Obama admin makes things worse with lies and ‘creative’ numbers

The payroll numbers adjusted by the Birth /Death bogus and the number jumps by 230k to 560k. Even that number does not describe reality if you add people with part time looking for full employment etc. which is about 16% the real picture will look very ugly. The Obama administration puts lipstick on a pig and names it ‘green shoot’.

Almost all statistics are a lie and Greenspan with Clinton introduced a new era of intensive numbers cooking which saved the government hundreds of billions in interest payments and showed artificially high growth rates for the economy. How did they do that by simply reducing inflation by changing the calculation model. Except for deep crisis the interest paid is gathered by the inflation hence if you show low inflation you can issue bonds with lower coupons.

That is one of the biggest scams in this century because they steal hundreds of billions from US taxpayers every year. That system was introduced world wide and now almost all governments use that trick these days. The second hit of that double scam comes from the salaries as all are adjusted once a year for inflation hence when they show low inflation you get paid less salary in real terms and that amounted to quite some sums over time. Within the last 20 years the global salaries in developed countries have been dropped by 50 % – where do you think the rising profits in companies come from?

The new administration does support exactly that systems – at the end of the day they were put in place by the people who really run this planet. When it comes to banks here some ideas how the ‘change’ government fully supports the old scam of Wallstreet.

Excerpt

http://www.bloomberg.com/apps/news?pid=20601109&sid=alC3LxSjomZ8

Bank Profits From Accounting Rules Masking Looming Loan Losses

…..

The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President Barack Obama’s efforts to pull the economy out of recession.

‘Bogus’ Profit

Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.”

Further deterioration of loans will eventually force banks to recognize losses that their bookkeeping lets them ignore for now, says David Sherman, an accounting professor at Northeastern University in Boston. Janet Tavakoli, president of Tavakoli Structured Finance Inc. in Chicago, says the government stress scenarios underestimate how bad the economy may get.

The accounting rule changes that matter most for the banks came on April 2, when the Financial Accounting Standards Board gave companies greater latitude in how they establish the fair value of assets. Lawmakers, including Representative Paul Kanjorski, a member of the House Financial Services Committee, had complained that existing mark-to-market standards worsened the financial crisis.

Debt Valuation

Along with that change, FASB also let companies recognize losses on the value of some debt securities on their balance sheets without counting the writedowns against earnings. If banks plan to hold the debt until maturity, they can avoid hurting the bottom line.

At Citigroup, the recipient of $346 billion in fresh capital and asset guarantees from the government, about 25 percent of the quarterly net income came thanks to the debt securities rule change, the bank said.

Another $2.7 billion before taxes came from an accounting rule that lets a company record income when the value of its own debt falls. That reflects the possibility a company could buy back bonds at a discount, generating a profit. In reality, when a bank can’t fund such a transaction, the gain is an accounting quirk, Weiss says.

Citigroup also increased its loan loss reserves more slowly in the first quarter, adding $10 billion compared with $12 billion in the fourth quarter, even as more loans were going bad. Provisions for loan losses cut profits, so adding more to this reserve could have wiped out the quarterly earnings.

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~ by behindthematrix on June 6, 2009.

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