"Creative Accounting" Makes Fed Insolvency Impossible

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Thu, 01/20/2011 - 10:38 | 889795 nontaxpayer
nontaxpayer's picture

Sure, they can fudge and cook the books and the sheeple will stay uninformed what is going on...but fundos will still apply.

Thu, 01/20/2011 - 11:24 | 889867 Sudden Debt
Sudden Debt's picture

fundos... :)


Goldman just announced a golden ticket to make money by shorting BAC:


Goldman Suggests Buying Calls on Bank of America (BAC)




Sometimes, I just want to create a account on the yahoo message board and give these guys a clue...

But that would just ruin the fun :)


Thu, 01/20/2011 - 11:32 | 889976 SheepDog-One
SheepDog-One's picture

If anyone ever wonders how its possible to pull off this scam day after day, read the Yahoo!Finance message boards and it all becomes totaly clear.

Thu, 01/20/2011 - 12:19 | 890089 Divided States ...
Divided States of America's picture

Fed adopting something like the Repo105's like what LEH did?

Thu, 01/20/2011 - 11:17 | 889923 Turd Ferguson
Turd Ferguson's picture

Last year, I gave you $1350 by Halloween.

Today, I give you $1600 by Memorial Day.


Thu, 01/20/2011 - 11:23 | 889942 Whatta
Whatta's picture

As long as one Ameican is left working (is there still one?), there is hope for repayment.

I still find it way cool that the FED can create play money out of thin air, and then (hopefully) be repaid with actual earned income tax dollars. Whatta racket to own.

Thu, 01/20/2011 - 11:34 | 889980 attst487
attst487's picture

When do we begin repaying ourselves with would-be tax dollars?

Thu, 01/20/2011 - 12:07 | 890058 Whatta
Whatta's picture

shhhhhh. The rest of the world is not supposed to know we have no real GDP any longer. Just a nation of fiat swappers in financial matters.

I spent a few fiats in the past week on some items for the farm...

...new trailer tires - made in Thailand, new metal cut-off disks - made in freakin' Russia, new work shirts - made in Cambodia, new welding mask - made in China. Oh, and my new HP computer was shipped from its assembly point in Mexico.

I think I see the problem.

Thu, 01/20/2011 - 10:40 | 889798 AGoldhamster
AGoldhamster's picture

This is still true - or even more true or confirmed as of NOW:

and as usually the early birds, rats are in london ... while the bagholders aka the sheep keep staring at the DOW ... look at FTSE!

And btw would be pretty surprised not to see Gold 133x or silver 27.x or even 26.x - so that Blythe can cover more shorts and shake more trees and get some more physical from the sheep ... btw with sacrificing indexes and munis and profiting nicely from fear again ... duration change: sell off might last into mid of February or so ... btw Harry giving back some? Not?

And have a closer look at brent ... could be rolling over too - eventually.

Guess HUI will see 49x pretty soon ... with 493 being a possible target.

Thu, 01/20/2011 - 10:42 | 889802 Sudden Debt
Sudden Debt's picture

maybe not insolvent but what when the dollar is worthless?



Thu, 01/20/2011 - 10:49 | 889804 plocequ1
plocequ1's picture


Thu, 01/20/2011 - 10:41 | 889807 LongSoupLine
LongSoupLine's picture

where the fuc is Ron Paul?!  Get his ass a chainsaw!

Thu, 01/20/2011 - 10:41 | 889809 Hedgetard55
Hedgetard55's picture

"Negative interest owed to Treasury" means losses owed to FED by Joe Taxpayer. Thank you Hanky Panky Bernanke!

Thu, 01/20/2011 - 10:43 | 889814 Xibalba
Xibalba's picture


Thu, 01/20/2011 - 10:48 | 889815 hedgeless_horseman
hedgeless_horseman's picture

...in fact will likely encourage it to gamble even more with taxpayer capital.

Not exactly accurate, but I get the point.  Taxpayer liabilities might be more accurate, but I am not a CPA, PhD, or CFA.

In actuality, the Fed has very little of my capital, and I hope to keep it that way.

Thu, 01/20/2011 - 10:44 | 889818 101 years and c...
101 years and counting's picture

"any future losses the Fed may incur will now show up as a negative liability (negative interest due to Treasury)"

Translation:  The Fed will pass the losses onto the treasury and let the taxpayers pay for their losses. 

Thu, 01/20/2011 - 10:44 | 889822 SheepDog-One
SheepDog-One's picture

Simply changing a technical definition of a word now means all is well? Give me a break, at some point soon reality steps in and trumps all.

Thu, 01/20/2011 - 11:14 | 889909 Cdad
Cdad's picture


This story is completely logical, and it fits in nicely with all of the fictional earnings reports coming out of criminal syndicate Wall Street banks right now.  I can hardly wait for Blight on America bank's earning report.  Should be sweet fiction reading.

