I wish to draw your attention to the conflicting reports we are hearing about banks toxic assets.

On the one hand Ernst & Young reported over the Christmas period that " banks have billions more in toxic debt than they have admitted to " and at the same time we hear laudatory reports of banks balance sheets generally and specifically that the banks "have spent 2012 quietly shifting toxic assets and de-risking their balance sheets. "

Now, I suppose that both statements could be true but do not these reports beg the question as to whether these toxic asset " transfers " were carried out so "quietly "as to escape the notice of Ernst & Young and also the question as to the identity of the (philanthropic?) transferee.

United States senator Ron Paul came close a couple of years ago to accusing the Federal Reserve of buying up banks toxic debt, which accusation may have gained a tiny bit of credence when Bernanke reacted so strongly and refused to allow the audit of the Feds balance sheet as requested by Ron Paul. Both the European Central Bank and the Bank of England have announced similar plans to buy up " commercial paper " as was mooted by Bernanke at the time senator Ron Paul asked for an audit of the balance sheet of the Federal Reserve.

One's mind boggles at the possible consequences of our discovering that central banks worldwide are in fact buying up these toxic assets It would certainly explain why, despite massive infusions of " quantitative easing " money, the banks are still not lending because, if my suspicions are correct, all the money is merely replacing rubbish assets and until the process is complete will not put the banks into lending mode.

But, and perhaps more importantly, if the central banks are in fact loading up with toxic assets where does that leave our financial system which has traditionally looked upon central banks as the custodians and guardians of our respective currencies, if in fact our currencies are backed by increasing amounts of worthless paper, all we will have done is to transfer these billions of losses from the banks to the taxpayer

Ronald C. Adair

Fort Fraser