I Don't Mean to Alarm You, but....

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PostMon Aug 24, 2009 3:45 am » by Lowsix


Days Away From Economic Chaos?
by Bill Sardi - LewRockwell.com

America is just a few days away from a possible day of reckoning. I again call attention to this day, August 25, when the Federal Deposit Insurance Corporation issues its 2nd Quarter report for 2009 on the state of health of American banks.

A plethora of bank failures has depleted the FDIC reserve fund from $52.8 billion in 2008 to $13 billion in the 1st Quarter of 2009. (See chart below)

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Alison Vekshin, writing for Bloomberg, indicates

"The failure of 77 banks this year is draining the fund."

Vekshin goes on to report that 56 bank failures since March 31 have cost the FDIC an estimated $16 billion. (For comparison, in the 1st Quarter, bank failures only cost the FDIC $2.2 billion.) That $16 billion bank rescue would fully deplete the FDIC fund as it only had $13 billion at the close of the 1stQuarter. It’s possible the FDIC has already tapped into its line of credit at the Treasury Department without setting off alarm bells to the public.

FDIC's $13 billion against $220 billion liabilities

So just how much liability does the FDIC bear aggregately for its "problem banks?"

At the end of the 1st Quarter in 2009 the FDIC said that figure was $220 billion. Remember now, the FDIC had only about $13 billion to over these institutions at the time. (See chart below) This figure will likely grow beyond imagination with the issuance of the FDIC 2ndQ report.


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OK BUT WHAT DOES ALL THAT MEAN??


The mother of all bank runs?


Now if just a small portion of American bank depositors hear that the FDIC had to tap into the US Treasury for funds, and these depositors feel their banked money is at risk and want to withdraw some of it, the mother of all bank runs could ensue. This could create the day of reckoning that many have predicted. A short banking holiday would have to be declared and who knows what happens from there – troops in the streets, issuance of new currency, martial law? Don’t think those in the Federal government haven’t made plans for such an occurrence.

Please understand, im not showing you this article to spread fear..im sharing it for the information within it. This is serious.
If any of you have significant money in the bank, PLEASE do yourself the favor of staying informed, through August 25th. When the FDIC releases its 2nd quarter report, which will tell us EXACTLY what sort of health the banks, and your insured deposits are in..

I mean it, watch for this report, if you have significant savings in cash,
in FDIC insured accounts..

This is the TRUE source of all the Bank Run Rumors,
Bank Holidays, and Martial Law threats, dont take it lightly, but dont panic.

Yet.
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PostMon Aug 24, 2009 4:01 am » by TheDuck


Only in America...nice post gotta go sleep

Shamans Golden Strain:???
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PostMon Aug 24, 2009 4:04 am » by Realorfake


way creepy...

It will be interesting to see how the stock market will respond to this.
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PostMon Aug 24, 2009 4:12 am » by Spock


This is scary. On Friday the old man that started the company I work for, came into my office and dropped a printout on my desk describing the same exact scenario.

I brushed it off because the ramifications are so terrible. Guess I'll start gulping up stomach bile again.

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PostMon Aug 24, 2009 4:18 am » by Realorfake


Here's some reiteration of some of the information along with new stuff as well...

The banking crisis will get alot worse despite all the happy talk that the economy is turning the corner. The FDIC is essentially bankrupt. The coming 2nd Quarter 2009 FDIC report will confirm what most of us already suspect: as many as 1000 banks may go belly up. Some even think 2000+ banks will go bust. Bill Sardi analyses the situation:

America is just a few days away from a possible day of reckoning. I again call attention to this day, August 25, when the Federal Deposit Insurance Corporation issues its 2nd Quarter report for 2009 on the state of health of American banks. ….. We must wait and see how Americans respond to the upcoming FDIC report.
…..
There are roughly 8400 American banks that set aside a small portion of their profits to aggregately insure bank depositors should their local bank fail. A plethora of bank failures has depleted the FDIC reserve fund from $52.8 billion in 2008 to $13 billion in the 1st Quarter of 2009. (See chart above)

Alison Vekshin, writing for Bloomberg, indicates :

“The failure of 77 banks this year is draining the fund, prompting the agency in May to set an emergency fee of 5 cents for every $100 of assets, excluding Tier 1 capital, to raise $5.6 billion in the second quarter. The agency has authority to set fees in the third and fourth quarters, if needed, to prevent a decline in the fund from undermining public confidence.”

