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287 Comments
- DeskFlyer, on 07/21/2008, -1/+93Luckily for me I'm broke already.
- mediaspree, on 07/21/2008, -4/+80Yes, creating a run on the bank is going to help.
- mikemil828, on 07/21/2008, -10/+76//Run, don’t walk, to your bank and get the funds you have clear of this mess before it gets any worse. The safe deposit box ... isn’t.//
So this guy is asking us to start the great depression all over again by doing a run on the banks, should be ashamed of himself. - 3tcp, on 07/21/2008, -2/+60The FDIC shields individuals from the risks that their bank takes so if it screws up and fails it won't bankrupt the customers. The FDIC is a federal government institution and it can insure deposits beyond the cash reserves that it holds because it is backed by the credit of the government. Total confidence that the FDIC will not fold plays a foundational role in our economy.
The failure of individual banks that invested, evaluated risk and priced assets poorly is a triumph of capitalism. This is economic darwinism. Think of these banks as giraffes with short necks or polar bears with brown spots. The domino effect from these bank problems will be relatively small as long as the governmental institutions do their job. We'll be paying off the debt for a while but that's the price we pay to even out the valleys in the business cycle.
There's really not much elected officials can do anymore. We'll have to rely on what has already been established. New policy takes too long to have an effect to influence anything, stimulus checks and anything else they can do short-term is just a placebo effect. - DaDrake, on 07/21/2008, -1/+43How is predicting IndyMac failure, four days before, significant? Lets face it, first the bank been in trouble for two years. Then after Senator Schumer (who, I don't blame), we had essentially an eleven day bank run of 1.3 billion dollars. All these transfers are monitored by the SEC and available with most stock-analysis software.... so essentially, this guy predicted a bank run seven days after it was happening? This is like me predicting Apple will sell some major product after seeing a huge ***** line in front of the store.
- apothekari, on 07/21/2008, -6/+48FTA-"If you look down from a very high level what you see is this: There is $75 trillion in global real estate, $50 trillion in annual global GDP, and $675 trillion in derivatives - synthetic financial instruments loosely associated with the real world that, when inspected, prove to be worth a small fraction of their face value. Nine years ago Weathervane McCain’s chief economic adviser, Phil Gramm, got the Glass Steagall Act largely repealed. Investment houses engaged in an orgy of what can only be described as private money printing, taking real assets, puffing them up, marking them up, passing them around, and they kept at it until there were five or six dollars of funny money for every real dollar of stuff. Ssshhh, don’t anyone tell the pension funds ..."
I guess I gotta make a stop on the way to work tomorrow
{A withdraw from the bank is in order}. - inactive, on 07/21/2008, -9/+50The Democrats and the Republicans have both been complicit in the criminal devaluation of our currency. Fortunately for them Americans are just too fat to get outraged right now. I expect this will be a hungry winter for a lot of people though.
- Hangly, on 07/21/2008, -5/+40This will not be dealt with. Count on it.
We have lots of smart people, but solving this problem takes someone who is also responsible, incorruptible, and able to think long-term.
People like that are not allowed to become president. - duckyinc, on 07/21/2008, -5/+38LOL, if 8500 US banks will die soon writing about it and trying it elect barack obama isn't going to save the american economy
- Waiting2awake, on 07/21/2008, -3/+33Keep doing what you are doing, and you'll keep getting what you're getting.
A new President this time, like the last, and the time before that, and the time before that - changed nothing. - clemsontiger, on 07/21/2008, -9/+38Oh shut up with this crap. The IndyMac went under for making stupid decisions and is now under investigation for fraud. There is no, 0, zip evidence that "many" banks will go under. That's right, lets start a run on the banks. That will help everything. What happens when people want their money? They won't understand that its mostly electronic these days. This stuff pisses me off.
- Dohko_Xar, on 07/21/2008, -2/+30" First and foremost, let’s discuss my qualifications in this area; I know jack *****."
Well, at least he is honest. - AmyVernon, on 07/21/2008, -15/+38i really think the big crash is coming.... it's kinda scary...
- legendxx, on 07/21/2008, -5/+27Remember when digg wasn't about sensationalism and fear-mongering? This article nails both on the head =/
- jynweythek, on 09/17/2008, -6/+27Buried for fear-mongering.
