Worst Debt Crisis Since The Great Depression To Claim 200 More U.S. Banks During 2010

The Market Oracle ^ | 1-18-2010 | Martin D Weiss

[blam]

Worst Debt Crisis Since The Great Depression To Claim 200 More U.S. Banks During 2010

Economics / Credit Crisis 2010
Jan 18, 2010 - 03:56 AM
By: Martin D Weiss

Washington has so thoroughly botched its supervision of the banking industry that 200 banks are likely to fail this year — easily surpassing last year’s 140 bank failures … inevitably involving the greatest bank losses in history … and already costing the FDIC ten times more than the great S&L and banking crisis of the 1980s did.

I am not basing these conclusions on conjecture. They come straight from official sources. Specifically …

In her testimony before the Financial Crisis Inquiry Commission on Thursday, FDIC Chairman Blair attacked the Fed under Greenspan for causing the housing bubble and subsequent debt crisis with its highly stimulative, low interest rate policy of the 2000s.

She slammed virtually all of Washington for allowing banks to establish a huge, high-risk “shadow banking system.”

And she made it abundantly clear that, without sweeping, far-reaching reforms, we risk another devastating debt crisis.

Each of her conclusions is abundantly obvious and thoroughly documented. What she did not mention, however, are the following equally obvious facts:

Obvious fact #1. The Fed under Bernanke is now pursuing an even more stimulative, lower interest rate policy than it did under Greenspan, threatening to create even larger bubbles and more devastating busts …

Obvious fact #2. In just the last two years, between bank bailouts and easy money, Washington has done more to encourage the growth of the shadow banking system than in all previous years combined, and …

Obvious fact #3. Despite all the talk and testimony, the nation’s powerful banking lobby virtually guarantees that, in the absence of another Wall Street meltdown, the chance of sweeping reforms is virtually nil.

So here’s America’s financial dilemma in a nutshell:

Without sweeping reforms, the nation is doomed to repeat history with another debt disaster. But without another debt disaster, the nation’s political will for sweeping reforms is dead or dying.

In the meantime, the aftershocks of the 2008 debt crisis are getting worse, as the latest news clearly illustrates …

171 actual total failures: In addition to the 140 banks and S&Ls that failed in 2009, 31 credit unions went under, bringing the total tally to 171.

[snip]

[rabscuttle385]

*Ping!*

[Woebama]

Well, what does it say about our future if this is a “bubble”? 10% unemployment, radically reduced house prices, huge default rates on credit cards and loans, cratered auto sales and durable goods sales, etc., and this is the bubble we’ve bought with a huge increase in government debt.

Our only hope is to pull back on the stick now before we crash. The only way to do that is a policy that real people, not idealogues, recognize as viable, so they can trust and hope again . . . which means they will invest, hire and spend. The left offers their version of hope and change . . but no one is buying it anymore (shocking that they didn’t know what they were voting for 1 year ago isn’t it?).

[radioone]

This doesn’t surprise me, a few months ago the FDIC announced they were hiring 1,500 more examiners. 600 in California alone.

[Candor7]

Blair left out the Fannie Freddie Mortgage Fraud, passing on sub prime mortgages as A rated. Heads need to role on that one. Freddie and Fannie need closing bad, they are still running an illegal welfare lending program there.

SHUT EM DOWN

[RayChuang88]

Here's the problem: US$15 TRILLION in American-owned liquid assets either participating in the illegal cash-only underground economy or sitting in an offshore financial center, all for income tax avoidance purposes. That's US$15 TRILLION that could easily recapitalize most of the banks in the USA almost overnight.

[Candor7]

The FDIC is broke. They have to draw down money directly fromm Coingress as they need it.When that ends, there will be no more deposit insurance.

[CodeToad]

There were about that many last year. I suspect it will be much more this year.

[jnsun]

Without sweeping reforms, the nation is doomed to repeat history with another debt disaster. But without another debt disaster, the nation’s political will for sweeping reforms is dead or dying.

