To continue with the trading topic about Europe that we discussed yesterday, today we keep the story going by Larry Levin around the talk: “Mark-To-Make-Believe”.

1. Mark-To-Make-Believe To continue with the trading topic about Europe that we discussed yesterday, today we keep the story going by Larry Levin around the talk: “Mark-To-Make-Believe”.

2. Yesterday he wrote, “The European banking crisis was never “fixed” – the can was simply kicked down the road repeatedly. During our extended weekend in the US, more nervousness surrounding the European banks has surfaced and could very well drag US equities lower this week.

3. “ Expect some fireworks this week.” The European banking sector was hammered during the US holiday , dragging the DAX lower by 5%. Greek bond yields continue to skyrocket which, despite the bailouts, tell us anyone holding these bonds will soon be receiving huge “haircuts.”

4. Last Friday they spiked to a 67% yield and on Monday reached an unbelievable 88%. European banks hold lots of these bonds, as well as the ECB itself.

5. Additionally, the Italian government is trying to quickly install its version of austerity to appease the banking mafia. The Italian people, naturally, are upset and have recently held a protest rally in Rome that grew to an estimated 70,000.

6. This news and more have caused the Dow to open down and trade -300 at one point of the day. However, when the market couldn’t make a new low, shorts covered and then the HFT brigade took over.

7. At one point, the S&P reversed in a very slow but persistent fall that took the market into the late afternoon session. Then, all of a sudden, the market reversed again that led to a strong rally – eventually trading to new highs.

8. I don’t know for certain what caused the late rally to new highs, but it could have been rumors of a change in the European banking sector: mark-to-make-believe, just like we have here in the US.

9. Apparently Doug Kass sent out a “tweet” this afternoon that read “My gnome, high above the Alps is hearing that the EU is considering suspension of bank mark to market acctg. as we did in US in 09.”

10. The lies and obfuscation have worked so well in the USA, why shouldn’t they do the same in Europe? After all, billions of banking mafia bonuses may be lost if they don’t, umm, continue to lie.

11. Oh and while they’re at it, they should add sovereign debt holding to the “mark-to-make-believe” accounting scam – not just underperforming real estate loans.

12. Trade well and follow the trend, not the so-called “experts.” Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.