- smellycarney, on 07/21/2008, -2/+23From the "Democrats are going to save us all from the rich people" department of Wikipedia...
Repeal of the Act
On November 12, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933. One of the effects of the repeal was to allow commercial and investment banks to consolidate. Several economists and analysts have criticized the repeal of the Glass-Steagall Act as contributing to the 2007 subprime mortgage financial crisis.[6][7]
Losses at financial firms from the mortgage collapse may eventually triple to $600 billion as defaults on home loans grow, says Zurich-based UBS AG. One reason banks are losing money is the repeal nine years ago of the 1933 Glass-Steagall Act, which separated commercial and investment banking after excessive risk- taking contributed to the Great Depression, Eveillard said.
The repeal enabled commercial lenders such as Citigroup, the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities.
Citigroup, which has fallen 36 percent since reporting in January the biggest quarterly loss in its 196-year history, may have writedowns of $15 billion this quarter, according to New York-based Merrill Lynch & Co. That would add to the $22 billion that Citigroup already lost because of the housing slump.
Citigroup played a major part in the repeal. Then called Citicorp, the company merged with Travelers Insurance company the year before utilizing loopholes in Glass-Steagall the allowed for temporary exemptions. With lobbying led by Roger Levy, the "finance, insurance and real estate industries together are regularly the largest campaign contributors and biggest spenders on lobbying of all business sectors [in 1999]. They laid out more than $200 million for lobbying in 1998, according to the Center for Responsive Politics..." These industries succeeded in their two decades long effort to repeal the act. Also, "The newly formed Citigroup announced only days after the deal that it had hired recently departed Treasurey Secretary Robert Rubin as a member of its three-person office of the chairman".[8]
"Glass-Steagall protected bankers against themselves," Eveillard said. "Bankers are sheep. They don't mind going over the cliff if everyone else goes over the cliff."
Two Words --> Bill Clinton
The Democrats and the Republicans are the same rich people. - Hangly, on 07/21/2008, -7/+27Be prepared for more surprises like that in the future. US political culture is undergoing some massive changes.
Within the next ten years left and right will disappear completely. The only real division, the only real choice, is between freedom and slavery. People are beginning to figure that out. - chuzbox, on 07/21/2008, -6/+25This article is going for shock value and general ignorance of the public. Yes some of these banks aren't doing too hot, but Fannie and Freddie own over 50% of the nations mortgages..there is no way the government will let those go under.
hell both Freddie and Fannie stocks are up right now. - inactive, on 07/21/2008, -5/+24I wouldn't mind seeing a few of the greedier ones going down...
- mcquitty, on 07/21/2008, -0/+18Two months ago, Mr. Cassidy told MarketWatch, a financial-information Web site, that Pasadena, Calif.-based IndyMac Bancorp Inc. had a worrisomely high Texas Ratio.
IndyMac went bust this month in one of the largest bank failures in U.S. history.
What does Mr. Cassidy see now? More trouble – but he believes the situation is less dire than in the early '90s.
"Over the next three years, upwards of 300 banks could fail," he said. "But from a bank failure standpoint and an industry collapse standpoint, we were in far worse shape in '90 and '91 than the banking industry today."
That was from the Dallas News this morning. He's an analyst, so I will take his predictions a little more seriously.
And he called IndyMac 2 months ago. - lamiaconfitor, on 07/21/2008, -8/+24Presidents do not have magical powers. I know it sounds crazy, but the president has absolutely no control over the economy. They can poke at it, they can tell you, 'yeap, its broken...' but in the end they can't do *****.
- Definition, on 07/21/2008, -8/+24I'm gonna get dugg down, but this is true.
You guys have to put into perspective of what the significance of those banks mean to the American economy. Freddie Mac and Fannie Mae control 50% of the mortgage market. Anyways, the president may have not done the right choice here, but it was his only choice, and as a supporter of Barack, I think he would have done the same. - chuckDontSurf, on 07/21/2008, -1/+16Mom and pop clients have $340,000? Also, why the hell did you have $250,000 sitting around in a savings account? Christ, at least put some in CDs or TIPS something.
