Why did shares in European Banks and BoA collapse?

The questions we have to ask is why, after so much money in the last three years, [the banks] still need more? Why, if this policy is the correct, the only one, are the banks selling each other’s stocks? What has caused the sudden collapse in European and American banks stocks? We need to find answers because it is obvious our financial experts are lost, but too arrogant and too afraid to admit it.

Until early August, Fed officials gave no sign that they were worried about the economy. They had forecast a pickup in activity for the second half and said that weakness in the first half was due to temporary factors.

Not one official forecast of the last three years has been worth a pin. And the financial press, because they follow the same disastrously wrong ideological assumptions as those they report on, are equally clueless.

[D]uring the ‘good times’ when all the bank looked at the ‘recovery’ and made their bone headed growth forecasts and basically smoked their own dope – they thought there was no ‘risk’ and their Risk Managers’ confirmed it. But now, when the fiction of growth can no longer be sustained, suddenly everyone has remembered with a start, that the assets are ‘Risk Weighted’.

Hundreds of billions with zero risk weighting is zero. But go from zero to any number at all no matter if its still fairly small and the answer goes from zero to ‘A LOT’ in an instant. And that is what I think has happened in the risk Manager’s office of every bank in Europe and America. The denominator of the Capital Adequacy Ratio and the Tangible Common Equity Ratio just went through the roof. And when it did the ration went to zero. Suddenly the Risk Managers are telling everyone that the ‘safe’ banks are actually virtually insolvent. Quelle surprise! I think we’ll find Bank of America is in the same or worse state.

And for once they are right. They all know the only thing that will stop this sell off is another round of ‘rape the tax payer’. Will Bernanke tell the Americans that while there is ‘no money’ for paying for social services’ – like schools and police – hundreds of billions can be found for the banks…again. And will the ECB and the BoE say the same to their people?

What really bothers me is that this game has been going on all during the time when our ‘regulators’ and the banks and the governments were all telling us how they had learnt their lessons. how we must let by-gones be by-gones and stop bashing the poor bankers etc etc, they were ALL conniving to play this game.

They all knew the banks and others were buying up sovereign debt of ‘unhealthy’ nations. Spanish banks were encouraged to buy Spanish debt. Greek banks Greek debt, Italian banks Italian debt and they all got it on with each other as well. So that the French banks obliged everyone.

They had learned nothing. They have not changed. The banks never intended to. The regulators are still gurning, toothless cowards and mountebanks and our political leaders just did what they do – they lied. AGAIN.

Just like last time, they have all been caught by their own lies and they want us to bail them out again. And our leaders will do it, if we do not say clearly “This was not in your mandate from us at the last election.” The time is upon us for civil disobedience.

via Golem XIV – Thoughts.

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