US Bank Collapse?

[schola]

You don't have to buy a gun, but stockpiling some food...well if you haven't done so yet, you should act now.

How long would the food in your house last if the grocery store shelves went empty tomorrow?

Argentina was a 1st world country by any standard in the 90s. In 2001 their economy and banking system collapsed; not unlike what is currently happening here. It has been hard times in the country ever since:

Food shortages worsen amid Argentine farm strike | International | Reuters

[Dan.Linehan]

Originally Posted by Dave Kaminski

Dan doesn't think this is necessary. It's been proposed to him a few times, actually.

What's your call on this again Dan?

I agree with Steve when he says this sort of thing comes down to feeling unconditionally safe.

A totally ineffective strategy is to respond to violence with more resistance. Verbally condemning attacks is pointless, as is fighting back. All that does is perpetuate the level of consciousness that spawned the violence in the first place. Yet this is what world leaders continue doing. It will never work though because it’s an inherently flawed strategy. It’s far more likely to have the opposite effect and keep the violence percolating indefinitely. Also, the frustration that results will probably drive some of the people involved to lower their consciousness ever further, down to the levels of shame, guilt, apathy, and grief. All this will do is delay the violence, which will be destined to erupt again later.

If things hit the fan I'll just roll with it. A negative or violent reaction is probably the worst way to respond.

[Dan.Linehan]

Now Wachovia is being raided by regulators..

Investigators inspect Wachovia Securities - Jul. 17, 2008


Two interesting points from this article:

• They have 'frozen' 40 million dollars of investors money and this action was brought about by investors filing complaints that they were being denied access to their money.
  
  
• The fact that the stock rallied shows just how ridiculous wall street is at the moment.

[Shain McVay]

This was someones responce to money is debt video on another forum:

Of course, 'money' is analogous to 'credit,' anything else would be essentially be some form of barter. Most people learn this in grade school, though it seems to come as a shocking surprise to Canadian socialist Paul Grignon, the man behind this cute little anti-capitalist polemic.

It's not that he's wrong -- Money is indeed created through a fractional reserve system, wherein a bank maintains only a portion of its reserves relative to the loans on it's book -- It's the (unsubstantiated in this presentation) subtext that there is something immoral about this, banking is evil, thus world socialism is the only answer, that I find ridiculous here

Not to mention Schoolhouse Rock could have taught us about the banking system in about 5 minutes instead of 45, and without all the socialist rhetoric.

Contrary to the one-sided way it is presented here, banks pay depositors an interest rate in return for their contribution to capital used to make loans, the bank's owners also take the risk that borrowers will not repay their loans, not to mention the fact that banks absorb the risk of fluctuating interest rates, fraud, etc.

When the bank becomes unwilling to loan (for instance, right now when they have a lot of bad loans on the books already), fewer borrowers will get credit to start new projects, economic activity is restrained, and the cost of borrow goes up (interest rates increase). Banks do not 'print free money,' so much as they risk their assets against a probability of return from their credit underwriting activities. Banks that are bad at this do not make money.

Without the ability to go to a bank and get a loan to do something like start a business, go to college, or build a house, economic activity would be pretty damn retarded. Grignon's real thesis here is that the national government should make this determination as to whose efforts should finance who else's activities -- Communism. Even the erstwhile Soviets ran into a problem here, that without a market to provide a real 'price' for goods, it was essentially impossible to make decent decisions on how to value different options as to what to command to be produced.

It is when the (non-country-specific) GOVERNMENT 'prints money' to finance its own overspending or to artificially stimulate the economy by pouring cash into it, when value is destroyed by the 'inflation tax.' Note that the intent of the government's printing money here is in fact, to artificially ease credit when banks are unwilling to loan due to economic conditions.

Banking credit, by contrast, is tied to the risk/reward of real economic activity. For instance, there is essentially no subprime market anymore. Low quality home buyers simply cannot get credit to buy. By contrast, alternative energy projects are having no trouble attracting capital right now.

