(Russian bank employee Maria Guterman bakes it all into the cake.)

Hi Tom-

It’s possible I may have spoken a little too soon regarding that whole “don’t worry about the banks anymore” thing. Turns out there are a couple teensy, tiny little problems after all. I mean, nothing to worry your soft little head over. But here are a couple things that give The Abyss the 3am agita:

Russian Banks Are Effectively Insolvent

According to a developing story from the FT: “Russia is considering a banking bail-out that will go further than measures taken by the US, as fears grow that bad loans could paralyse the economy.”

See, Tom, Russian bank balance sheets will be completely wiped out if “non-performing loans” reach 10-12% of total. Of course, the always spot-on S&P rating agency (which once gave its highest rating to nearly all subprime loans) said the Ruskies are a lock for at least 38% loan non-performance. If they’re as accurate on the Russian assessment as they have been on the US, that number is likely to be around 1000% higher. (Man, this financial mathematical modeling stuff is easy!)

Three things pointed out by Zerohedge.com are particularly intriguing:

First… “Unlike the US bank bail-out, the Russian scheme would see the government take board seats and get veto rights at the banks it bails out.” (So, the Russian .gov would be the de facto owner-operator of the banks, kinda like how the US runs General Motors—fucking commie pinko Russians!)

And… “Analysts said such a plan could allow banks to declare the true level of bad loans on their balance sheets, which, once cleaned up under the programme, would break the credit squeeze and allow them to start lending again in 2010.” (What? Actually declaring the “true level” of the toxic waste the banks are holding? Is there no shame in these sinister Iron Curtain Douchebags?)

The money shot… “If the government continues to delay this means that many banks will just stop operations.”

That seems bad to me, Tom. Do you think if US banks actually declared the true value of what’s on their books and weren’t completely bailed out by everything the public has left they too would “just stop operations”?

To be continued…

Big Russian Bear Hugs,

The Abyss