As we get nearer to the unavoidable Day of Reckoning, the State pulls out all stops to sell the fraud that we are improving/doing well/recovering/ or fill in your word of choice. There is no escape from an inevitable end that will likely produce a collapse of the dollar, the economy and the government. The only question is when some or all of these events occur, not if.
The latest example of how anything will be done to try to extend the notion of a recovery is the fraud condoned in the financial sector. Robert Lenzer, in Forbes, reports how banks are reporting phantom income on $1.4 Trillion of delinquent mortgages. Instead of writing these mortgages off or reducing their valuation greatly (which would cause an enormous loss to the banking system), they pretend the loans are good and book as income interest that is not being paid and will likely never be paid. This is blatant fraud condoned and encouraged by the government!
Enron is beginning to appear ethical in comparison to the lengths that government will go to to deceive the people. Just as many who believed Enron’s accounting will be destroyed, so will many who believe the recovery myth that the government is selling. Unfortunately, we are all “shareholders” of the government. Those not associated with Enron were spared in their debacle. That will not be the case when the government collapses.
Read Lenzer’s explanation of this travesty of accounting which has as its only purpose a coverup of the fact that the banking system has not been healed and will still collapse:
US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages
Jan. 12 2011 – 8:36 amThe giant US banks have been bailed out again from huge potential writeoffs by loosey-goosey accounting accepted by the accounting profession and the regulators.
They are allowed to accrue interest on non-performing mortgages ” until the actual foreclosure takes place, which on average takes about 16 months.
All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a resullt, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off gthe books of the banks.
This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.
Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.
The potential writeoffs could be even larger should home prices continue to weaken, placing more homes in the nomnperforming category on bank balance sheets.
About 6 million homes are still at risk, according to Schnapp, and at least 10% of them are 25% underwater, meaning their market value is 25% less than the mortgage– but the owners are still paying interest to their banks.
