.

“Well we don’t know how to run a business properly, but we are going to make more trying to do it.” What an attitude.

So the next time a bank – any bank wants a loan from me, I say screw ‘em. No bank is too big not to fail. Let them go down the drain with the millions of Americans they foreclosed on who were upside down in home loans they shouldn’t have been in in the first place – oh yeah…predatory lending by the banks. Hum, what goes around comes around. It’s an old adage apparently not shared in the halls of high finance.






















Stuff, the exciting new novel from Gallivant Press, by John Crawley is at an eRetailer or on-line bookstore near you.

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