Vekshin goes on to report that 56 bank failures since March 31 have cost the FDIC an estimated $16 billion. (For comparison, in the 1st Quarter, bank failures only cost the FDIC $2.2 billion.) That $16 billion bank rescue would fully deplete the FDIC fund as it only had $13 billion at the close of the 1stQuarter. It’s possible the FDIC has already tapped into its line of credit at the Treasury Department without setting off alarm bells to the public.

The FDIC is required by law to maintain a reserve ratio, or balance divided by insured deposits, of 1.15 percent. It was at 0.27 percent as of March 31. It could be near zero at the current moment. (See chart at bottom of post)

Hiding losses
Banks have been slow to foreclose, allowing mortgage holders a few months before their home is deemed in default and giving another 2 years before the property is foreclosed on its accounting books. This practice has been able to temporarily hide most of the banking collapse.

But banks must eventually write down their real estate home mortgage losses. First-quarter net charge-offs of $37.8 billion were slightly lower than the $38.5 billion the industry charged-off in the fourth quarter of 2008. As banks write off bad home loans, this downsizes their asset values. Downsizing at a few large banks caused $302-billion decline in industry assets in the 1stQ. The FDIC report says:

Total assets declined by $301.7 billion (2.2 percent) during the quarter, as a few large banks reduced their loan portfolios and trading accounts. This is the largest percentage decline in industry assets in a single quarter in the 25 years for which quarterly data are available. Eight large institutions accounted for the entire decline in industry assets;

…US banks are directing a great deal of their profits towards write-offs (loss provision..) for non-paying home mortgages (foreclosures). So the banks only have about $5–7 billion of profit to direct to the FDIC to shore up its quickly vanishing reserve account. This aggregate profit equates to about $890,000 profit per bank in a quarter. That is a pretty thin margin.
….
Zombie banks
The FDIC, which claimed only about 300 problem banks in the 1st Quarter of 2009, but hid the fact there were about 2000 total lame banks among its 8400 members, This has given rise to the term “zombie banks,” which are defined as “a financial institution with an economic net worth that is less than zero, but which continues to operate because its ability to repay its debts is shored up by implicit or explicit government credit support.”
….
FDIC’s $13 billion against $220 billion liabilities
So just how much liability does the FDIC bear aggregately for its “problem banks?” At the end of the 1st Quarter in 2009 the FDIC said that figure was $220 billion. Remember now, the FDIC had only about $13 billion to over these institutions at the time. ….This figure will likely grow beyond imagination with the issuance of the FDIC 2ndQ report.
….
How do American banks make profit today?
… the FDIC 1st Quarter report tells all – our so-called conservative American bankers, entrusted with your hard-earned savings, with no place to turn to generate traditional profits, have entered the gambling parlor. Here is how the FDIC said it:

Sharply higher trading revenues at large banks helped FDIC-insured institutions post an aggregate net profit of $7.6 billion in the first quarter of 2009.

Trading revenues means profit generated from trading stocks and other risky investments. Recall, when your money was being financed commercial and residential property it had some collateral behind it. An asset (real estate) was held in balance against the risk of failure to pay the loan. Now bankers are “investing” your money in the stock market in what appears to be a replay of how the Japanese propped up their stock market in recent years – by simply having major companies purchase each other’s shares to prop up value.

Banks valued by goodwill and bailout funds
So there, you can see that in addition to goodwill, the bank’s capital was largely increased by bailout funds. So a dose of reality therapy will lead one to conclude that nearly all American banks are essentially insolvent.

