Posted on 10/30/2009 8:09:04 AM PDT by grayhog
my favorite part:
"The real shocker that we discovered some time ago is that the FDIC ‘funds’ were never even held in a segregated bank account – the fees collected from the banks are accounted for as a part of the government’s general revenues that go towards military spending, bailouts, interest costs and other government programs. The FDIC ‘fund’ merely consisted of IOU’s from the general revenues accounts. And now that the Deposit Insurance Fund balance as of September 30, 2009 is negative13 the FDIC wants the institutions to prepay their assessments for all of 2010, 2011 and 2012. In effect, the FDIC wants to borrow money from the banks it provides insurance for. Does this not strike you as surreal? Why would anyone have any confidence in anything the FDIC guarantees?"
(Excerpt) Read more at sprott.com ...
Its not just SoSo Security with all the IOU’s
These guys called out the impending bankruptcy of GM, Fannie Mae, Freddie Mac, Citigroup etc... in November of 2007 when everything was all hunky-dory.
Very good, not too long, read.
Scary to read what they are calling out now given their track record.
So the FDIC ‘insurance’ is akin to Social Security, which was originally intended to be kept off of the general accounting ledger.. Government is a giant pickpocket and they have picked us pretty near clean. I am no longer surprised by people wanting to offshore their money, even into Swiss bank accounts..
Is this one of the “4” SETS OF BOOKS that David M. Walker (U.S. Comptroller General) told us about, or is this a side bar to all their accounting irregularities.....
The entire financial system has become a chain of IOUs and empty certificates. It’s all paper.
GM is the prototype of what will happen in DC, and IMHO I think Pelosi, Rangel etc, alll know it, they just don't have answer other than try the same old.....
Another gem:
“From 2004 to 2009, US unfunded obligations increased by an average of almost 50% over this six year period under both calculation methods, while US government revenue increased by only 12%. No compay or goverment can increase its liabilities by more than four times the rate of its revenue and stay solventfor an extended period of time.”
If a non-government organization dipped into insurance and pension accounts like this the decision makers would go to jail
Glen Beck pegged this; the Obama Marxist want to destroy capitalism by letting the dollar crash. It is being pulled down by all this unsustainable debt.
IOU'S written by the legislative branches which makes no money ever ... they only suck money up for themselves, their family, friends, and for leverage from others they allow to have government preference. Sad but true.
There is a rare honest man that goes to Washington ... and he usually leaves after his first term or two. They simply can not take the corruption around them; and the isolation and sneering they receive from the others that live there for their lifetime.
The days of our founders dedication ... that gave and pledged all they had to serve America ... is simply an idea our Senators and Representatives, and our President and all the President's men; and the Judicial branch do not connect with themselves and do not understand or care to know.
Another gem (sorry, can’t help it, this analysis is so eye opening):
“Hemingway wrote that a man goes broke “slowly, then all at once”. We believe the same sentiment can be applied to governments. If fiscal abuses continue unabated, confidence eventually erodes until investors just stop lending. It happened famously to Lehman in September 2008, and it is happening now to the US government. The Q2 Flow of Funds Report published by the Federal Reserve revealed that the Federal Reserve purchased as much as half of the newly issued treasuries in the second quarter. This means that the Federal Reserve isn’t merely supporting the market for US treasuries…it is the market for US treasuries. Printing new dollars to support an almost $9 trillion dollar budget deficit that stretches out over the next ten years puts the US on the road to ruin, and the major governments of the world have noticed and are taking action.”
So our government is running the biggest ponzi scheme of all time (Madoff would be proud). The treasury issues debt to pay for our bloated government and the Federal Reserve creates dollars out of thin air and buys that debt (because no one else will). Unbelievable!
I know my ‘gut’ isn’t any indicator of anything except gas... but I have had since yesterday afternoon a HORRIBLE feeling something bad is on the cusp. Like I keep expecting to turn on the news today and hear the stock market crashed, or the dollar crashed or something equally as devastating.
Probably just me being paranoid, but I can’t shake this feeling!
Speaking of the Treasury (or lack thereof):
http://www.freerepublic.com/focus/f-news/2373743/posts
Page 25 of the Proposed Healthcare Package -
(h) FUNDING; TERMINATION OF AUTHORITY.— (1) IN GENERAL.—There is appropriated to the Secretary, out of any moneys in the Treasury not otherwise appropriated, $5,000,000,000 to pay claims against (and administrative costs of) the high-risk pool under this section in excess of the premiums collected with respect to eligible individuals enrolled in the high-risk pool. Such funds shall be available without fiscal year limitation.
(2) INSUFFICIENT FUNDS.—If the Secretary estimates for any fiscal year that the aggregate amounts available for payment of expenses of the high-risk pool will be less than the amount of the ex-penses, the Secretary shall make such adjustments as are necessary to eliminate such deficit, including reducing benefits, increasing premiums, or establishing waiting lists.