This is what plutocrats do.  Laws and rules are for Average Joe.  Anything to keep the ponzi scheme going.  So put me all in on red!  No, black!  Investing is easy, man.

Thu, 01/20/2011 - 11:34 | 889964 SheepDog-One
SheepDog-One's picture

The only thing I keep wondering about is when they have planned for it not to go on any longer, tightrope walking across the grand canyon is a risky job! 

And like when Rusty was talking to his dad at the hotel after being caught skinny dipping in the pool with Christy Brinkley, 'You believe me dont ya son'? 'Sure dad...but do you think mom will buy it'? 'Good talk Rusty'

So...anyone think the Chinese are buyin it? I dont.

Thu, 01/20/2011 - 12:13 | 890024 Cdad
Cdad's picture


That is what is so sweet about this currently crappy situation.  The only people buying this BS are the criminal syndicate Wall Street bankers themselves!  They are the bag holders [of their own fiction, no less]. 

Average Joe continues to sell the crap out of stocks...no matter the news.  In a maddening and tortured sort of way [that is taking far too long because of super trading computers], the market is disciplining them.  It is my belief that the tightrope you refer to is shaking already...and criminal syndicate Wall Street bankers are about to start receiving their pink slips soon...falling into the canyon.

Even more sweet, propagandists at the Blow Horn [CNBC] will start receiving their pink slips soon, as well.  

It has been a long and tough slog, brother, but the market is working despite all the forces that are trying to rig the market.  You just wait and watch. 

Get your Whack-a-Mole game together, Dog.

Thu, 01/20/2011 - 11:38 | 889987 attst487
attst487's picture

"Always bet on black." -Wesley Snipes, Passenger 57

Thu, 01/20/2011 - 10:45 | 889824 Cognitive Dissonance
Cognitive Dissonance's picture

This rule change is just another example of manufacturing reality. Don't like the reality you're seeing? Just change the rules. There, all better.

The reason the insanity can continue longer than anyone can believe is because we are viewing the insanity with a static set of rules. Silly rabbit, insanity and insane institutions can change the rules at any time. 

Thu, 01/20/2011 - 10:48 | 889836 SheepDog-One
SheepDog-One's picture

Yep CD but theres no spinning a world famine, and gas to $4 then $5 and higher. The FED can claim anything it wants but the country is shut down just the same.

Thu, 01/20/2011 - 10:49 | 889841 DaveyJones
DaveyJones's picture

we don't call it famine, we call it fashionably thin

Thu, 01/20/2011 - 10:51 | 889846 SheepDog-One
SheepDog-One's picture

When do the fashionably thin start shooting?

Thu, 01/20/2011 - 10:53 | 889854 DaveyJones
DaveyJones's picture

we don't call it shooting, we call it a point of order

Thu, 01/20/2011 - 11:20 | 889933 SheepDog-One
SheepDog-One's picture


Thu, 01/20/2011 - 10:52 | 889848 Cognitive Dissonance
Cognitive Dissonance's picture

Agreed. I didn't say the insanity wouldn't end, only that it has and will continue longer than most could believe possible.

Thu, 01/20/2011 - 10:54 | 889855 jus_lite_reading
jus_lite_reading's picture

Correction- is has continued longer than even the best Enron account could have imagined...

Kalifornia here we come!

Thu, 01/20/2011 - 14:37 | 890559 hbjork1
hbjork1's picture

Discussion of the "change in government" in Sudan on the NPR DR show this morning. 

20% of the people live on less than $2/day.   Out of work numbers, 50% to 70% depending upon age group.  What did ZH say about the dear departed?  How many tons of gold?   

Recently, it seems we have an unusually large number of congresspeople saying that they do not plan to run again. 

The next round of elections could be verrrrry interesting. 

Thu, 01/20/2011 - 12:08 | 890062 6 String
6 String's picture

ZH needs a new acronym. I vote for:


Translated: "They will change the rules" or "They will change the fucking rules."

....Because we've officially seen enough evidence of this to know the fascist elites will.

*Remember the overnight you can't short financials rule during the financial collapse?

*Remember the change the accounting rules for total legerdemain?

Every market is totally rigged. My prediciton, within four short years--and probably much sooner--when the silver paper contracts default on the COMEX, our governement will simply change the fucking rules. They will in followig order:

*Set a fixed price for silver redemption (one that is highly unfavorable for the speculative "hoarders").

*For those that don't turn in their silver at the said fixed price, a VAT (Value Added Tax) will be assigned on any further transactions beyond the fixed price to the tune of an 80% capital gains tax rate.

And they will do this, of course, for the good of the country because the evil hoarders ruined the real market: the physical, for industrial use.

The will do this-TWCTFR--because they can. There is no safe haven except far off grid, sustainable living, in a fully protected compound.  


