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The Washington Post: The huge profits reported this week by some of the nation’s largest banks showed that the government is succeeding in its rescue of the financial industry, but the details of those earnings reports made it clear that the broader economy is not seeing the benefits…
Washington once celebrated such profits as evidence of economic strength, but the current round of earnings has instead become a political problem…
The core business of banking — lending money to companies and consumers — remains deeply troubled. The number of borrowers defaulting on existing loans continued to rise rapidly, and the bankscontinued to respond by shrinking the total volume of their lending…
Speculation via levered trading, inside info and electronic advantage, as well as mark-to-model/fantasy accounting allows a select few banks to greatly profit at the expense of the rest of the country. Funny money concentrates wealth so Main Street has not seen the benefits that have disproportionately accrued to Wall Street since the Great US Stock Bubble commenced over a decade ago.
The media is getting smarter. The NY Times: Citigroup and BofA Report Profits, Aided by Asset Sales Bank of America reported a $3.2 billion profit for the second quarter. Citigroup said it earned $4.3 billion during the period.
But behind the figures was a sober reality: Those happy results were driven by billions of dollars in one-time gains — in the case of Bank of America, by a profit from the sale of a stake in a big Chinese bank and, in the case of Citigroup, by a bonanza from a new joint venture for its Smith Barney division.
