Montreal, Canada

The phony results now underway for Q3 bank earnings continue to mask the greatest bear market rally or con-game in history.

Despite great numbers for the largest banks since Q2, financial sector intermediation remains severely impaired, small businesses can't obtain financing while consumer installment debt has markedly declined through a combination of debt reduction and rising defaults. Yet the banks have reported a miraculous recovery in bond trading revenues over the last several months – while still harboring toxic assets, rising non-performing loans and for smaller banks, more FDIC bailouts. The latter, by the way, is broke again and requesting urgent funding from Treasury.

J.P. Morgan's (NYSE-JPM) latest earnings this morning are providing another big boost to global markets following news that its fixed-income division grew revenues for the latest quarter. Other banks are sure to report similar results this week as they twist and reconfigure earnings to appease regulators and Congress while deceiving the public at large suggesting we've seen the worst of this financial crisis.

Banks, more than any other sector, probably have the best accountants in the business. And not just American banks: the Chinese, Russians and everyone else have the same accountants – and all of them fudge their books.

Following the changes (a.k.a. adjusted fudging parameters) made in May to the FASB, or Financial Accounting Standards Board, which effectively allowed bank CEOs to basically concoct their own assumptions on assets, bank stocks have skyrocketed. Yet most institutions are still starving for capital as they refrain from growing their loan book in an environment of deteriorating loans and weak credit demand.

According to the latest issue of The Bank Credit Analyst in Montreal, "We are still closer to the beginning of the unwinding process than the end, especially judging by the reluctance of the industry to embrace the new regime of fair value accounting and off-balance sheet disclosure regarding mortgage-related assets and other OBS exposures. Despite abundant credit and liquidity from the Fed, the willingness of banks to lend with or without collateral remains muted, and this is a function of the lack of liquidity in many of the asset classes that once served as important sources of income and liquidity for banks."

I've got no trust and no faith in the stock market. The banks are rigged and the accounting system is a joke. This is neither the time nor place to make new equity-related investments, following the biggest con-game in history, which has deceived the poor, unsuspecting public into believing things are improving since March. For all intents and purposes, they are not.