quote:

ORIGINAL: ThatDamnedPanda

quote:

ORIGINAL: Vendaval


The FDIC chief said in the letter that the rapidly deteriorating economic conditions
raised the prospects of "a large number" of bank failures through 2010."

I've got worse news than that, Ven. He may be understating the problem, drastically understating it. There are a growing number of economists who maintain that the banking system is not just in deep trouble, but that it's already insolvent - that the banks are essentially bankrupt. That they simply do not have the money to meet the legal definition of solvency, which in simplest terms requires that banks have on hand shareholder capital equivalent to 10% of the obligations on their books. With the number of foreclosures still rising, and rising at faster and faster rates, there is almost zero chance that the banks will be able to meet that requirement this year. We're talking trillions of dollars here. Thus, massive and widespread bank failures are probably inevitable.

The only solution is to at least partly nationalize the banking system, even if only for a limited time period. Mind you, I'm not saying I advocate that; I'm just saying that's probably going to be the only realistic option. There's no other way to fix this, because the federal government is the only entity in the world that has the kind of money needed to keep the banks solvent. Faced with a choice between nationalizing the banks and letting the banking system fail, they won't have any choice but to nationalize the banks.

The math is simple. The Obama administration knows this, but they're not telling us that. Yet. I believe they're waiting until the walls start to fall, at which time people will be so terrified they'll jump at any solution. Right now, people aren't scared enough yet, so nationalizing the banks would serve only to hasten the economic decline, and Obama would be blamed for causing the collapse. If they wait until it's inevitable, they can just step out front and say, "hey, we tried everything, but now we have no choice." And people will be more inclined to give them a pass. I think we're looking at a very ugly, and a very scary, year or two here.This latest message from Sheila Bair is just one more subtle step in the process of preparing us for the nationalization of the banking system.

quote:

ORIGINAL: StrangerThan

Usually, there's someone who comes along and starts chanting "the sky is falling! the sky is falling!", then heads back off into la-la land once they've performed that particular town crier service.

I wonder if they got hit by a piece.

quote:

ORIGINAL: cjan

But the gov'ment won't allow the FDIC to fail and it will temporarily nationalize the banks when the time is politically right.

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ORIGINAL: Termyn8or

Unfortunately cammille, that 100K limit is per depositor mot per bank nor per account. It may hedge you nicely if one of your banks fail, but in these times multiple failures are a real possibility.

In general though, this is just the other shoe dropping, and this whole thing is proving to have alot of shoes.

Actually I think property is one of the best investments right now if one can manage to hold on to it. After all, what good is a safe place to put your money if it is worthless ?

The only other thing I think might be gold, but first one must know why. Gold, as high as it is right now, I believe is undervalued. There is only one sure way to accomplish that, to make sure there is a slight glut on the market. Once gold rises to a certain level I think it will quickly skyrocket once certain conditions are met. Then someone is going to make alot of money. This is kind of the opposite of what the Hunt brothers tried to pull off.

During the last depression, sure some people jumped out of windows, but others made money.

T

quote:

ORIGINAL: blacksword404
Ok maybe I don't understand how it works but if the FDIC is there to cover peoples money in banks. When most banks fail it is my understanding that the money in the accounts are still there and the government or another bank takes over. Either way business continues. So why is the FDIC going broke? Where are they spending money?