Goldman Sachs Profit Surge is an Accounting Mirage

Editors note: In a followup to my post on credit default swaps, there's this-

JPMorgan, Goldman Sachs Profit Surge is an Accounting Mirage, Not a Sustainable Sector Trend

It takes more than two to make a trend.

JPMorgan Chase & Co. .... yesterday ..... became the second major U.S. investment bank – following Goldman Sachs Group Inc....... – to this week report windfall profits for the second-quarter. That’s helped fuel a four-day advance in U.S. stocks that’s seen the Dow Jones Industrial Average surge 7%.

Unfortunately, these two decidedly positive developments don’t necessarily indicate that better days have arrived for the U.S. banking sector.

To the contrary, many analysts – including Money Morning Investment Director Keith Fitz-Gerald – say these profits are merely a mirage created by an obscure accounting rule that allows banks to transform “toxic debt” on their balance sheets into income.

.......

Read the full story here.

It's good to see the mainstream financial media starting to call out these turkey trots and side with the investors instead of the usual corporate media prostitution.