Newspaper logo  
 
 
Local Stories, Events

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Books, Films, Arts & Education
Letters

Ref. : Letters to the editor

Health Care & Environment

09.20 Al Gore Is Still Optimistic [24:06 video; rather than future Frankenstein governments, how can we better ensure having brilliantly efficient & competent governments?]

09.20 Florence sparks pollution fears after excrement-filled 'hog lagoons' overflow

09.20 EU must end new petrol and diesel car sales by 2030 to meet climate targets – report

09.19 Air pollution linked to much greater risk of dementia

09.19 Shell and Exxon's secret 1980s climate change warnings [that capitalists suppressed this for continuing profit is the most unforgivable crime ever]Trump administration rolls back methane pollution rule despite harmful health impacts [continuing in the tradition of stupid capitalism at all costs]

09.18 'I was horrified that children are breathing air this dirty inside the school' [if your government isn't working, change it!]

09.17 California plans to show the world how to meet the Paris climate target

09.16 Universal healthcare was unthinkable in America, but not any more

09.16 Air pollution particles found in mothers' placentas

09.16 Portugal’s radical drugs policy is working. Why hasn’t the world copied it?

News Media Matters

09.20 Morning Edition’s Think Tank Sources Lean to the Right

09.19 Taibbi: Bernie Sanders’ Anti-Amazon Bill Is an Indictment of the Media, Too

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

09.18 Voters Are Ready for a Green New Deal. Are Democrats?

09.18 'This Election Is Last Chance to Stop Them': Kudlow Confirms Trump and GOP Ready to Gut Safety Net After Midterms [Yes, there are far too many sociopaths]

09.18 You'll miss Trump one day

Justice Matters
High Crimes?

09.20 Trump Should Be More Worried About the Brennan Dossier

09.19 'Killing a generation': one million more children at risk from famine in Yemen [Does America's government have empathy? Does it understand the concept of morality? The Saudi Air Force would be ineffective without U.S. military assistance...]

09.19 ‘Tied to trees and raped’: UN report details Rohingya horrors

09.16 Merchants of Death Profit from the Bombing of Children as a US-Backed War Goes Largely Ignored

Economics, Crony Capitalism

09.16 If Jeff Bezos wants to help low-income people why not just pay them better?

09.16 Central Banks Have Gone Rogue, Putting Us All at Risk

International & Futurism

09.18 Racist rioting in Chemnitz has reopened Germany’s east-west split [We are all mixed-race after 10,000 generations. Helping suffering people makes us feel good, so become their friends instead.]

09.18 'Unconscionable' and 'Appalling': In Affront to Those Fleeing US-Backed Wars and Persecution, Trump Slams Door on Refugees

09.17 For Whom the Climate Bell Tolls

09.17 How to Humanely Solve Europe's Migration Crisis

We are a non-profit Internet-only newspaper publication founded in 1973. Your donation is essential to our survival.

You can also mail a check to:
Baltimore News Network, Inc.
P.O. Box 42581
Baltimore, MD 21284-2581
Google
This site Web
  Thinking about Stresses
Newspaper logo

COMMENTARY:

Thinking about Stresses

by Fred Cederholm
Stresses placed upon US individuals, households, and auto giants are real and realistic. Hypothetical stresses just dealt the biggest 19 financial behemoths are not even close!
I’ve been thinking about stresses. Actually I’ve been thinking about Treasury Secretary Geithner’s stress tests, rosy scenarios, the missing laugh track, the classes of 2009, households, and the automotive giants. Last week the public learned the “results” of Treasury Secretary Timmy (the Tiger) Geithner’s stress tests which had been performed on America’s 19 largest financial (banking) behemoths. These few mega-institutions handle roughly 90% of America’s banking volume. The “what if” scenarios applied to each were designed to provide benchmark insight into “would these institutions remain viable and solvent should the economy continue its downward spiral into further recession/depression in 2009 and 2010?”

You see an army of 200 federal examiners had gone over the books and calculated the impact of growing unemployment, asset (particularly real estate portfolio lending) deterioration, potential exposure on other investments, and various personal credit/loan write-offs. The unstated goal was to re-assure the general public that our banking behemoths were on solid ground and that there was no reason to fear any 1930’s type meltdown. With combined assets of an estimated $11.72 TRILLION, these 19 were clearly regarded as “too big to fail” - so any integrity of an honest testing was suspect. It was set up from the get go to advance all of them to the next grade level in the spirit of “no child (or mega bank) left behind.” Well, guess what? THAT is exactly what happened!

The worst case scenarios (of what can go wrong, will go wrong) for the coming two years suggested a “further potential exposure” of a mere $599 BILLION in losses (roughly 5.1% of total assets). The public was informed that 10 of the 19 were looking at a combined potential shortfall of $75 BILLION in this hypothetical two year worst case $600 BILLION of additional write-off losses. In effect, the BIG 19 already had $525 BILLION (or 87%) of these hypothetical losses covered! The 10 institutions facing any shortfalls could raise the needed capital themselves through common stock offerings and/or debt convertible paper. NO more taxpayer nor Treasury/FED bailouts would be necessary! THIS was exactly what the public needed (and wanted) to hear. How convenient!!! It was even announced that the highly rosy scenario figures had been negotiated (?) with the respective institutions. Humm... The only thing missing from the press conferences and media sound bytes about these tests were the background laugh tracks from TV network situation comedies.

A pensive analysis of Geithner’s stress tests shows them for what they are – spin, hype, and a “Hail Mary Media Pass” for May of 2009. The Obama Administration is currently promoting how the equity markets have experienced a significant up-tick in recent weeks, and that the increase of a mere 563,000 jobless claims for April 2009 was the smallest in six months! Short term positive market swings, and ONE “not as awful” labor number have more credibility than Geithner’s stress test, but do they mean we have turned the corner? Obama’s Administration needs to be very careful here because premature zealousness can come back to haunt them. There are too many variables looming on the horizon (both home and abroad). Any attempt at willful optimism being “the fix” for our economic/financial problems just isn’t going to happen.

This country is experiencing a great deal of stress. The high school and college graduating classes of 2009 are facing toughest job market in well over 30 years. Outstanding credit card debt and personal bankruptcies continue to set monthly records. One in five households now owes more than the real estate behind their mortgages is worth. Chrysler went into the government mandated Chapter 11 bankruptcy in May; GM will more than likely follow suit in June. The auto workers’ unions may end up with stock equity stakes in the surviving emergent companies, but will auto workers save their jobs here in the outcome? Stresses placed upon US individuals, households, and auto giants are real and realistic. Hypothetical stresses just dealt the biggest 19 financial behemoths are not even close!

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.


Copyright 2008 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.


Copyright © 2009 The Baltimore News Network. All rights reserved.

Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent.

Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.

This story was published on May 11, 2009.

 

Public Service Ads: