The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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From: nextrade!	4/7/2009 1:15:28 PM
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Denninger market-ticker.denninger.net Two Years On, We're Still... ... arguing over "what are the losses going to be"? Rick Santelli hit the nail on the head with this point. The IMF is now in the "Roubini" camp with regards to their "estimate" of losses. The obvious question is this: Given that we're two years into this mess, how come we're still arguing over what losses "might be"? Simple answer: The lies have not yet stopped. When the lying stops we will be able to actually read balance sheets and figure out what exposures are. From there we can figure out the damage to the economy, and from there we can craft a reasonable set of expectations for what lies ahead, how much contraction in lending will be required, how much contraction in GDP will occur, and what the economy will look like in a couple of years. We cannot do that until the lying stops. We cannot get an accurate read on balance sheets today because of the intentional obfuscation of both corporate and government officials. Corporations cannot lie (or simply obfuscate) en-masse without government involvement and approval of their conduct; the law is supposed to prevent this sort of nonsense. But in the last two years the government has not only ignored these actions it has actively encouraged them through changing the rules every time you turn around, leaving loopholes large enough that a Mack Truck can be driven through them, and refusing to investigate and prosecute obvious falsehoods and the hiding of losses. It has required truly outrageous actions (such as IndyMac apparently "reclassifying" the date deposits were received to "cook" their capital numbers) to draw a response, and then the "response" is only a suspension instead of the prosecution that should have come from what certainly appears to be a clear-cut case of accounting fraud to this observer. If our government has ANY desire to see the economy bottom and recover, the lying must stop. It really is that simple. Until and unless that happens, there will be no recovery of substance or durability in our broad economy, as trust cannot be restored so long as it is common knowledge within the markets that the truth is being concealed.

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