BIS comedy central.

The Bank of International Settlement (BIS) just had a press conference at the end of a two day meeting of the world’s Central Bankers.

Here’s some of what they said. I had to check I hadn’t got confused and picked up last year’s press release by accident.
I don’t know, you tell me if these people have their finger on the pulse of events. The quotes are from Reuters’ report.

“The BIS said if the extraordinary measures were kept in place for too long, policymakers ran the risk of creating ‘zombie’ banks or companies, dependent on direct support.” “IF”? “…ran the risk…?” Did this idea get stuck in a time warp and only just make it through from a year ago? What do the Central bankers think the Big Banks have been for the last year? What is their definition of Zombie bank? Mine is when a bank relies for its survival on government bail-outs, won’t or can’t lend (ie do its job) and is sitting on a suicidal pile of debts which if ever recognized would kill said bank deader than dead. Have I missed something this last year or do most of the Big Banks fit this identikit rather completely?

The BIS does admit, in a fit of intellectual largesse, that, “The banking system was still far from sound…”, Gasp! No really?! The BIS goes on to reveal that this is because, “… recent profits from fixed income and currency trading and the low interest rate environment were hard to repeat and not all crisis-related losses may have been booked.” ( I certainly didn’t see that last point coming, did you?)

Rough translation of the rest of it – The only profits the banks made were speculative ones using bail-out money to bet against the bonds of European banks and against European sovereigh debts. The CDS bets, plus currency bets and the Swiss Franc carry trade, is what made the bank’s money. And all at the very modest cost of causing another near melt down and forcing another bank bail-out at public expense. But what do the banks care? They are in a win-win position. They make money betting against banks and currencies. This forces a ‘crisis’ which the banks tell government’s can only be remedied by another bank bail-out. And around we go for another bonus generating/ public impoverishing turn of the wheel of Greed.

This self creating crisis/greed-mechanism aspect of the endless bail-outs and debt hiding, didn’t merit any recognition by the BIS. They did however, give us this exercise in clarity and nut-crunching directness, “But the longer that policy rates in the major advanced economies remain low, the larger will be the distortions they create, both domestically and internationally,” Wow! It’s like listening to radio mogadon! GO BIS! Tell it like it is!

Then, utterly fearless, they go for the old one-two combination with this gem, “Extremely low real or inflation-adjusted rates altered investment decisions, postponed the recognition of losses, increased risk-taking in the search for yield and encouraged high levels of borrowing.” God damn, I nearly burst a blood vesel just reading it!

Postponed the recognition..!.. Two years of the most monumental, global accounting fraud paid for by several trillion and soon to be a trillion or two MORE, in unvoted, unaccountable, unrecoverable, undemocratic public debt all just to ‘save our banks!’ -summed up in a gut wrenching, “..postponed the recognition..”

They do at least admit that the policies have NOT healed or regualted the broken Wall Street banking modus of looting. Even the BIS can see the free money and gold-plated get-out-of-debt-free-card has made it a no brainer to gamble more, at higher risk and greater leverage in an insane – but very lucrative (bonus-wise that is) pursuit of high yeilds.

And then just to keep the comedy coming, “In addition, central bankers may underestimate inflation risks as the crisis may have lowered potential growth rate.” “..may have..” Oh may they ? Really? No! You don’t say?

It’s not the ‘potential inflation risks that flabber my gast. It’s the, “..may have lowered potential growth…” Could someone point me at the country where lower growth is only a ‘potential’, Please? I must not have it marked on my atlas.