If this leaves you feeling a bit queasy, well, you may need to reach for Dramamine when you realize the FDIC is not only broke, but it will probably announce it is tapping into its line of credit at the US Treasury Department, which is also insolvent (America is spending $1.58 trillion more than it collects in taxes this year).

The mother of all bank runs?
Now if just a small portion of American bank depositors hear that the FDIC had to tap into the US Treasury for funds, and these depositors feel their banked money is at risk and want to withdraw some of it, the mother of all bank runs could ensue. This could create the day of reckoning that many have predicted. A short banking holiday would have to be declared and who knows what happens from there – troops in the streets, issuance of new currency, martial law? Don’t think those in the Federal government haven’t made plans for such an occurrence.


http://socioecohistory.wordpress.com/2009/08/22/
How many times must you honk your horn and say fuck you?
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You feel better now, I didnt let you pass.
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PostMon Aug 24, 2009 4:25 am » by Brothers


I suppose if what you declare is true and a bank holiday is going to happen then perhaps the Amero which some people are talking about will be our new currency. However, I have not heard anything about a massive amount of this new money is being made unless it was done in secret. However, if the new change is to happen then I suppose all other prices would have to reflect on the new currency. In other words, you might not have a million dollars in your account (only wish that I did) and the exchange rate would be 5 to 1 (lets suppose) then you would have 200,000 ameros if my calculation is correct. How this would effect the world economy is anyones guess.

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PostMon Aug 24, 2009 4:36 am » by Lowsix


brothers wrote:I suppose if what you declare is true and a bank holiday is going to happen then perhaps the Amero which some people are talking about will be our new currency. However, I have not heard anything about a massive amount of this new money is being made unless it was done in secret. However, if the new change is to happen then I suppose all other prices would have to reflect on the new currency. In other words, you might not have a million dollars in your account (only wish that I did) and the exchange rate would be 5 to 1 (lets suppose) then you would have 200,000 ameros if my calculation is correct. How this would effect the world economy is anyones guess.


Im not sure im reading anything that drastic in this, although if the run was big enough, it could be possible.

That was a favorite pet theory of how it would occur by Hal Turner, the recently arrested FBI agent provacateur (proven) slash Conspiracy Patriot....where he said the bank holiday would be the cover for the currency exchange...

Im not in that camp, nor is the author. (i dont THINK)

But thats a decent point either way, of a possibility.
Thanks for the feedback..
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PostMon Aug 24, 2009 4:39 am » by Strider


Well, it seems to me that the government can alway pull a few trillion out of its butt when the need arises - of course the taxpayer gets stuck with the bill + interest in the end (pun intended).

USA spends more money on its military than the rest of the world combined, and has a "black budget" with zero congressional oversight greater than the military budget of any individual country in the world. So it seems that if budgets need to be cut, there's a lot of fat out there to trim...

Of course, the government may be too busy living in fear of this Frankenstein creation to touch it - in which case - we're all screwed.

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PostMon Aug 24, 2009 4:53 am » by Muchtyman


Two Points ;

I have in the past Initiated threads which were derived from sure fire indicators of economic chaos .Much to my embarssment , sod all happened . What makes you think this is different ?
You are quoting the Federal Reserve ; which as you know are neither Federal , nor do they have a reserve , but have this wonderful capacity for what we call in the UK as Quantitave Easing , ie Printing Money !
But , Date Noted . Will reavaluate pantry stocks .

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PostMon Aug 24, 2009 5:18 am » by Pateriot


The FDIC will not run out of money. If the fund risks running low the government will simply increase the tab to us and future generations until no one in the world is willing to purchuse our debt. Then they will simply print more money...no problems!! Don't worry, be happy! Our Marxist leaning Socialist President and administration will keep us safe and warm by insuring that the evil capitalist system dies a quick and painless death...along with prosperity and freedom! Death to the American way!! After all, we voted for change right?


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