Global No-Confidence Vote: Eternal Zombie Banks

Back when the bank stress tests were first announced, I figured they would give Obama the political cover to implement Plan N and take over failing banks. Obama could say "Well, we investigated the bank, we did our due diligence work, Banks X, Y, and Z don't have the ability to survive without complete restructuring, so we're going to put them in receivership and do just that. They will emerge as better banks." Nobody could really complain then, and the problem would go a long way towards being solved.

Unfortunately, it's looking like I was not only wrong (happens often) but it looks like the complete opposite has happened.

The Federal Reserve on Friday said the government is prepared to rescue any of the banks that underwent "stress tests" and were deemed vulnerable if the recession worsened sharply. The Fed, in outlining the tests' methodology, said the 19 companies that hold one-half of the loans in the U.S. banking system won't be allowed to fail — even if they fared poorly on the stress tests.

The Fed reinforced its view that major financial firms are "too big to fail," and the government must do whatever is necessary to save them, said former Fed examiner Mark Williams.

"It appears 'too big to fail' is a fundamental philosophy — it's a philosophical principle," said Williams, a finance professor at Boston University.

This here? This is a problem. This is in fact bad enough to make me almost give up in despair. This is proof positive that Obama will in fact continue to throw trillions at the banks until the problem is solved. The banksters know this, so they will continue to take insane risks with money they can't possibly lose, or get in trouble with. If they do lose it, we simply give them more. That is the plan.

Then the banks will want to complain about the nasty rules and strings having this money entails, but we all know that the rules are meant to be broken.

It took nearly 100 days, but the Obama administration has finally enshrined Too Big To Fail as the fundamental heart of the economic crisis. No major bank can be allowed to fail on Obama's watch. The Fed will print money and give it to the banks for zero interest. The banks will then sit on it, pretend they are solvent, and laugh at the rest of the suckers out there losing their jobs. They'll use the money to buy smaller banks that aren't too big to fail, and just get bigger and more powerful.

It'll be that way until somebody notices we don't have the money as a country to pay for our financial system. Then the real fun begins.

I'm honestly terribly disappointed in the President and his financial braintrust. They have decided that preserving the status quo of our banking system is more important than saving the country's economy.

Despite all the honest good this administration has accomplished, it will soon turn to ash. Trillions will continue to be thrown at banks and nobody of course will have to be fired, nor will anyone have to take responsibility. Automakers on the other hand will have to get rid of maybe hundreds of thousands of employees because they simply aren't viable and made such terrible mistakes and took such lousy gambles.

Unlike the banks. They never make mistakes. They just fail their way to trillions in free money. Think about it. There's a reason why GM and Chrysler are on their deathbeds and Ford is whistling past the graveyard. Manufacturing is expendable. Union jobs and pensions are expendable too. Obama can't spare another $30 billion to save the automakers. It gave that $30 billion to AIG this week. Nobody noticed.

If this is the official Obama plan now, Too Big To Fail Now And Forever, then America is now in critical trouble. Nobody will hold the banks accountable for their mistakes, their losses, or their greed. Why should they do anything to improve the situation if they know they can't lose? Moral hazard doesn't begin to describe the situation. Banks are now free and clear to do whatever they want with our trillions. They have unlimited credit from the US Gubment. Undercapitalized? Revenues dropping like a stone while profits are rising? Long-term calamity ahead? No problem!

Ahh, but you and me? We can lose. And we will. Big time. Zombie banks for all eternity. Forever and ever, amen. Zombies eating our jobs, draining our economy, and all the while kept fat and happy by Helicopter Ben's magic printing press. The banks are holding Obama hostage. Obama's not only giving into the bank's every demand, but in fact he is holding the world hostage. "Support our debt or your economy gets it! Don't make me collapse the financial system! Pay up or else!"

Obama will not save the economy. He will save the banksters. The rest of us are now on our own. Don't count on a recovery. Don't count on anything. America's tombstone will read "Too Big To Fail."

Be prepared.