Thursday, February 10, 2011

Bill Isaac - Universal Deceit Spin Doctor

Regular readers know that I mince few words when I go after those I deem as part of the Great Ponzi that have enveloped this great country and most certainly threatens to sink it if more do not stand up and speak up.

Since creating my All-Imbecile Team I have inducted some to said team with C.V.'s that would make most grown men blush with envy. The most elite schools, the most prestigious council memberships and accolades. Sadly though, a star studded resume does not ensure brains as most of the All Imbecile Team members have aptly demonstrated.

Quick Update on Team Members for those interested:

Ken Rosen - professor Cal Berkeley
Roger Farmer -professor UCLA
Alicia Munnell -professor Boston College
Paul Krugman - professor Princeton
Allan 'the maestro' Greenspan - former Fed Chair **
Fredric Mishkin - former Fed governor
William Isaac - former FDIC chair
Brian Westbury - chief economist First Trust

I took some heat via email when I took to task one William Isaac, former FDIC chair and current chief bank apologist, in my post Bill Isaac - All Imbecile Team's Newest Addition. You can click on the link above to read it.

For some strange reason many took issue with this idiot blogger's rant and gave it zero weight. Go figure?

Well this morning I had the opportunity to catch a piece out the Financial Times by none other than Bill Isaac who is still on his tour of universal deceit with a piece entitled Banks should be allowed to pay out dividends.

Now normally I would go into a rant over this piece of unmitigated garbage, I would mock and ridicule why any of us would still be listening to this perpetual history revisionist and outright liar. Then, I would then jump all over the FT for allowing this banking thug the forum to spew his brand of bought and paid for propaganda but then I thought, heck I am just an idiot blogger.

Well, lo and behold not all bloggers are created equal, that's for sure.

So it is with great pleasure today that I find my criticism of Isaac shared by blogger extraordinaire Barry Ritholz of The Big Picture got on his soapbox and dismantled banking water boy and shameless shill Isaac's FT piece in his own piece entitled Isaac: Please Let Under-Capitalized Banks Pay Dividends!

I have reprinted Barry's article below for you viewing pleasure but I encourage you to check out his sight as it is well worth your time. Here it is in its entirely below:

Isaac: Please Let Under-Capitalized Banks Pay Dividends!

Relentlessly shameless bank shill William Isaac gets up off his knees just long enough to pen an absurd FT piece: Banks should be allowed to pay out dividends.

It is such a bizarre statement that we are left truly wondering what color the sky is on his planet.

Isaac seems to be just making it up as he goes along:

“Preventing profitable banks from paying reasonable dividends impedes bank lending and economic growth. It tilts the balance away from the issuance of new capital towards a slow-growth approach.

We made a major mistake in allowing large banks to reduce their equity capital ratios to inappropriately low levels during the boom years. It encouraged lending beyond the ability of capital to cover the risks. At best, we were short-sighted and living on borrowed time (or money).”

Wow, there is so much wrong in just two paragraphs, I don’t know where to begin.

Let’s start with this: There is absolutely no credible evidence that not allowing banks to pay a dividend somehow impedes lending. Nor is there a scintilla of evidence that a lack of dividend payment somehow “tilts” towards reduced economic growth.

What Isaac calls bank profitability is largely a mirage: Thanks to FASB 157, Banks are not required to report their actual financial conditions. How hard is it to appear profitable when you get show only gains, but never have to disclose losses? Who amongst us is so foolish as to really believe this?

Then there is the issue of the 0% interest rates and artificially steepened yield curve. Does anyone actually believe these banks would be flush if they weren’t receiving free money from the Fed?

That is before we get to the issue of the GSEs: Fannie and Freddie have become the banks dumping grounds for every crappy mortgage loan made. This backdoor bailout is little more than emergency funding from the taxpayer to the Banks.

And Isaacs has the unmitigated gall to claim these propped up, subsidized, phony balance-sheet banks are healthy enough to issue dividends? PUH-leeze.

As to how the banks fell into this unfortunate condition, Isaac gets busy rewriting history to support the bankers his cause : It wasn’t WE who made the “mistake allowing large banks to reduce their equity capital ratios” — that was done at the BANKS OWN REQUEST. They ASKED FOR AND RECEIVED the capital reserve waivers via their lackeys in Congress and the SEC. It was their demand — not ours — made to their bought and paid for rent-a-Congress. It was the banks who have made the concept of American Democracy a global joke, replaced with a far more accommodating Corpratocracy.

And, the inappropriately low levels weren’t a coincidence of the banking boom years — they were the cause. Increased leverage means more profits during good times, but more bloodshed during the inevitable correction. Every rookie trader understands the double-edged sword of leverage.

Isaac, apparently, does not . . .

Well said Barry.

Sadly men like Isaac and others neck deep in the Great Ponzi continue to shout from the rooftops that indeed the earth is flat. That what you think you see is not at all what it seems, rather it is what thugs like him say it is. They are so much more enlightened.

Why are we still listening to him?
Why does he still have the platform?

Yes, George Orwell was definitely correct when he said

"during times of universal deceit, telling the truth becomes a revolutionary act.

Thanks again Barry for telling the truth and for taking Isaac to task and exposing him for what he is, yet another in a long line of the universal deceit spin doctors.

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

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