If anyone here caught 'This American Life' today on National Public Radio, it was amazing.
They basically simplified the banking crisis and housing crisis, and laid out the case, after consulting with economists, people that worked out bank systemic failures in the past, regulators, etc., that we are on an inevitable course towards nationalizing the banks, and that they won't announce it, because they have to have the tens of thousands of federal employees in place, and all the paper work completed, before making the announcement.
They spoke about how Citi and BofAmerica hold 25% of all U.S. bank deposits, and how J.P. Morgan, Morgan Stanley and many, many other banks in addition to Citi and BofA are insolvent, and how they are insolvent by literally trillions, as the value of their assets + capital is swamped by the amount of liabilities they have - mainly due to decimated real property values on the inflated loans they made.
Unless housing values rose 30% or maybe more in the next year or so, which won't happen, there's no way around nationalization.
Banks also have the U.S. government over a barrel, because if they fail, trillions of deposits will be lost, and we will have a 'depression so large it will render the Great Depression a footnote by comparison.'
They also shatter the misconception that insolvent banks should loan money out they're receiving from the U.S. Government (taxpayers), as such banks are least able to do so, because that would further decimate their balance sheets.
One bank analyst at Deutsche Bank Group wrote a memo to U.S. regulators, saying they could either save the banks with taxpayer dollars now, or save them with taxpayer dollars later, when the unemployment rate topped 20%. He also stated unemployment would rise to at least 12.5% regardless.
Finally, an economist at Duke (I believe Duke) was interviewed, and states the last time that Household Debt as a per capita % of GDP was this high was - you guessed it - 1929. I'm trying to find a chart illustrating this.
Edit - One chart:
You would do yourselves a favor to listen to the podcast, which is free to download for a week, beginning tomorrow:
http://www.thisamericanlife.org/Radio_Episode.aspx?episode=375
It's called 'Bad Bank.'
P.S. - As bad as things are in the U.S., insolvency is even greater in Europe and some parts of Asia. Ouch!
They basically simplified the banking crisis and housing crisis, and laid out the case, after consulting with economists, people that worked out bank systemic failures in the past, regulators, etc., that we are on an inevitable course towards nationalizing the banks, and that they won't announce it, because they have to have the tens of thousands of federal employees in place, and all the paper work completed, before making the announcement.
They spoke about how Citi and BofAmerica hold 25% of all U.S. bank deposits, and how J.P. Morgan, Morgan Stanley and many, many other banks in addition to Citi and BofA are insolvent, and how they are insolvent by literally trillions, as the value of their assets + capital is swamped by the amount of liabilities they have - mainly due to decimated real property values on the inflated loans they made.
Unless housing values rose 30% or maybe more in the next year or so, which won't happen, there's no way around nationalization.
Banks also have the U.S. government over a barrel, because if they fail, trillions of deposits will be lost, and we will have a 'depression so large it will render the Great Depression a footnote by comparison.'
They also shatter the misconception that insolvent banks should loan money out they're receiving from the U.S. Government (taxpayers), as such banks are least able to do so, because that would further decimate their balance sheets.
One bank analyst at Deutsche Bank Group wrote a memo to U.S. regulators, saying they could either save the banks with taxpayer dollars now, or save them with taxpayer dollars later, when the unemployment rate topped 20%. He also stated unemployment would rise to at least 12.5% regardless.
Finally, an economist at Duke (I believe Duke) was interviewed, and states the last time that Household Debt as a per capita % of GDP was this high was - you guessed it - 1929. I'm trying to find a chart illustrating this.
Edit - One chart:
You would do yourselves a favor to listen to the podcast, which is free to download for a week, beginning tomorrow:
http://www.thisamericanlife.org/Radio_Episode.aspx?episode=375
It's called 'Bad Bank.'
P.S. - As bad as things are in the U.S., insolvency is even greater in Europe and some parts of Asia. Ouch!
