KA24DESOneThree

*Please note: all of the following information was posted by the WSJ and compiled into spreadsheet form by me. To the best of my knowledge and to the extent of the information available to me, it is correct.*

So far this year, there have been 41 bank failures.

The size, in assets, of the banks which have failed is $19,167,000,000.

The size, in deposits, of the banks which have failed is $19,785,100,000.

The FDIC's estimated costs due to these failures is $6,510,200,000.

Last year, 140 banks failed with a total asset size of $127,797,400,000, total deposit size of $123,370,000,000, and the total FDIC payout was $36,361,400,002.00.

How much longer can the FDIC continue to pay? How much longer will we ask the government (and its lackeys) to cover our losses because we assume there is no risk when we invest in a bank? We ask for higher and higher interest to be paid while the companies take on huge risk to deliver this "return." Hell, companies that don't do high-risk loans otherwise are forced to meet certain loan criteria lest they be called racist or bigoted against the poor.

Yes, I would have lost all my money in the collapse of Downey Savings and Loan back in November of '08 if it weren't for US Bancorp and $1.2 billion from the FDIC. I think I would have been OK with that. However, who's to say what I would have done if I knew there was no safety net?

What are your thoughts about this screwed up financial system? Am I the only one who pines for a bank unaffected by government restrictions, whose sole purpose is to make me money by giving loans only to those most qualified? A bank whose interest rates are reasonable only because those who they lend to are reasonable and honest.

kingkilburn

The Federal Reserve needs abolished along with the return of the gold standard.

The FDIC is there to secure our money not the banks. Anything beyond that is a bailout to a failing company.

The interest rate is almost irrelevant when it is artificially fluctuated like it is, it just covers up the inflation and keeps jobs at a certain level.


On a slight side note, I'm all for deregulating banks but the corporations surrounding them can continue to be regulated. I don't really like the companies having their headquarters in the Bahamas and the like. I don't like corporate holding companies either.

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ronmcdon

what do you mean we ask for high interests to be paid?

I thought bank interest rates were fairly cut & dry.
they all seem fairly low right now.
your typical savings account interest is negligible considering inflation.
I would be baffled if anyone thought to invest their $$$, via some savings account anyways.
Last I checked, even the INGS account were pretty lousy.

I wouldn't be so worried with the number of banks failing, vs. the combined value/assets.
19 bil in 4 months is actually an improvement (figure 77 bil in 12 months at the current rate),
compared to 127 bil in 12 months.
(I don't know when the 19 bil figure was recorded, so I'll just assume now in Apr).
I am optimistic the economy is recovering.

As for inflation, I'm more inclined to not care for Ben Bernanke.
Seems like all he does is keep interest rates low, no matter the state of the economy.
I'd like to see someone increase rates when inflation is bad (i.e. - Bush years)

Of course, all the spending/debt from the Bush & Obama years isn't going to help much either.
Lol, $100 bill is the new $20 bill.

As far as bank regulation goes,
I'm all for giving out loans on the basis of credit score & income alone.
Companies are going to be 'greedy' no matter what.
If they weren't, they'd be 'Charities'
(even a lot of those aren't as benevolent as you'd think).
It's up to the government to dictate policy & enforce it.

kingkilburn

I'd rather they left the interest rates at a constant level and let the markets work themselves out.

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imotion s14

Don't worry, Uncle Ben has plenty of trees to churn out worthless paper. You'll have your paper, but it's value will be gone.

Well you would have done more insure that your banking institution has a sound balance sheet. Or if people can't find the time do that themselves there would be an consumer organization that would rate the banks just like how we have consumer magazines that rate pretty much everything we buy. People do more research on toaster ovens then they do with the place they leave their life savings at.

But because of the FDIC, people don't care. They figure if the bank fails, they are covered. The banks don't care because if the gamble and win, the keep the profits. If they gamble and lose, no big deal the government will take care of it.

That's the way it should be. But loans should be allocated by the market, that's the only efficient method we know. Replacing market efficiency with political motivated socialist engineering leads to our current malaise.

KA24DESOneThree

I agree that loans should be allocated by the free market, not this hypocritical bullshit we have now. We claim to have a free market, where businesses are allowed to make decisions based on their profitability, but we do not.

We never have. We never will unless we accept the fact that we must do without nannies. We must do without anyone's safety net but our own.

A question for those smarter than I am: given the rate at which banks are failing, do you foresee further problems down the road that the mainstream media ignores for the sake of comforting the sheep? If so, why?

imotion s14

The FDIC is broke already, every deposit that is insured now is done so with printing press money. If we keep going on pretending that we can solve our consumption-debt disease with more consumption-debt then we'll end up with a currency crisis that will lead to a inflationary depression. Stagflation on scale that makes the 1970s seem like prosperous times.

kingkilburn

Gold standard baby.

