Too Big To Flush

Changing 'mark to market' permitted the banks to present fantasy books, and the government overpaid for some of the worst assets on their ledgers ( corpses, really ). This let the Wall Street crew pump their share prices back up ( BOA, CITI ) and then these banks promptly issued new offerings of secondary shares at the inflated prices built on phony accounting. The market sucked in a lot more money out of pension funds, etc., to buy these new shares. Now the credit default swaps have adjusted to what is supposed to be a lower risk of failure for these banks, but this is just phony derivatives responding to phony share prices.

The whole house of cards has a weaker foundation than ever.Everything that was rotting in 2007 and 2008 and 2009 will continue to rot in 2010 and the government will keep papering over the rot. Except now the commercial real estate is joining the bonfire of rotting assets.

This is the most government intervention into the credit and property and equity markets in our history, but despite that, you'll continue to hear the fictional 'free market' scapegoated as the cause of the next leg of this designed economic contraction. The concept of 'too big to fail' cannot exist in a free market, but it is the trademark of a centrally-planned oligarchical economy.