- CrazedLeper, on 07/21/2008, -1/+15No one can deal with this, it must play out to the bitter end.
- Ethek, on 07/20/2008, -23/+36I find it incredible that this is from kos... they love Ron Paul and they don't even know it.
The core and soon to be undeniable truth behind the chaos to come: http://www.youtube.com/watch?v=O5vEM-FlMtg
Jim Bunning of KY gave it a try too... even if it does look like his speech was written by his aid and not him:
http://www.youtube.com/watch?v=-VV6ST1Pmk4 - Capisano, on 07/21/2008, -0/+12The FDIC has a list of 150 banks it is keeping a very close eye on.
That's less than 2%. When is the last time that less than 2% is considered many?
Sensationalism at its best / worst. - jaymzdean, on 07/21/2008, -0/+12To save us domestically, we must first correct our foreign policy, which, if you will look closely, is controlled wholly by PNAC and AIPAC. These two organizations need to be put on probation and declared politically irrelevant until the criminal elements within them are removed. If you are not thoroughly informed on these two powerful and effective groups and their agenda's, then I'm sure their proponents won't mind if you do become independently informed.
- burninthepyre, on 07/21/2008, -0/+12You and me both.
- inactive, on 07/21/2008, -3/+14The FDIC is an insurance program with about 53 billion in cash. If 2 or 3 of the biggest banks fail they will be wiped out. As smaller banks fail next they won't be able to cover up to $100K for all depositors.
- jazzfunkblues, on 07/21/2008, -3/+14that's it! this guy has me convinced to pull out all of my savings and CD's. I'm going to convert it all into food stamps.
- fyngyrz, on 07/21/2008, -4/+14The runs are absolutely unavoidable. The question is, will you already have your money out, or will you still be back in the line when they close the doors?
This isn't myth, you know; it is a very real thing that happens from time to time, when economies (and banks) get out of control. And if you don't think the US economy isn't out of control, you're simply not paying attention.
Aside from the US economy, US banks are currently operating under rules that let them make loans for up to ten times - repeat TEN TIMES - the actual deposits they have on hand. You understand what that means? It means that when you put $10 in there, they can (and generally do) loan out $100 in "paper" like mortgages.
That's not real money. That's imaginary money. On these loans, they earn interest. That's a great deal, UNTIL all the depositors pull out their deposits. Because then the bank doesn't have anything to lend, real or otherwise. But wait! If the bank has loaned out $100 on your $10... they don't HAVE your $10! They just have a little in reserve so they can operate; it's all money from interest. Now, you come in (early) and you say, "gimme my $10" and they smile and do so. Others do the same. Soon, the reserve money is gone, and they're only at about 10% of deposits covered, and the FDIC steps in. If you're under $100k, that is.
But when the total exceeds $53b, the FDIC is out of money. Then government prints more to cover; but this money is just paper, and EVERY DOLLAR THEY PRINT reduces the value of what is in circulation.
In the end, you might have your money but that $10 won't even buy a loaf of bread.
Plus, when the FDIC steps in, people aren't very willing to regard those checks as reliable (and for good reason!) That's why the people from the recent bank failures who in fact have financial instruments issued by the failing bank are finding that their new banks are putting long or indefinite holds on the paper; again, this happens because our currency is only based on trust, and that trust has been sundered.
So if you have money in a presently operating bank, take your money out NOW, and convert it to something useful that will retain a high value. Things like stable food, jewels, gold, collectables and even weapons. Do it while your money has a (relatively) high value. If you wait for the bank runs, you're going to find out why those people were jumping out of windows in the late 1920's, and why people were trying to sell apples in the street in the 1930's. Don't try to sell the things you've bought until the crash is over, which may take as much as a decade. Either think this way, or be prepared to lose everything you have.
The signs are all there; if you don't pay attention, you've no one to blame but yourself. - Solkre, on 07/21/2008, -0/+10Not if the gold bubble pops and he looses his ass.
- inactive, on 07/21/2008, -1/+11 For him to cause a bank run someone would have to be reading these articles. It's not like this is in the New York Times or NBC. Most of the people reading a site like that have already lost faith in the system.
