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20 years ago the shenanigans that the big banks are now trying to pass off as “good earnings” would have landed people in jail.  JP Morgan, Citigroup and now Bank of America are reporting earnings that include the “release” of loan loss reserves…at the same time they are increasing the write offs of home equity loans etc..  This really doesn’t make any sense, Things are getting better …but they’re not?  I do find it sad, ludicrous, ominous, criminal amongst other descriptions that NO ONE has been held accountable for what happened.  So much so that even Jon Corzine after a $1+ billion, blatant and in your face theft, is still out running free and even raising funds for the president’s re election.  Sickening!

It does make some sense from the standpoint that the only thing of importance today is that of perception.  Perception that the banks actually have earnings, perception that the imploded collateral has bottomed and is healing, perception that your “money” has value, perception that your account balances are real, perception that things are getting better.  They are not nor can they until a Mother Nature approved washout and cleansing of debt occurs.  A debt cleansing is what is needed but will not be allowed to occur.

However, a debt cleansing is exactly what we will get, probably in a VERY short and tight time frame or all at once.  When looked at from the standpoint of raw amounts of capital, distance from fair values and reality, the “sovereign” sector of the debt market is THE biggest bubble in all of history, bar none!  Not that debt in other areas are not bubbles also, they are.  In fact, the other areas of debt were frontrunners of default and the sovereigns stepped in to try to make (fake) everything as “whole” and keep the destruction hidden.  The problem is that the losses were so big as to strip naked the sovereign insolvencies.

But, no one cares.  Everyone sees it, everyone knows it, everyone knows that everyone knows it… but no one cares.  Actually, maybe they care (a little) but as long as the stock market keeps going up and central banks are sopping up sovereign supply, don’t rock the boat…right?  Even people as old and wise as Richard Russell are being fooled.  He finally, a couple of weeks ago came to the realization that the precious metals markets were rigged too, which I say “Congratulations and welcome to reality.”  But yet he “frets” because his Dow Theory which worked so well for so long… seems to have developed a hitch in its giddyup?  Does he not “get” the fact that EVERYTHING is rigged?  Does he not understand that even the best world class mathematician and card counter is still going to lose in Las Vegas if the table is rigged?

My point is this, everyone knows, no one really cares and people still “hope” that free and fair markets exist.  I’ve got news for you, they don’t anymore.  “Hope” is the vestige of fools and at this point in time, investors (hopers) are “hoping” that their bank stays open.  They are hoping that the banking system as a whole stays open.  They are hoping that their “account balances” are real and have meaning.  Hoping that their currency retains (perceived) value and that it will continue to “spend” even though they know that their country’s treasury has become insolvent.  How stupid is it to already know that “everything is worth nothing” but still “hope” and do nothing?  Of course, there are those who have their heads in the sand and up other “dark” places, their hope is not what I am referring to.  It is the “elite thinkers” who understand at least 70% of the game yet do nothing but “hope” that I am scratching my head at.  I say, plan for the worst and hope for the best.  This way if your “hope” was misplaced, you have prepared for the worst.