Well, well, well.

Yesterday the SEC says that banks will have to disclose that which they'd rather not tell us (what they have and how they priced it) in the United States.

Now, its the Japanese!

"Japan's Financial Services Agency has called on major banks to disclose details of assets and losses related to subprime mortgages before they announce full-year earnings, Nikkei English News reported, without saying where it got the information."

Oh so now Japan gets it? Gee, how long did it take? 20 years?

I do have to give the Japanese credit - they listened to Einstein. You see, they tried "hide the truth" 20 years ago, and it resulted in a "lost decade" in their economy. The Nikkei has never seen the levels it once traded at, their economy has been moribund for over a decade and their currency became the funding source for a vast arbitrage play instead of a medium of exchange.

All of this adds up to raw mockery of a nation that just a few years prior was the pride of Asia.

Of course Bernanke is hellbent and determined to try a re-run of the Japanese experiment, as he has demonstrated exactly zero propensity to force banks to tell the truth, and neither has Congress. That Chris Cox and the SEC have stepped up and decided to make a run at the truth is to be lauded, but don't rest on your laurels America - there are still 535 clowns in Washington DC collecting campaign contributions and one Fed Chairman who are pushing as hard as possible in the opposite direction.

The "alphabet soup" of various funding facilities that require zero disclosure of who's tapping those "sources" along with what they're putting up and how its being valued is all the evidence you need. If we lived in a nation where honest accounting and truth was paramount every security put forward to The Fed for credit would be identified by CUSIP, its source and composition published, its valuation by The Fed made public and the organization tendering it named. Thus we would see what The Fed thinks of it on a 28-day basis in terms of "value", which would be a tremendous improvement in disclosure.

I fully expect both our politicians and The Fed to continue to "hide the sausage" right into a re-run of the 1930s, with the truth being forced out into the bright light of the sun only when these institutions fail outright.

Oil is basically $125 now, and yet people keep insisting that the markets won't care - and it won't impact consumer spending. Pull the other one. The recent increase in fuel prices will take at least 1 and probably closer to 2% off consumer spending on discretionary items, which is a huge haircut no matter how you slice it. If oil keeps going - and until and unless we suffer a fairly-severe recession it will - the bite will continue to get worse and worse.

This is part and parcel of our insistence on "not in my back yard" with regards to oil discovery. Yes, I know, its all Cheney's fault.

Uh, no, its our fault. We think we can avoid the nasty, smelly business of oil exploration and refining, but we want to drive our SUVs, boats, and RVs. We want the ability to keep our homes at 75F in the winter and summer months, without regard to the fact that we expend 20-30% more energy doing so than if we kept the house at 68F in the winter and 80F in the summer.

All this is fine in isolation, but see, we didn't do that either. We exported our production (to "save money") to China and India, and they, of course, saw all of those nice DVD players and wanted one. Oh, and a car - instead of a mule, bicycle, or pair of feet.

This of course has driven up their energy consumption but heh, we still won't go get our oil!

The basics of supply and demand say that the price will rise as demand does, and gee, guess what - it has. Now add to that speculative "hot money" and $200 billion in "excess liquidity" courtesy of our Federal Reserve, injected into the system in a vain attempt to drive down the trading rate of short-term commercial credit and prevent a recession, and you have just established a feedback loop that drives the price of energy higher - which of course threatens a deeper recession. The more you flood the system, the higher prices are driven, and the greater the amount of money removed from discretionary spending - that is, the greater the recessionary pressure.

Thanks Ben.

Citibank will identify up to $400 billion in assets it may sell off in an attempt to de-leverage its balance sheet. This is amazing stuff, if you think about it - yet another bank that's "ok" so it says, then out they come (once again) with major restructuring and balance-sheet shrinkage.

For how long will investors listen to these clowns when every one of them claims they're "just fine" in terms of their balance sheet and liquidity position, and then nearly the next day announce yet more job cuts, balance sheet shrinkage or yet another equity or debt offering? I simply cannot get my arms around why anyone would want to own these stocks, yet these guys, just like Fannie and Freddie, seem to have no problem finding suckers, er, "investors" to take on yet more of their debt. Amazing.

AIG reported a disaster for a quarter, losing double what was expected, or nearly $8 billion net, with losses in its portfolio of over $15 billion.