Look, human society in the United States of America has become one of the phoniest, delusional societies on the planet:

College kids think they deserve to be CEO's. Lawyers think they know the truth. Politicians think they know what's good for everybody else. Teenagers think they all should wear Calvin Kleins. Businesses think that twenty million parasitic illegals are good for the economy. Economists think that printing money will incur prosperity. Women think they are better men than men. The Media thinks it creates reality. Hollywood thinks it emulates the masses. Voter after voter thinks a bigoted self-delusional narcissist is a savior president. Investors think that wind can solve energy dependence. Scientists, and their sycophants, think anthropogenic carbon dioxide is going to end civilization. Educators think kid's ego's are intellectual development. Environmentalists think that oppressing initiative preserves the environment.

Debt crisis? How could anyone ever, ever expect otherwise for the United States of America?

Johnny Suntrade

[hot4plasma]

What a brilliant reply. You have really scored with this one today. Your synopsis is written very well, and it flowed like poetry.. great job!

[mulligan]

The mess is due to an incompetent, ignorant, crooked and greedy government, mainly our Congress. Those in Congress care more about re-election than what is good for the nation. Huge budget deficits, creating inflation thus devaluing earnings and savings, creating an unmanageable national debt, passing rules, regulations and laws that prevent the private sector from doing it's job, in some cases telling the banks to employ unwise lending practices or be subject to federal punishment, creating the Fed and working hand in hand with that organization in order to participate in the ‘perks’and promising voters everything with no intelligent way to pay for those promises. Until people wake-up and realize it is not Wall Street or Bank Street or Regulation Street but Government Street that got us into this current mess nothing positive will happen and future messes will be even worse.

[The Comedian]

This is so good, it deserves to be repeated en toto:

Look, human society in the United States of America has become one of the phoniest, delusional societies on the planet:

College kids think they deserve to be CEO's.
Lawyers think they know the truth.
Politicians think they know what's good for everybody else.
Teenagers think they all should wear Calvin Kleins.
Businesses think that twenty million parasitic illegals are good for the economy.
Economists think that printing money will incur prosperity.
Women think they are better men than men.
The Media thinks it creates reality. Hollywood thinks it emulates the masses.
Voter after voter thinks a bigoted self-delusional narcissist is a savior president.
Investors think that wind can solve energy dependence.
Scientists, and their sycophants, think anthropogenic carbon dioxide is going to end civilization.
Educators think kid's ego's are intellectual development.
Environmentalists think that oppressing initiative preserves the environment.

Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

[seowulf]

United States of America has become one of the phoniest, delusional societies on the planet

And the financial apocalypse will soon be upon us.

...because they received not the love of the truth, that they might be saved. And for this cause God shall send them strong delusion, that they should believe a lie: That they all might be damned who believed not the truth, but had pleasure in unrighteousness.

[Diana in Wisconsin]

The IRS is hiring more agents, too. The government is DESPERATE for funds...and that means a living hell for us!

http://blog.pappastax.com/index.php/2009/01/08/tax-vox-proposal-hire-more-irs-agents-to-close-tax-gap/

[Pelham]

Well said.

[GOPJ]

The FDIC is broke. They have to draw down money directly fromm Coingress as they need it.When that ends, there will be no more deposit insurance.

I suspect they'll crank up the old printing press ...

[mo]

“....one of the phoniest, delusional societies on the planet”

Ya.....2-3 generations of public skewl education malpractice will do that to ya....

[blam]

"And the financial apocalypse will soon be upon us."

More people daily are starting to realize this probability.

[April Lexington]

We need to reorganize the Federal government to make it a vassal to the states. That was the original intent and that is what must be done to save our liberty. Bust it up, limit its power and prosecute those who have abused power. Oh... and rip down that horrible Roosevelt monument on the mall. Biggest pile of communist crap ever built by American serfdom...

[April Lexington]

So true... even communist Massachusetts (or, is there an e at the end?) has figured this out!