Are The Banks In Trouble?

[babylonsister]

Are The Banks In Trouble?
by Mike Whitney | Sep 8 2007



“The new capitalist gods must love the poor – they are making so many more of them.” Bill Bonner, “The Daily Reckoning”


“The hope of every central bank is that the real problem can be kept from public view. The truth is that the public---even professionals on Wall Street---have no clue what the real problem is. They know it has something to do with derivatives, but none of them realize that it’s more than a $20 trillion mountain of unfunded, unregulated paper that has just been discovered to not have a market and, therefore, no real value… When the dollar realizes the seriousness of the situation---be that now or sometime soon---the bottom will drop out.” Jim Sinclair, Investment analyst

About a month ago, I wrote an article “Stock Market Brushfire: Will there be a run on the banks?” which showed how the collapse in the housing market and the deterioration in mortgage-backed bonds (CDOs) in the secondary market was creating difficulties for the banking system. Now these problems are becoming more apparent.

From the Wall Street Journal:

“The rising interbank lending rates are a proxy of sorts for the increased risk that some banks, somewhere, may go belly up.” (Editorial; WSJ, 9-6-07)

Ironically, the WSJ editorial staff—-which normally defends deregulation and laissez faire economics "tooth-n-nail"---is now calling for regulators to make sure they are “on top of the banks they are supposed to be regulating, so we don’t get any surprise bank failures that spook the markets and confirm the worst fears being whispered about.”

“Surprise bank failures?”

Henry Liu sums it up like this in his article, "The Rise of the non-bank system"---required reading for anyone who wants to understand why a stock market crash is imminent:

“Banks worldwide now reportedly face risk exposure of US$891 billion in asset-backed commercial paper facilities (ABCP) due to callable bank credit agreements with borrowers designed to ensure ABCP investors are paid back when the short-term debt matures, even if banks cannot sell new ABCP on behalf of the issuing companies to roll over the matured debt because the market views the assets behind the paper as of uncertain market value.

more...

http://www.smirkingchimp.com/thread/9810

[Joanne98]

1. Yes! K&R!

[pretzel4gore]

2. global warming too!

dear god please kick this stupid, corrupt murderous perverted CULTURE IN THE FACE! please...

[OneBlueSky]

3. important (and scary) article . . . k&r . . . n/t

.

[Paranoid Pessimist]

4. Most people don't understand that money is debt is money. This film

does a pretty good job of explaining it all. Problem is, once you understand it all, there's still nothing we as individuals can do about it. I've actually thought of pulling my money out of my savings account and buying gold coins and getting a safe.

I think this has been posted on DU before, but it's worth seeing if you like knowing how bad things are and could get.

Here:
http://video.google.com/videoplay?docid=-9050474362583451279&hl=en

Or, if you have QuickTime, here:
http://www.paulgrignon.netfirms.com/MoonfireStudio/MoneyasDebt/Money_as_Debt.html

[Locrian]

6. I've seen the videos too

And have come to the same conclusion: "there's still nothing we as individuals can do about it". So WFT do you do? The gold thing sounds like there are just as many charlatans as the banks.

[ryanus]

5. I have already liquidated and settled my debts

my assets to liability net pretty much the same, just both are smaller numbers.