I want to get to GameStop and the overall video game market, which finally seems to be losing steam.

But tech is going nowhere until we straighten the banking mess out and this week’s earnings report from perhaps the biggest bank out there - Citi – is being falsely touted as a harbinger of a big bank rebound.

For the first quarter of 2009, Citi claimed a first-quarter profit of $1.6 billion – which, on the surface, would appear to be good news. But if you include the dividends on the preferred shares that Citi paid the government, it actually recorded a loss of $966 million.

But it was the $1.6 billion figure that triggered another big rally in the stock market, but few traders I know, or have read about, think this rally is the real thing.

Perhaps that’s because the way banks are presenting their earnings isn’t the real thing, either. One litmus test that could work is if Citi is ready to pay off its TRAP debt right away – after all, it has $1.6 billion in its coffers, right?

But they really don’t have the money. Citi has factored in much of its profit based on an accounting charade that allows it to claim a $2.5 billion accounting gain. By law, banks are allowed to account for declines in the value of their own debt as gains, under the theory the securities could then be bought back at a discount.

Maybe and maybe not. But the Citi gambit tells us how far we have to go to straighten out the P&L side of the banking crisis – those infamous “balance sheets” that hold the real key to getting this economy back on track.

On the video game market. I noticed that GameStop – my sons' favorite store – came out today and said that company store sales for April would be “flat”, with earnings-per-share of about 42 cents. For the year, GameStop expects growth to reach a more favorable rate of 6%.

Why the sudden candidness from GameStop? Could it be that, only last night, the analytical research firm NPD Group said that video game companies were having a lousy year?

NPD has issued a report stating that video game industry overall sales fell 17% in March from a year ago, with hardware down 18%, software off 17% and accessories off 15%. For all of Q1, overall industry sales were flat, with hardware up 1% year over year, software down 2%, and accessories down 3%.

NPD analyst Anita Frazier said that the calendar hasn’t helped the industry, from a perception point of view. With Easter actually falling in April this year and March last year, which important because Easter is apparently a huge weekend for video game sales (I guess parents pop them into the kids’ Easter baskets, but I’ve always used chocolate eggs and baseball cards).

Frazer said that. Last Easter, over $121 million video games were sold in the U.S. But this year, March only showed $1.43 billion in video game sales, compared to $1,72 billion for the same period last year.

Maybe she’s onto something, but I don’t think the Easter issue is worth mentioning. It’s more likely that lost jobs, falling home prices, and a lousy consumer attitude on spending has more to do with the drop.

That said, if it continues into the holiday season in 2009, we’ll see some steep cuts and big layoffs at video gamer firms – the last line of defense from technology during the economic downturn.