Rallies in a Bear Market Are A Sell – Wall Street Underground

By Nick Guarino | July 25, 2008

Never in the modern history of the stock market has government done so much to try to save its favorite golden boys.

In overt manipulations not seen since the desperation of the Great Depression, the government has come to the aid of its real owners — the Wall Street Elite.

But the truth is, it won’t work.

All of these government gimmicks have been tried before: prohibiting short selling, punishing analysts who reveal the truth about stocks and a full-court media propaganda campaign.

The lesson learned over and over again is that these acts of outright desperation only buy the market a little time, nothing more. Nothing government has done to date changes the raw facts.

The cold, hard, ugly truth, as I keep saying, is that the mega-banks are flat broke – and no amount of creative accounting or media spin can change that. How bad is it? Well, to be painfully honest with you, I cannot imagine a worse scenario for our banking buddies. Do you know that 35% of ALL existing home sales in June were bank repossessions?

Don’t let them shit you. As I explain in our latest report, the bankers’ balance sheets are pure works of fiction that should earn them a Nobel Prize for Literature before it lands them in prison. They are holding incredible losses that mount by the day. They need money — and lots of it — not temporary loans from the Fed.

I keep repeating this, but it’s important: At the bottom of the mortgage crisis is not a liquidity problem (a temporary cash flow problem that can be fixed with temporary loans) but a solvency issue (worthless assets). The banks are being wiped out by their bad bets in the derivatives casino.

They owe trillions – more than all the central banks possess put together. The IOUs they’re holding as “collateral” are virtually worthless and losing their value by the hour.

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