Now the government may think it has good reasons to pour cash into the economy, such as easing credit during a recession (dot-com bust, housing bubble), but realize that this is essentially a tax on smart people who didn't max out their personal credit to buy pets.com stock or that giant overpriced McMansion in the middle of nowhere. Ultimately we'll all share to cost of that decision to stimulate via inflation (devaluation of money).

[Dan.Linehan]

The FDIC only has assets to cover a little over 1% of what it is responsible for insuring.

With the dollar falling and indications abroad that the ratings of U.S. Treasuries might be cut below AAA if the FED allows FNM and FRE access to the discount window, it would appear that the FDIC guarantee might be the least of your worries.

Still you might be well-served by keeping your deposits under $100,000 per account including C.D.'s. Of course, maintaining cash reserves outside the country might also be a good idea.

How Safe is your wealth with the FDIC?

[Dan.Linehan]

FDIC took over two more banks and closed twenty eight branches.

1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California, were closed Friday by federal regulators.

The Associated Press: FDIC takes over 2 more banks, closing 28 branches


Pretty small time banks though.

[ThoughtAddict]

Originally Posted by Dan.Linehan

The FDIC only has assets to cover a little over 1% of what it is responsible for insuring.




How Safe is your wealth with the FDIC?

FDIC quarterly report indicates a coverage ratio of $.89 for every $1.00, or 89%. Is there something I'm missing?

http://www4.fdic.gov/qbp/2008mar/qbp.pdf

[standrums]

I just think the greed of the past few years has been shocking.

And banks are the culprits, if they do collapse then they only have themselves to blame.

They're just as bad here in the UK where they've been lending people upwards of 10 times their annual salary for a mortgage without having sufficiently demanding checks on their income.

People are lying about how much they earn and the banks believed them!!

I have no sympathy with their current plight.

[Dan.Linehan]

Nice overview by Bill Moyers.

Bill Moyers Journal | Mortgage Mess | PBS


^ Sad video. But I don't know what people expect to happen if they don't pay back their loans. This doesn't seem like predatory lending to me. It seems like people getting massive loans that they didn't pay back. What did they expect would happen when they signed on that dotted line?

My best friend in Ohio bought a large trailer a few years ago for $5,500. Bought it outright. Everyone in his family made fun of him. They told him he should get a real house, way to go living in a trailer park, called him a loser, etc. Now his family members are getting foreclosed on and several are unemployed. He says he thinks people are just getting what they deserve -- they bought things outside their means and this is what they are getting for it.

There was plenty of greed to go around for sure, it wasn't just on the part of the banks. The people who took out these loans weren't fully committed to paying them back. Now we see what that has caused.

[ar81]

The concern over banking issues is diverting attention from the real problem.

US has a negative currency flow. More currency is going out that currency getting in. You can blame the following factors:
-War (hiring foreign contractors with US taxpayers money in foreign lands and money spent by armed forces in foreign lands)
-External debt used to pay the war (interests paid to China)
-Trade deficit

So it is like a body that is leaking blood.
The problem of leaking blood is that internal liquidity is reduced, so there is not enough money for everyone.

Inside the body you have government, companies, banks and people.
Banks are having liquidity problems, so interests are low so people acquire debts to consume and to save banks, so the liquidity problem is being transferred to citizens.

This consumption with debt creates the false illusion of economic growth. But there will be a time to pay debts, and by that time, there will be recession, for people are the market and they will have less money to buy.

[moiselevi]

Technically speaking ; price /volume recent action seems to be giving us reversals (bullish) on Citi and BOA.
The reversal of the $USD was also a pretty bullish signal

[Still Growing]

The US's dollar falling is obviously contributable to the trade deficit.

The weaker USD has larger implications. The investment community worldwide is investing into emerging markets such as China and Brazil. There has been a systematic dumping of US Dollars and people are taking that money to invest into these emerging markets.

If you look at London 70 years ago they probably had no idea the US would become such a large mfg powerhouse. If you look at the US 30 years ago we probably never saw China as being an economic threat.

I don't think the US will become a third world country simply because we've lost our advantage and gotten ourselves into debt. I would compare the upcoming US bankruptsy (so to speak) to be like Donald Trump's. We're heading for insolvency but no one can afford for us to go under.

