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DTMark

The Alleged Recovery And The Banks

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If the current crisis could be said to have "started" about a year ago (the obvious negative, visible effects, anyway) and we fast forward to today, what I'm intrigued by is where the recovery is coming from.

Clearly unemployment isn't falling (the "jobless" recovery) and just because the economy "recovers" (in terms of GDP growth) that doesn't necessarily mean that households stop being squeezed by job losses and inflation.

The CPI measure is falling stubbornly slowly (not that the CPI has a lot to do with inflation anyway). I don't see any deflation occuring in anything except the cost of servicing mortgages (which appears to be on the turn now especially with regard to fixed rates).

The Banks, which are always by definition insolvent anyway, were on the "verge of collapse" a year ago. Since this was the trigger - the collapse of confidence a year ago - I was wondering what has changed.

The so-called toxic assets are still shrouded in secrecy. As far as I can see, little or no attempt has been made to quantify the extent of these. The Mortgage backed securities would still appear to be practically worthless. The "mark to market" concept has failed yet the Banks appear to be bouncing back somewhat. Indeed some are reporting profit and most recently Lloyds and RBS want out of the asset protection scheme:

http://business.timesonline.co.uk/tol/busi...icle6841982.ece

Now I'd thought that scheme was a last lifeline to insure the banks against total collapse at the taxpayer's expense.

In broad terms, is what has happened over the last year that the politicians, and hence the taxpayer who they're meant to speak for and protect, have simply been royally shafted by the Banks - who are far cleverer?

For example, the Government would appear to be able to intervene in the bonuses paid. given their share, but choose not to.

Banks about to go to the wall - taxpayer bails them out.

Bonuses to be capped? Barclays invent a creative way to "PFI" their worthless toxic assets to the Caymans.

Is what we're seeing now the Banks simply coming to the conclusion that they can do anything, and so since that is true, everything is fine because the Banks say so? Or, put another way, the Governments of all countries have simply agreed to pretend that the problem does not exist, because mark to market can continue to be used to do so?

Edited by DTMark

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Is what we're seeing now the Banks simply coming to the conclusion that they can do anything,

The elite have been running the show for centuries OP.

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banks are NOT by default..insolvent.

they ARE however, solvent today, but only by the grace of bailouts, and overvalueing their assets.

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