Tuesday, Nov 25, 2008
FDIC 'Coverage ratio' at lowest level since early 1993; bodes ill for industry
MarketWatch: Bank reserves not in pace with loan losses
Shhhhh!
The FDIC does not have enough reserves to guarantee deposits in the event of a systemic banking failure. The possibility of a run on the banks is very real.
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Posted by gardeniadotnet @ 11:10 PM (429 views) Add Comment
8 Comments
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1. dohousescrashinthewoods said...
I think we all know this, but nobody blinked.
I guess either we all hold off or the printing presses will have to roll, destroying our money anyway?
2. gardeniadotnet said...
Some comments following the article:
...people wont run on the the banks. the creditors aka foreigners will run on the dollar the ultimate insolvent bank
... And screw themselves in the process. There are so many dollars out there the foreigners need an "orderly withdraw".
I believe that was the intent of China's 562 Billion infrastructure plan announced a few weeks ago. Slowly spend (convert) the dollars into hard assets like roads, bridges, airports, etc.
....It also means they won't be buyers of US Treasuries either
...The only thing that saves us (temporarily) is that so many foreign nations and investors have bought into the dollar as real money scam that they can't let it tank because they hold so much of it. They have an incentive to keep the illusion going at least until they can find somewhere else to put their money.
3. planning4acrash said...
Well. There can be a run on global fiat currencies. Its called a gold spike. That is why gold is being manipulated well below its true inflation adjusted price. How? Through fractional futures markets that sell more gold than exists. COMEX will fall.
4. drewster said...
The FDIC can't cover deposits. That's why the head of the FDIC, one Sheila Bair, pushed Citigroup and Wachovia into a shotgun marriage last month. If Wachovia had gone under then the depositors would have taken a haircut, and confidence in the US banking system would have collapsed overnight.
More info here: Bronte Capital: Citigroup, Wachovia, Sheila Bair and a post I didn't make...
5. titaniccaptain said...
@P4AC
What will happen to gold then when the fractional markets run into trouble I wonder?
6. mountain goat said...
"the United States government’s borrowing power — its ability to continue tapping the open market for cash — is, by far, it’s most precious asset, more valuable than the White House and all public properties; even more valuable than all the gold in Fort Knox. Those assets are like Uncle Sam’s home, land and pocket change. His borrowing power, in contrast, is like the air he breathes to stay alive."
[this long article was an eye opener for me. Starts with threats to banking (derivatives) and then why treasuries are safest. The US gov has never ever failed to pay back the holder of its Treasuries because that would destroy confidence in their debt. So everything will fail first, banks will be shut, deposits won't be guaranteed but come what may the holder of treasuries will be paid.]
Martin Weiss
7. mountain goat said...
Oh and by the way the Money and Markets website (from which the above article is taken) is also not post-able on housepricecrash anymore, I discovered.
8. mountain goat said...
Right heres another one on money security. Max Kaiser recons the Russians are going to bust the COMEX by demanding delivery of silver in December because they are mad about the paper games that have hit their oil and currency. Ahh I don't know what I am going to do when this credit crunch is over, it will be like when the footbal world cup ends, I wont know what to do with myself anymore!