Friday, September 09, 2011

The End Of Big Continues - Bank Of America’s Unwinding

We have been talking about the unwinding in the financial economy since starting this blog.  That is well before anyone saw any cracks in the financial system.  As we have ranted incessantly since starting this blog, we are in the biggest financial bubble the world has ever seen.  None of Wall Street would exist today except for government bailouts.  When that bubble pops, no one will be hurt more than JP Morgan, Goldman Sachs, Bank of America, Morgan Stanley and the other oligopolies and monopolies that have been bailed out time and again. 

We even wrote a year before the financial collapse exactly and specifically what was going to happen to Wall Street in a few posts on “The Game”.  That is, essentially Wall Street would puke up its liquid assets and be stuck with its toxic, illiquid assets.   And that is exactly what happened.  That is why we had a government bailout.   Wall Street was stuck with illiquid balance sheets.  And mind you, anyone who believes Jamie Dimon, Lloyd Blankfein or other Wall Street cronies that say they didn’t need a bailout are full of sociopathic self-delusions.  All of Wall Street would have collapsed.  They are all wildly incompetent at best and guilty of much more at worst.

When a corrupt Washingto failed to break up the big banks, we wrote countless times that Wall Street had won nothing and that if the government doesn’t fix Wall Street by breaking up these firms, the market Wall Street worships (and does anything to avoid competing in by rigging the game through government bribery and monopoly access to society’s capital)  would eventually do it for them.  That is exactly what is happening with this crisis at Bank of America.   Bank of America’s potential firing of tens of thousands of employees is simply an outcome of ‘The Game” we wrote about years ago.  That is, they are puking up more of their liquid assets.  This time their employees are the liquid assets they are ridding themselves of.

Until the government fixes our economy, and they have done absolutely nothing so far, and that includes President Obama’s silly speech last night, as we have noted time and again, Wall Street will need bailout after bailout after bailout.  (there is only one way to fix the economy)   The unwinding will never end until these firms either no longer exist or they have become mere shadows of their former self or they receive endless infusions of society’s capital.  (an end of globalization, which we also have uniquely called, and a subsequent repatriation of America’s capital into our banking system would essentially be another bailout but with massive unintended consequences for multinational firms and the profit bubble.  another topic we have uniquely written about.) 

Many Wall Street crooks privately cheered at the failure of their competitors back in 2008 but what they seemingly don’t understand is that each time a large Wall Street firm or bank fails, their firms become a greater systemic failure risk.   Is Timmy Geithner doing anything about this risk?  He doesn’t even know it exists. 

There are only a dozen or so firms in the world large enough to take the counterparty trades in all of Wall Street’s money-thieving Ponzi schemes.  Eventually without continued government corruption that allowed these criminal enterprises to develop, they will all fail on some level.  Period.  Again, something we have uniquely written.

Remember, another one of our unique theses on here is that we could very well coin this environment the end of big.  It’s coming.  Bank of America is just another in a long list of massive firms that are headed for irrelevance or worse.  And, as long as society’s assets are protected or the failure is relatively orderly, we need to see this for our economy to recover.  The end of big is necessary for a resurgence in local economies.  Of course, as we have ranted incessantly, if our corrupt government would have enforced the rule of law - our anti-trust laws - rather than allowing these firms to bribe their way to the massive bureaucracies of bloat and fraud they have become, none of this would have ever happened in the first place. 

Title link here.

posted by TimingLogic at 11:27 AM

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