- lead2thehead, on 07/21/2008, -6/+16The Daily KOS also said that Bush would bring back the draft, that 9/11 was an inside job, and that Jimmy Carter was the best president who ever lived. They're always predicting gloom and doom at the hands of capitalists, conservatives, or anyone else they dislike.
- inactive, on 07/21/2008, -4/+14pffft. and wich presidential candidate would be fit to deal with this?
only one
Ron Paul. Somebody ***** that up. - inactive, on 07/21/2008, -11/+20Wow are you clueless. Hell the very well off were pulling their cash out of IndyMac for days to the tune of $100 million dollars before mom and pop clients found out the hard way that the $340000 that I had in savings just got chopped down to size.
Heck I even had $250,000 sitting in a savings account a few months ago... Now I know better. I've been diversifying my holdings for ages. the house is paid off, the cars, I have gold and cash on hand and I'm not even that paranoid.
Don't say Zaibatsu didn't warn you as well to the upcoming financial storm. - kingp, on 07/21/2008, -1/+10My thanks goes to Alan Greenspan. We really appreciate this!
- cdigioia, on 07/21/2008, -3/+12@ xptoast - That's an argument to change your assets out of USD, and into gold, a foreign currency/etc. Not a valid argument to take your < $100,000 out of the bank.
@ Hangly - That's retarded. This reminds of me of post 9-11, people saying we'd have a military draft. Just doomsday predictions. Yes the economy is ***** up, yes there's a good chance it'll get worse before it gets better. However- there's no way the government would let the FDIC fail, it would cause MASS panic and an economic meltdown. I know people love to hate the government (and with fair reason), but FDIC will be allowed fail just prior to the apocalypse. - superwick, on 07/21/2008, -1/+9independent credit unions FTW
- marx2k, on 07/21/2008, -4/+12The Batman?
- Optiks, on 07/21/2008, -0/+8Well played.
I'm not a big Kos fan, and usually just bury anything that sneaks out of there, but I found this article surprisingly readable - other than the first two paragraphs. This guy's claim of having 'amateur' status when it comes to analyzing financials is one I find a little hard to believe.
But like you said, none of what he said comes as anything of a shock. The bad technicals of several of the companies he mentioned can be traced WAY, WAY back.
I called Countrywide way back in June of last year, and Bear Stearns finally in November, but didn't have to stones to buy any puts on either. Too bad for me. If I had, I wouldn't be here right now typing this and sipping day old coffee. - inactive, on 07/21/2008, -0/+8While this is a tragedy it isn't accidental. This happened in the great depression. The story is just repeating itself and it seems that we can not do anything about it... again. The Fed with Ben Bernanke is making the USD worthless intentional, do you think that they can't see what the problem is? Most of this people have PhDs for *****'s sake! They know what is wrong with the actual collision course.
The US sold its soul and betrayed its core values when it handed its monetary system to a private company. - inactive, on 07/21/2008, -2/+9You're an idiot if you keep $250k in a savings account for more than 24 hours
- rishid, on 07/21/2008, -3/+10Kinda scary since the "credit of our government" is oh about... 9 trillion dollars in the red.
- ozziegt, on 07/21/2008, -2/+9Gold futures are really high right now due to speculative investing. Buying gold right now would be like buying AOL stock during the .com bubble.
- justjoehere, on 07/21/2008, -1/+8We survived and flourished after the S&L Bailouts. We'll survive and flourish after this as well.
- llewner, on 07/21/2008, -0/+6(checks bank account) $500k, nope..... $250k, nope.....$100k, FDIC insured maximum, nope..... Less than $1k in the bank and $50k+ in debt due to the lack of health care and college tuition, yep! Glad he discussed an issue that I (and countless others) can really relate to.
- Witchboy, on 07/21/2008, -4/+10You must be insane. The President has massive control over the economy via appointments, regulations (which are far more numerous and quick to put into place than laws), and--recently especially--signing statements. Quit repeating a false narrative.
- KMartSheriff, on 07/21/2008, -2/+8Sensationalists? On my Digg?
Seriously though, article = buried. - HexiumVII, on 07/21/2008, -2/+8What retarded BS is this? Even if you take out your money, the collapse would mean your say, $10,000 will only buy you 2 weeks worth of bread.
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