How to help a sick French bank look healthy

November 15, 2012 by · Leave a Comment
Filed under: Global News 

If these rules are what we are applying to all banks to show their healthy and risk, we are in big trouble.  We have a global debt problem (too much), in a financial system that requires growth (more debt/credit) to function problem.   Pointing out a single institution makes headlines but over all, any large bank is leveraged well beyond their capital base. 

We need to de-leverage the financial system.  This will relieve pressure on the bank’s balance-sheet so they can get back to there major societal purpose, lending to the public so we can innovate and create jobs and maintain income levels.   Overall, they are falling and have been for some time, outside time periods where we had asset bubbles that created artificial growth that was unsustainable.   Global governments will need to go through the same process.   If you ask, “how did we get here”, my answer would be that when we moved forward with the global bailout programs and not letting institutions fail or restructure with massive write-downs, this is the course we chose going forward.

My prediction is that we will limp along but eventually we will have a number of cascading failures when the math becomes to unsustainable and out of touch with reality.  Perception is reality until you do not have the ability to perceive fantasyland.   Good luck and prepare yourself.

Bloomberg – It’s no secret that the methods many banks use for calculating capital ratios are a farce, especially at large European lenders. Sometimes the numbers are so over- the-top, all you can really do is sit back and admire the chutzpah.

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