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imotion s14

a gold standard would kill your dreams of universal health care.

aznpoopy

i'm not really sure what that would solve.
bottom line is you want banks to not give out shitty loans.
regulated economy seeks to enforce this by law.
unregulated economy seeks to enforce by competition.

either way, neither will stop boom bust cycle or bank failures. a regulated system will act like a damper on a spring / shock system. same oscillations but depressed booms and depressed busts. unregulated will see more intensity, faster growth and much harder crashes.

it is a systemic failure, but not with any particular iteration of a current system. the root of the flaw is basically the herd mentality of human society at large.

kingkilburn

The problem with regulation is that shit like the housing bubble was caused by push from the regulators. Once the ball was rolling it was a runaway train and every one wanted easy money.

I don't think in a free market system the big banks would have been willing to make the initial gamble. Once the feds secured the loans the flood gates opened and they would have been stupid not to give the loans.

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brndck

gold standard. yes.

fuck universal health care.
you want health care? buy it.
maybe ppl should rearrange their priorities and quit worrying about buying things like flat screen tvs and new rims, but then complain when the govt wont give them free universal health care.

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theicecreamdan

What is a "gold standard" supposed to do? Give your money "value"?

Money gets its value basically from faith.

Where does the "value" of gold come from? Same place that your money does. If you want your money backed in gold, then buy gold. The rest of us realize that its the same thing either way.

Show me proof that everybody who can't afford healthcare is in that position because they're buying rims and TVs instead of insurance for their families. The population of people who give two shits about rims is so small that they are meaningless to this argument.

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aznpoopy

it's not the same thing, because the government can't print infinite amounts of gold.

adherents to gold standard basically believe the government cannot ever be responsible enough to control the money supply properly. because the government is always under pressure to provide more but tax less. the easy way out is therefore to inflate.

if you look at the historical value of gold vs. dollar over time, you see gold rising relative to the dollar. that's not really gold gaining value. that's gold holding steady and the dollar losing.

kingkilburn

Dan you need to do some research before you come in here bashing a gold standard. Not even anti-gold standard economists say things like that.

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imotion s14

Makes it redeemable for a tangible asset rather than faith in an incompetent government.

What's the difference between a $10 bill and a $100 bill? Nothing but the belief that one extra zero changes it's nominal value. The difference between 10oz and 100oz of gold? 90oz of physical metal. That what's called an "intrinsic value".

Fiat currency is nothing new, they've been tried all throughout history and they've all collapsed because the people who are in charge of keeping them scarce are almost always pressured to print more money for various reasons.

kingkilburn

The reason we left the gold standard was to give back door handouts to the banking industry of the time. The soul purpose of their existence is to keep existing.

If we are to fix OUR economy and currency in the long term we must take it back from them.

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brndck

gold standard is to keep a govt from running amok, printing money like its nothing, and taking on debt that it will never be able to repay. its a large scale version of balancing your checkbook. if you know you only have $xxx in the bank, you won't be writing checks for $xxxx.

ugh, i'm not honestly suggesting that the entire population of the us buys dubs instead of medical insurance, but i AM suggesting that a large population sacrifices their own health and well being and pursues far more trivial things instead (i.e. fast food/poor eating habits, lack of exercise, drinking/smoking/drugs, etc) and then all of a sudden we expect the govt to take care of us? the same govt that has run us horribly, terribly, possibly irreversably into debt? the same govt that has bankrupted programs like social security? the same govt that throws billions at an unwinnable war, while those same billions could've easily provided adequate care for millions? i'm not interested in encouraging a runaway govt that has repeatedly proven just how incapable it is of making decisions with OUR best interests in mind.

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imotion s14

We left the gold standard because we wrote a lot of checks out asses couldn't cash. We went to the moon, fought a war in vietnam, started a war on poverty, Medicare, etc.

We we spending all these blank checks in the 60s on those programs. A lot of people who held dollar reserves based on it's convertibility to gold called our bluff that we weren't printing more paper then we had in actual gold. Foreign banks were converting their dollars to gold and there was a lot of movement of gold overseas. So Nixon suspended gold convertibility which was in essence defaulting on our obligations and lead directly to the collapse of the Bretton Woods system. Because of that we had Stagflation in the 70s. The 70s was the price we paid for the reckless spending in the 60s.

You can trace everything going on today all the way back to the 1960s and the closing of the gold window.

brndck

not to mention that leaving the gold standard was in violation of our own constitution.....

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kingkilburn

It goes further back than the 1960's. The FED was founded in the early 1900's. Massive banking and stock holding companies go back further than that.

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ronmcdon

Well Gold is more or less just another commodity today.
I will agree that all commodities (and equities/stock),
are just a matter overall supply & demand.

In that respect its just a matter of consumer confidence imo.
I dont entirely disagree with Icecreamdan here.
Even the value of gold can drop.
The likilihood of it doing so under todays cirrcumstances are prob lower.
Tbh - iirc, the value of gold, was somewhat stagnant relative to the US dollar,
until the inflation we saw with the Bush & Obama yrs.
You can also invest in other floating currencies,
should you have 'faith' in it, lol

imotion s14

it's funny how the central bankers and anti-gold politicians have brainwashed the masses to think that a gold standard is detrimental to working class and middle class people.