A Financial COLLAPSE pretty much certain!!!!!
Think about this for a second....the assets in our banks and insurance companies is basically debt. You loan the banks money or pay insurance premiums and they loan money to individuals, businesses, commerical real estate projects, and municipalities.
Our deposits in banks is about $5 Trillion dollars....but the banks have loaned out much more than $5 Trillion...many times more than $5 Trillion so if only a small percantage of the loans default.....all of our savings(loans to the banks) are wiped out!!!!!!
For those of you that say not to worry, I am insured......that may be so, but remember, the total FDIC fund is about $50 Billion......$50 Billion protecting $5 Trillion...Hmmmmmmmmmmmmmmmmm???????
Not only that....a HUGE percentage of the $5 Trillion in deposits is not insured such as large payroll deposits for corporations and municipalities and states parking their tax revenues.
Now a growing number of the loans on the banks books are starting to default. The defaults are growing in frequency and size. First is was Subprime Debt....that cost the system about $500 Billion(so much for Big Ben telling us that was a $25 Billion dollar issue).
Now the defaults are growing rapidly in PRIME mortgages(about 10X greater in size than subprime), exploding in Commercial Real Estate, spreading to municipal debt, and Billion dollar corporate bankruptcies are growing at rates not seen in years!!!!!!!!!
In the end, the value of the assets our our banks and insurance companies is imploding. Here are a few examples today....one of a bank who has been ordered to stop taking deposits and another is from a Casino on the strip that has been forclosed(weren't Casino's supposed to be recession proof....maybe not depression proof):
BANK ORDERED TO STOP ACCEPTING DEPOSITS:
[F]ederal regulators have ordered Vineyard National Bank of Corona to stop accepting so-called hot-money deposits ...
Vineyard has nearly $2 billion in deposits, with branches in Orange, Los Angeles, Marin, Riverside, San Bernardino and San Diego counties. ... Vineyard had nearly $2 billion in loans as of June 30, of which 48% were to home builders and developers.
In its filing with regulators Monday, Vineyard estimated that about $660 million of its nearly $2 billion in deposits are above those standard insured limits.
FORECLOSED CASINO ON THE STRIP:
Deutsche Bank AG will foreclose on the $3.5 billion Cosmopolitan Resort & Casino in Las Vegas after developer Ian Bruce Eichner defaulted on a $760 million loan ... Deutsche Bank ... is talking with companies including MGM Mirage and Hilton Hotels Corp. to help run its 80,000-square-foot casino ...
Sagging commercial real estate prices ... forced banks to hold projects until prices rise or sell at a loss. The Frankfurt-based bank would oversee an 8.5-acre development with two high-rise towers, three wedding chapels, a sandy beach overlooking the Las Vegas Strip and a deck featuring ``European-style bathing.''
We know in the last few weeks, the almost $5 Billion dollar Eschelon project shut down mid construction on the strip as well, three department stores chains filed BK, WCI filed BK, a slew of private builders filed BK, spreads on muni bonds are reaching record levels.ect..ect...ect.....
All of the above collectively likely owed banks, insurance companies, and pension funds Billions and Billions and Billions.....one famous scientist would be proud!!!!!!
Let's think about this for a second....Over $25 Trillion of Consumer, Corporate, and State and Municiplal Debt(not including Federal Debt) and only $5 Trillion in deposits.
And our government officals think $100 Billion dollar stimulous package is going to do something????? That is not even close to one month's worth of loans during the credit bubble. If we sent $100 Billion dollars per month EVERY MONTH to Americans....it would not be enough to service the existing debt.....even if every dime of cash in savings accounts were applied to paying down debt first!!!!!!!!
The reason debt was being serviced in the past few years is new credit was being taken out to service old debt. Now credit is being cut off from almost every angle......as a result there is simply not enough revenues to service debt and the defaults are growing every month.
You can do the math....it is not too difficult. Now the question is how long will Wall Street and our Government be able to deceive the people before the truth be told???????????
In the mean time.....we have just started the cycle of defaults......there are those out there that fantasize that our government will somehow print its way out of this.......just one small problem.
You can't print your way out of insolvency....only illiquidity. Each time a dollar is printed......a dollar of debt is created and it requires a buyer to purchase the debt.....the buyers of government debt are very sophisticated and know when the printing presses are running.......at this point, debt is defaulting at a much faster rate than money is being printed so our dollar is relatively holding its value and interest rates are in check..........but if the government started printing faster than defaulting debt......our creditors would go nuts and interest rates would skyrocket. Rising interest rates without rising wages would force America into starvation.....the Fed knows this and has chosen to keep the presses in check.
As more and more debt defaults, more and more assets of our financial institutions will implode resulting in more and more crashes. The irony is it has only just begun and CNBC talks about the bottom for the last year.....amazing.
CA is the perfect example of the next major multi billion dollar default....it revenues now are simply too low to pay its workers and debt at the same time....if it fires its workers its revenues are going to fall further.......now its Governator refuses to sign bills unless a budget is submitted......the problem is that it is not possible to balance CA's budget even if you fired all the workers.....in the mean time....CA's legislative process is basically shut down and little is being said.....for now. Just wait until the cities and county issues start getting added in to the equation.
And its not just CA....it is dozens of other states and growing rapidly.
In the end, we are ending the BIGGEST CREDIT BUBBLE in human history.....expect the unwind to be the BIGGEST DEBT IMPLOSION in human history.......it ain't too complicated.