” ...the Secretary shall make such adjustments as are necessary to eliminate such deficit, including reducing benefits, increasing premiums, or establishing waiting lists.”
...read that slowly about five times.
Thanks for the quotes.
God help us in our day, in Jesus name, amen.
I had a dream in the early 1990’s that the World filed bankruptcy. Asset holders were paid 10 cents on the dollar with the new world government currency. I wondered why I had this dream at the time, but I have never forgotten the dream.
The HI Trust Fund (Medicare Part A) started cashing in its IOUs in 2008. They will be exhausted by 2017. By law, 75% of the costs of Medicare Parts B and D are funded by the General Fund. By 2014, five years from now, 45% of all Medicare expenditures will come from the General Fund. And by 2030, one in 5 Americans will be 65 or older or twice what it is now. Medicare will bankrupt this country by itself and that doesn’t include Medicaid or SS or Obamacare.
Picking us to the bone and here is something many do not realize.
I thought the FDIC has full faith and credit backing by the US treasury?
Actually, no, it does not. The language in Section 14 of the FDIC Act is clear and unambiguous (emphasis mine): (a) BORROWING FROM TREASURY.— The Corporation is authorized to borrow from the Treasury, and the Secretary of the Treasury is authorized and directed to loan to the Corporation on such terms as may be fixed by the Corporation and the Secretary, such funds as in the judgment of the Board of Directors of the Corporation are from time to time required for insurance purposes, not exceeding in the aggregate $30,000,000,000 outstanding at any one time, subject to the approval of the Secretary of the Treasury: Provided, That the rate of interest to be charged in connection with any loan made pursuant to this subsection shall not be less than an amount determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturities.
Now that’s pretty interesting. First, that any additional money from the federal government is not a guarantee, but rather a loan, which will only be made subject to the approval of the Secretary of the Treasury. Further, that the loan is to be made at “current market yields.” What do you suppose would happen to US Treasury yields during a true emergency? I can imagine a few scenarios where they might skyrocket, and this would serve to compound the difficulty of keeping the FDIC fund solvent.
How long does the FDIC have to repay me if things go bad?
Here things get murky. We turn to Section 11 of the act and find this (emphasis mine):(f) PAYMENT OF INSURED DEPOSITS.— (1) IN GENERAL.—In case of the liquidation of, or other closing or winding up of the affairs of, any insured depository institution, payment of the insured deposits in such institution shall be made by the Corporation as soon as possible, subject to the provisions of subsection (g), either by cash or by making available to each depositor a transferred deposit in a new insured depository institution in the same community or in another insured depository institution in an amount equal to the insured deposit of such depositor.
That only says “as soon as possible” and sets absolutely no time limit or maximum. Taken to the extreme, it might be impossible for the FDIC to ever make depositors whole again, and this is one of dozens of such “outs” that exist in the document. Remember, this act was written in 1933 when money was gold, times were uncertain, and government lawyers were exceedingly careful to avoid locking the government into any possible financial black holes.
And the FDIC Act is very clear to spell out that the only insurance funds available to depositors are those that exist within the fund itself:(f)(1)(A) all payments made pursuant to this section on account of a closed Bank Insurance Fund member shall be made only from the Bank Insurance Fund
So, if the fund runs dry, there isn’t another possible source of funds that can be legally tapped without changing this wording. And that would take – wait for it – an act of Congress.
Surely Congress would appropriate the necessary funds to keep the FDIC solvent?
Here your guess is as good as mine. I would personally expect the US Congress to do everything in its power to the keep the FDIC well funded, especially during an emergency. I would not fault their desire here. But I can also think of a few scenarios or circumstances under which their ability could be taken away.
For example:
If the banking crisis came at the same time as an interest rate spike and general funding emergency
If we were at war with Iran and things were not going well
If China suddenly started dumping their Treasury holdings in the opening gambit of an economic war
Excellent post, Lori. Thanks for breaking down all the legal-ese. The bank of ‘Stearns and Foster’ looks better and better. And any one of those scenarios is certainly possible, some more than others.
Imagine if the new currency was a world currency.
I could picture something like that.
New currency will be the oldest currency -— gold. Its the only currency that is no one else’s liability.
Perhaps the Chinese RMB will become the next world fiat currency at some point, but that will take a while.
The direction we are headed sure makes one ponder if all this isn’t an accident or poor judgement and planning.
I think we’re gonna get NUKED. Did you see the interview with that guy Hill? He says Al Quaeda has Russkie nukes and will use them soon.
That would set off the financial crisis and the political crisis as Obama attempts martial law.
Prepare!
do you have a link?
It was: http://w3.newsmax.com/a/dayofislam
I think. I printed out copies to give to family and employees.
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