I truly believe that there will be a new economy emerge starting in 2010. They more wealthy China becomes the more consumers we'll be able to sell to. Yes we sell to China; no matter what you've heard. We simply have a deficit because they can't afford as much of our products.... yet. As they continuously develop they will devour US goods faster than we can make them. You will tell me that we don't make anything in the US but we do and will more once there is a market. Japan is a perfect example... They use to sell low cost hand bags to France now Louis Vuitton sells more $2,000 hand bags to Japan than they do in France.

I believe that there will be another technological revolution and a growing green movement that the US can profit on. The US is still a powerhouse in R&D and will continually develop new franchises, new movies, new apparel, new drugs and new computer technology. I think that our best years are yet to come but we must go through a little (or big ) recession to come out on the other side.

[Dan.Linehan]

More articles on this coming out now.

Credit crunch may take out large US bank warns former IMF chief - Times Online

[mark7]

here is a link that will explain how the money system works for those of you that do not understand it yet, its very good and explains it in simple terms, even i could understand it lol

Watch Money As Debt Documentary Online - DocumentaryWire.com

the main site is also a very good source of documentary info on all aspects of life from, well just have a look and see : )

Watch Free Documentaries Online - DocumentaryWire.com

[Dan.Linehan]

Lehman Brother's employees are shocked, SHOCKED, that the company is going under! They feel like they've literally been tasered!

Of course, I knew this six months ago, and posted about it here. Yet these employees are so surprised? C'mon.

Don't they know the first thing about the company they work for?

[Dan.Linehan]

Here is the Sedeca list of future failures. He is spot on as always.

Anyone smart enough to short these stocks can owe me one.

Zions Bancorp (ZION)

Equity has traded down from 75 to 25.
Tried to issue a $200 million preferred stock offering at 9.5% but only was able to sell $47 million.
Their debt trades in the open market approximately 1,000 basis points above Treasuries, IF you can sell them, or 13-14%.
They are geograhically in Utah, but spread out to Florida, Nevada and Arizona at the top of housing to take advantage of great opportunities.
They say they need $200-300 million capital.
They maintained their common dividend.


KeyCorp (KEY)

Common Stock has traded down from 40 to 11.
Preferred Stock trades at 13%.
Debt trades in the market at 10-11% dvd.
Cut dividend in half in July, still yields 6.5% even while they lose money.


Fifth Third Bank (FITB)

Equity has traded down from 60 to 14.
There are no preferred issues outstanding.
Debt trades in 10-11% range if you can sell it.
Cut dividend by 75%.


Washington Mutual

Equity has traded from 40 to 3.
No preferred outstanding except convertible preferred.
Debt trades in the 20-25% range.
Cut the dividend to 1c per share in April.
Has admitted they will lose money for the next several years.


National City

Equity has traded from 40 to 5.
Preferred stock trades at 13-15%.
Sold a huge amount of shares at $5 per share in April.
Cut dividend to 1c per share in April.


Regions Financial

Equity down from 40 to 8.
Preferred Stock Trading at 10%.
Debt trades in the 10-11% range, if you can seel it.
Cut dividend by 75% in June.
Needs to raise $2 billion, according to Sanford Bernstein.


General Motor/GMAC (GM)

Equity has traded from 80 to 10.
Preferred stock trades in 18% area.
Short-term debt trades in 25-30% range.
Long-term debt trades in 17% range.
Eliminated common dividend in July.


Ford/Ford Motor Credit Co. (F)

Equity has traded from 60 to 4.
Preferred stock trades in 16-17% range.
Long term debt trades in the 18-20% range.
Eliminated common dividend in September.


Wachovia (WB)

Equity has traded from 60 to 14.
Issued a $3.5 billion ‘hybrid security’ in February that now trades at 11%.
S & P has stated they cannot issue any more hybrids.
Sold 92,000,000 shars of a preferred stock in December at 8% that now trades $18 or 11%.
Cut common dividend twice since February to .05 a share or 90%.
Debt trades at 9.5-10.5%.


CIT Group (CIT)

Equity has traded from 60 to 9.
Preferred Stock trades in 12% range.
Outstanding debt trades in 12-14% range.
Cut common dividend by 66%.
Sold 91,000,000 shares of common at $11 in April 2008.

