Bloomberg tells us that U.S. lenders are sitting on $1.29 trillion in cash, “equal to a record 98 cents for every dollar of existing business loans”. But neither the banks, nor Bloomberg, is actually telling you why.

We therefore take this opportunity to translate into reality. First of all, the remaining “assets” on the TBTF’s balance sheets which haven’t already been transferred to the taxpayer-funded debt load as “toxic” assets are just as toxic (translated: worthless) as before, if not moreso. Secondly, they are expecting one of two things to occur before long:

1) Governments will begin the long, slow process of revaluing these assets under a gradual return to sensible FASB accounting methods, and under that scenario they will barely meet their liquidity requirements, and/or …

2) Another Lehman-like unwinding of ficticious assets will occur, to the extent that swollen cash reserves will be the only (albeit again temporary) salvation of a global monetary system where banks have the only cash and nations are bankrupt.

In the event of scenario 2, the new definition of “bankruptcy” should prevent that term from ever being uttered, unless the “intellectual elites and world bankers” decide that only banks are “too big to fail” and not nations (!)
Odd that the lunacy might apply that way, but certainly in keeping with equally bizarre recent assumptions.

Take for example the Bloomberg article comment that there is “slack demand from borrowers throughout the economy” which flies in the face of Obama’s urgings–yet is actually true. In a completely anti-private sector, pro-government political-economic environment, private sector businesses neither hire, nor grow, so why borrow? For what?

The whole idea that TARP was ever intended to spur lending is a well known fallacy by now, and Obama’s insistence that banks LEND, LEND, LEND to get the economy moving comes from the Keynesian SPEND, SPEND, SPEND mentality that’s poisoning our fiscal health. And of course, false assumptions like TARP, sold as a prescription for economic recovery, but instead used to dramatically screw U.S. taxpayers, are difficult to abandon politically.

Businesses don’t need to BORROW, BORROW, BORROW to get back into productive mode–they are sitting on record cash reserves as well, primarily due to their dramatic payroll reductions, which are in turn due to dramatic workforce reductions.

Businesses are exercising COMMON SENSE and have backed down to survival mode, realizing that if they produce anything other than windmills or solar panels they’ll be carbon taxed to death to subsidize some public-private partnership which does. They have gotten the message that if you succeed you are penalized and if you fail you are subsidized, just like Obama’s Federal government – our biggest, fastest-growing and most wasteful employer, with the highest average wages (about $71,000 vs. $40,000) and the lowest real productive value to the economy. And until big goverment gets back to COMMON SENSE, the private sector is in hibernation.

Banks are exercising COMMON SENSE by assuming that sooner or later the lavish, high-risk, taxpayer-pillaging party will be over (despite government’s own absence of restraint to reign in taxpayer-funded spending) so they are holding record reserves for the reason’s cited above.

It’s GOVERNMENT that simply doesn’t get it. All government needs to do is GET OUT OF THE WAY to ENABLE jobs (instead of pretending to be able to CREATE jobs just by throwing more money around).

Like a bad manager with a control problem, Nanny-bama’s Government-Knows-Best fails to understand that the government that manages least manages best. And that is just a particularly shameful U.S. economic problem, to heap on top of a much larger, much different, global economic problem, which is why Senators like Evan Bayh have said Bayh Bye to this dysfunctional Congress.

Which again is ultimately why we advocate that State’s TAKE ACTION, under the waning presumption that State government is only source of common sense government still available to the people, and able to save this nation.

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