Citigroup (C) and Goldman Sachs (GS)’s Off Balance Sheet
By Daniel at 27 October, 2008, 11:33 pm
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Don’t even be concerned by their BS (balance sheet).
The real problem is the OBS (off balance sheet), they still try to pretend represents assets and not liabilities. They, together with almost ALL the rest of the banks, are awaiting the crush that will come when they are eventually forced to bring their OBS greed and foolishness back on to their reported BS.
You’d think that after Enron, such an approach to accounting would have been discredited, even a red flag to both banking examiners and investors. A lot of Enron was about Income, that was not income, here you are dealing with Off balance sheet liabilities that are real liabilities.
although it is tangentially about income(s) that was booked to their BS (balance sheet). Wouldn’t it be nice if everyone understood what was happening?
By creating those phoney, OBS liabilities the Bankers created a vehicle which they could “sell” to other Bankers (and to foolish speculators in their dubious goods). When they sold those liabilities (”protected” by the speciously named “Credit Default Swaps” and disguised as/or under various other names . . . all boiling down to “Fluffy Financial Instruments”) they took the income onto their BS and paid exhorbitant commissions to those who sold the FFIs.
Thus, the liabilities were OBS.
The income was on BS.
The fix was in.
Now they are looking to the taxpayer to bail them out.
The massive FFI liabilities exceed the BS income by factors which can never be overcome. Consequently there is NO WAY the liabilities can ever be covered. The Banks, and almost all holders of the FFIs, are bankrupt with NO WAY to recover. They must be left to fail and will be left to fail in the not too distant future.
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
No comments yet.