Thu, 01/20/2011 - 10:46 | 889828 DaveyJones
DaveyJones's picture

creative accounting makes as many things possible as impossible

Thu, 01/20/2011 - 10:47 | 889832 I think I need ...
I think I need to buy a gun's picture

How can they be insolvent when they can revalue their gold to whatever price they want?

Gold capitulation day....China's Hu " The dollar system is a thing of the past"

Everything finally rolled over. Can anyone say new monetary system or gold revaluation?

Thu, 01/20/2011 - 10:48 | 889833 stoneman sacked
stoneman sacked's picture

As one accountant famously said "Profit is just an opinion"

Thu, 01/20/2011 - 10:48 | 889834 Rider
Rider's picture

Freaking unbeliebabled no one cares about the accounting crimes.

The corruption is so rooted you think is part of the same tree.

Thu, 01/20/2011 - 10:49 | 889838 plocequ1
plocequ1's picture

Well, There it is. Rally on. Time for me to move north where the Moose and Antelope play

Thu, 01/20/2011 - 10:50 | 889843 SheepDog-One
SheepDog-One's picture

Yea yea...change the terms, pull the wool over the american sheeples eyes and all....but the real question is- 'Ya think the Chinese are buyin it'??

Thu, 01/20/2011 - 10:51 | 889844 London Banker
London Banker's picture

The Fed remits 85 percent of interest received on US Treasuries back to the Treasury under a long standing arrangement (1960s or so).  The amounts weren't significant until monetization of the debt under QE2.  Now that the Fed is holding trillions in Treasuries, the amounts of interest are enough to warrant breaking them out as a specific liability.  This accounting change seems to make sense to me.  As interest rates rise, and QE3 looms, the amounts could become quite large.  It's worth having a separate entry to make the flows clear.

Thu, 01/20/2011 - 11:09 | 889890 QQQBall
QQQBall's picture

Flows clearer? Not a CPA, but it seems you could reduce interest payments due to the Treasury by the amount of "negative interest". This would effectively have the Treasury eat the losses on the Fed's books?

Thu, 01/20/2011 - 11:20 | 889926 unununium
unununium's picture

Precisely.  It will be a long time before the Fed ever remits anything to Treasury again.  Like never.

But this accounting change did not create that problem.  It just changed the name of the capital shortfall account.

Thu, 01/20/2011 - 11:25 | 889953 Greenhead
Greenhead's picture

So they shoveled out tons of good paper to buy/exchange trash at par and now the trash gets written down and accounted for in the money due the Treasury account.  How else would the taxpayers eat the loss?? 

Thu, 01/20/2011 - 11:31 | 889973 QQQBall
QQQBall's picture

Flows clearer? Not a CPA, but it seems you could reduce interest payments due to the Treasury by the amount of "negative interest". This would effectively have the Treasury eat the losses on the Fed's books?

Thu, 01/20/2011 - 10:51 | 889845 youngman
youngman's picture

What this shows is that in some boardroom..and with some committiee...they are discussing the end game..the failure..and how they can hide it....

Thu, 01/20/2011 - 10:59 | 889864 hedgeless_horseman
hedgeless_horseman's picture

Raising rates?  Sure.

End game?  Not so sure. 

The Fed's and the .gov's ability to scare the pants off 99% of America on a whim enables them to do whatever the fuck they want, and they know it.  We stepped down the slippery slope of Fascism long ago, and they are far better at it than the old school.  Act accordingly.

Thu, 01/20/2011 - 11:27 | 889960 TruthInSunshine
TruthInSunshine's picture

Ya' know, that reminds me of the times when the market was down 5% to 10% in one day, way back when in 2008, when Congress initially voted down a blank check for Paulson & TARP...

...ahhh....good times. And totally NOT manipulated events, either.

Thu, 01/20/2011 - 12:01 | 890044 JW n FL
JW n FL's picture

please stick to the official story...

Thu, 01/20/2011 - 10:52 | 889847 jus_lite_reading
jus_lite_reading's picture

Actually, I said it first- this a PONZI so well concieved, so buttoned down, the Fed can never be technically "insolvent," thanks to creative Enron style accounting. That being said, your money is worth only as much as OTHER nations think it to be- big guns keep the US safe. But what keeps the EU safe? Answer- nothing.

Alas, the EU is already imploding before your very eyes...

Thu, 01/20/2011 - 10:55 | 889856 Cursive
Cursive's picture

So the FRB, a private consotium of 12 member banks, is ultimately backstopped by - wait for it - US taxpayers.

Thu, 01/20/2011 - 11:01 | 889871 hedgeless_horseman
hedgeless_horseman's picture

Welcome to the party.  You will want a drink.

Thu, 01/20/2011 - 12:14 | 890079 Cursive
Cursive's picture


I've had a front row seat at the party for quite a while. My above comment was meant merely to concisely explain the real reason behind the "accounting change."

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