Let me predict now that Americans will be shocked, SHOCKED, when these companies all go under.

Almost like some sort of Shock Doctrine, isn't it? Literally.

Nothing like a stock market / banking collapse to create panic.

[Dan.Linehan]

The stock market is being artifically propped up right now by the US gov buying futures.

And lo and behold! The magical rally materialized, led by none other than the large banks such as Wells Fargo. I must admit that the market has a way of squashing one’s ego, but the "I don’t care what I pay for futures in the face of incredibly lousy economic statistics" has become a bit insulting of late. I could go on and on and tell you who I think it is buying these futures without a fear of loss, but I shall leave it up to your imagination who I feel it might be (Hint: Who is spending other people's money and doesn’t have to answer to anyone or have a ‘P & L'?).

It collapses whenever the gov wants.

[mercuryrising]

Originally Posted by Dan.Linehan

Let me predict now that Americans will be shocked, SHOCKED, when these companies all go under.

Almost like some sort of Shock Doctrine, isn't it? Literally.

Nothing like a stock market / banking collapse to create panic.

Thanks for providing the link. I completely disagree with this lady. I hadn't studied much Milton Friedman. Now I'm on my second hour of youtube videos.

Let me ask you:

A bank collapses. In a libertarian government, this would be simply part of the market cycle. Instead, a conservative government which gives lip service to libertarian doctrine, bails them out. What is the better system?

The US is attacked by radical Muslims (who happen to be CIA-government- operatives). In a libertarian government, the protection of US territory steps up. In a conservative government, a profiteering campaign of attacking Iraq is commenced. What is the better system?

In terms of politics, we come to a basic choice. Either we allow more people to be free or we try to control them. Over and over again, those governments who have allowed people to be free have societies that flourished. Those governments who have essentially fleeced the people of their freedom have faltered if not entirely collapsed.

[Dan.Linehan]

Originally Posted by ThoughtAddict

FDIC quarterly report indicates a coverage ratio of $.89 for every $1.00, or 89%. Is there something I'm missing?

http://www4.fdic.gov/qbp/2008mar/qbp.pdf

Yes. The FDIC is lying. There is no separate fund set aside for insurance. Just more treasury debt.

FDIC Insurance Fund - It Doesn't Actually Exist - Seeking Alpha

Isaac: Don, I'd like to come over to look at the money.
Regan: What money?
Isaac: You know . . . the $11 billion the FDIC has in the vault at Treasury.
Regan: Uh, well you see Bill, ah, that's a bit of a problem.
Isaac: I know you're busy. I don't need to do it right away.
Regan: Well . . . it's not a question of timing . . . I don't know quite how to put this,
but we don't have the money.
Isaac: Right . . . ha ha.
Regan: No, really. The banks have been paying money to the FDIC, the FDIC has
been turning the money over to the Treasury, and the Treasury has been
spending it on missiles, school lunches, water projects, and the like. The
money's gone.
Isaac: But it says right here on this financial statement that we have over $11 billion
at the Treasury.
Regan: In a sense, you do. You see, we owe that money to the FDIC, and we pay
interest on it.

[Dan.Linehan]

Originally Posted by mercuryrising

Let me ask you:

A bank collapses. In a libertarian government, this would be simply part of the market cycle. Instead, a conservative government which gives lip service to libertarian doctrine, bails them out. What is the better system?

The US is attacked by radical Muslims (who happen to be CIA-government- operatives). In a libertarian government, the protection of US territory steps up. In a conservative government, a profiteering campaign of attacking Iraq is commenced. What is the better system?

Sure, I agree with you on these examples. If we lived in a libertarian nation things would run much differently. I'm all about it.

But what does this have to do with the current government using shock doctrine tactics? The question here is what bills / policies will the government push through after these banks collapse, while people are in a panic?

[mercuryrising]

Originally Posted by Dan.Linehan

Sure, I agree with you on these examples. If we lived in a libertarian nation things would run much differently. I'm all about it.

