... i.e. the legal precedent being set in the Chrysler bankruptcy case that the holders of senior bond debt won't actually be allowed to take (contractually guaranteed) precedence in a liquidation proceeding ...


(snip)"In a bizarre exercise intended to defend legitimacy, the bankers are engaged in a complex game of propaganda. They pressured the USCongress to relieve Wall Street from the chains of FASB Rule #157, and the senators & representatives obeyed their paying masters. The result has been a baseless stock rally led by insolvent banks that have lied desperately about their capital and earnings. The announced audited Citigroup profit of $1.6 billion in the first quarter was actually a deep $2.5 billion loss, provided the $4.1 billion in gimmickry was removed. The gimmicks pertained to toxic assets valued at fictitious model, shell games on loss reserves management, and illicit debt markdowns on the balance sheet. Thanks to Martin Weiss for the autopsy of Citigroup, the biggest zombie strutting in the global financial sector. Actually, that ignominy is a close race with Bank of America. The end result is the global financial markets are losing faith in the US$-based system, since the US is regressing in backward steps rather than working toward remedy. In my view, attempts at remedy would reveal a failed system that cannot be revived, broken irreparably since last autumn. The contradiction between the exposed US bankers and the Intl Monetary Fund projections of additional bank losses is another big billboard message, again ignored. Maybe somebody should reveal to US bankers and their investors what is happening in the mortgage market, with losses to come on a broad basis. Future bank losses will continue in a torrent!!!

The President has uttered a total absurdity, that the USGovt will pay as you go, despite the fact that the PayGo has been violated if not trampled in the last few years, and foreign creditors have stepped back from USTreasury Bond sales. It should be called PrintGo, since the monetization card has already been put on the table. A very dangerous precedent has been initiated. Obama has led the charge against senior bondholders of corporate debt. Their right to be first in line during any bankruptcy process has been discarded carelessly, a legal contract violation, with certain unintended consequences in the corporate bond market issuance arena. See the General Motors and Chrysler dictated conversion to stock, which favors the Wall Street firms in possession of vast amounts of unsecured debt. That puts the screws to hedge funds that hold vast amounts of secured debt (deserving senior positions). This war against hedge funds is more a defense of a syndicate in charge, and a gross betrayal of securities rules. Once again, the financial bosses in the USDept Treasury write the policies that favor themselves. Foreigners are watching; confidence in the US$-based credit markets will suffer blows. The impact on the USDollar and gold, if not the USTreasurys, will be vivid.

The bank sector Stress Tests clearly are a sham designed to restore confidence after accounting rules were eliminated. USFed Chairman Bernanke continues to make inept comments about the problems centering upon bank liquidity, when solvency remains their plague issue, and will continue to be the main flaw. He claims the Stress Tests were extraordinarily detailed, yet they relied on ridiculously soft economic stress factors from months ago. My stance is clear, that the Stress Tests will eventually be used as weapons to force stronger regional banks to merge with dead ones lodged on Wall Street, with the FDIC holding the legal hammer. The cancer of Lower Manhattan most assuredly will force its metastasis across the nation and into its banks.

Financial market anchors and analysts debate whether the 30% stock rally qualifies as the new bull market, as nutty green shoots are identified. The supposed green shoots are nothing more than elaborate moss on exposed decaying roots of dead standing trees. These are sprawling sequoias with hollow trunks and decayed roots. Those sell-side optimists ignore that a 30% stock market rise after a 50% decline since October 2007 is a typical bear market correction. The green shoots cannot possibly be new attempts at legitimate growth when jobs are being destroyed on a massive scale, home foreclosures continue to rage, home values continue to decline closer to 20% than 10%, corporations are guiding lower on profits and investments, and the states are cratering financially. Besides, the S&P500 Price Earnings Ratios are at historic highs, not lows. Worse, the earnings are mostly fictions. Votes are being registered in the gold & silver markets, and in the USDollar and USTreasury Bond markets."(snip)

from