But what does this have to do with the current government using shock doctrine tactics? The question here is what bills / policies will the government push through after these banks collapse, while people are in a panic?

The link you provided makes a connection between the shock doctrine and Milton Friedman who is a fiscal libertarian. Naomi Klien claims that capitalism is the source problem for using terror tactics by the government.

My point is that in a truly free market system, the government's job is simply to maintain a free market. Mainly, through breaking up monopolies and holding private companies accountable to the public. That's it. No starting wars for profit.

I agree with the 'shock doctrine' thesis. It's the background she gives that I disagree with. I mean, if the government is going to use terror tactics, why would we want to give them more control over the economy?

[Brutha]

In a conservative government, a profiteering campaign of attacking Iraq is commenced.

Profiteering has nothing directly to do with being conservative but with being corrupt.

The question here is -- what bills / policies will the government push through after these banks collapse, when people are in a panic?

Cutting corporate income tax might be one thing that some people want to push.

[ThoughtAddict]

Originally Posted by Dan.Linehan

Sure, I agree with you on these examples. If we lived in a libertarian nation things would run much differently. I'm all about it.

If the transition is as successful for the people as Pinochet's Chile, count me out.

Originally Posted by Dan.Linehan

But what does this have to do with the current government using shock doctrine tactics? The question here is what bills / policies will the government push through after these banks collapse, while people are in a panic?

Not sure. The word is that there will be a power struggle for regulatory authority, with the SEC aiming for increased regulatory authority over mortgages.

[mercuryrising]

Originally Posted by Brutha

Profiteering has nothing directly to do with being conservative but with being corrupt.

I wasn't defending liberalism by any means. What I would really like is a party which stood for both economic liberty as well as social liberty. With the conservatives, you generally get the economic side (the current US administration not withstanding) and with the liberals, you get the social side. I want freedom on both ends. In practice, I see no difference between socialism and fascism. Perhaps the worst is the centrists, the populists who try to please everybody.

As the saying goes, "He who stands for nothing will fall for anything."

[Still Growing]

Originally Posted by Brutha

Profiteering has nothing directly to do with being conservative but with being corrupt.

Well said Brutha.

I like to see when people keep it real and not party affiliated. People are so bias and I try to see both sides.

[mercuryrising]

Originally Posted by Still Growing

Well said Brutha.

I like to see when people keep it real and not party affiliated. People are so bias and I try to see both sides.

Could you elaborate on how I am showing this bias?

[Still Growing]

Mercury, I'm just glad to see that Brutha is not being bias.

[mercuryrising]

Originally Posted by Still Growing

Mercury, I'm just glad to see that Brutha is not being bias.

Ok, that's cool. Just wondering if I was missing something.

[Brutha]

I wasn't defending liberalism by any means. What I would really like is a party which stood for both economic liberty as well as social liberty. With the conservatives, you generally get the economic side (the current US administration not withstanding) and with the liberals, you get the social side.

All those labels get confusing.
Milton Friedman self labeled himself as liberal.

I like to see when people keep it real and not party affiliated.

In addition conservative isn't a party label but a label for certain political ideas.

You can have people in the Republican party how aren't necessarly conservative and you can have conversative thing tanks that are actors on their own and don't act only through a given party.

If you throw around those labels to much it's gets confusing. In a election you can vote either Democrat or Republican not liberal or conservative.

Then you have intellectuals that produce ideas. Milton Friedman is one of them.

A lot of the time certain ideas can also be shared by both parties.

You don't have that clear "government" line. Where you have the evil government on one side and the people on the other. In democracys you have a lot of different actors.
Some act based on some political idea. Some act based on their own self interests.

Fiscal liberalism lead to things like the Washington consensus. Especially people like Milten Friedman are supporters of the Washington consensus.
You have a lot of people with money who profit from Washington consensus style politics.
Naomi Klein argues that people used shock ideas to push those policies where those policys are unpopular.

Not exactly Banking but Naomi on Oil: Naomi Klein Outfoxes Fox

[schola]

Bump. The house of cards is beginning to crumble. These independent investment banks are just the beginning.

BofA to acquire Merrill Lynch, Lehman bankrupt - Memphis Business Journal:
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