US is now officially bankrupt expect market and dollar to drop like a rock

[TwixVoy]

Our largest bank has just gone bankrupt and FDIC did not have enough assets to cover the loss.

Whatever means they use to name this bank failure it marks a watershed event in American history as the day the US went bankrupt.

No matter how much lip stick the government puts on this pig smart investors will start to dump US backed assets like they were the toxic loans they are.

It is not a matter of too big to fail in Citi Group's case it is a matter of too big for FDIC to bail out.

Just how people can think this is good news and have the stock market raise is totally insane to me. This is the worst possible news. It says that only 1/3 of the way through this credit crisis the US government is totally powerless to stop it. The worst is still ahead of us folks.

Does anyone out there have any idea what it means that FDIC could not bail out Citi Group and that they are just going to pretend that they did? Do you realize how much this undermines the US dollar?

The fact that the largest bank in American went bankrupt and people cheered the stock market up 5 percent on the news proves to me that things are going to get very very very bad.

[NMDemDist2]

1. the Depression went like this too

lots of volatility but always trending downward

[aquart]

6. I'm stockpiling Uggs.

They're the only winter footgear I can wear and they are hideously expensive to repair, and I just keep buying them for when there's no way to buy anything. I know it's panic. What I'm not sure of is whether it's irrational or prudent panic. I look around me and nothing has changed. I still have everything I need, if not everything I want...and I have never gone hungry. But I grew up on the stories (especially the story of only having one pair of brown shoes, and a pair of black ones if you were rich) and I don't know where to put the fear.

[knitter4democracy]

29. I've been doing that, too.

Not with Uggs (I've always wanted a pair, actually), but with food, Crocs (my best house footwear), and yarn (well, that might just be me).

[Mojorabbit]

54. I just bought two

more pairs of crocs myself. :) Indestructable and easy to care for unless my Doxie gets a hold of them. I am still working on stocking my pantry and am saving a stash of cash which I am keeping at home. I also just added two pears and a pecan tree to my little orchard. If all goes well, I have lost nothing, if it goes to Hell I am ahead of the game.

[CoffeeCat]

45. I support your Ugg hoarding...

Your post really hit home with me.

We know that things are bad. We sense that things will get worse, and that we're not getting
the full story from the MSM.

However, we don't know the answers to these questions: What will happen? When will it happen?
How will it impact each of us?

It's hard to know what to do. Are you prescient if you do something...or are you a tin-foil fool?

I am hoarding cash at home and stockpiling essentials. I'm not in a frothy panic. I just sense
"a bad moon rising." We've got kids, so I worry more and I want to protect them.

As you said, "I don't know where to put the fear." That's...really spot on. I find myself wavering
between preparing and trying to talk myself down, "Ok, we need more peanut butter...ok, this is crazy
to do this, all will be fine."

If you love Uggs, and you'll eventually wear them, I'd say there's nothing wrong with what you're doing.

[Incitatus]

52. The rise in gun sales suggest a lot of people think it will get worse

the 'tin foils' numbers are rising fast

[judasdisney]

49. add socks, chocolate, alcohol, cooking oil, cigarettes

wartime commodities, highly tradeable items on the black market

[knitter4democracy]

56. Whoo! Another reason to horde sock yarn!

:bounce:

I've only got, um, twelve socks' worth around here somewhere. Maybe more.

[aquart]

2. Then it's good you got the proof you need.

I still haven't heard word one about restoring Glass Steagal or outlawing derivatives.

Kinda cute them all with their hands out for our money, and because of them our money isn't worth anything.

We have an entire generation of young people who are in for the rudest shock. As for us oldsters, they may just let us die.

[Mind_your_head]

9. They will let us die - no doubt about it

but, hey, we're all going to die sooner or later.....

The thing to be concerned about is our progeny. What will our children, grandchildren, great-grandchildren inherit (not necessarily in the monetary sense, although that can be part of it) in terms of knowledge, wisdom, knowing how to spot a "cheat" early on...what do you do when you KNOW you are being cheated....those are 'life skills/lessons' that we can teach ~ by example ~ to our progeny.

Peace,
M_Y_H

[Hydra]

33. Don't worry,

The oldsters won't be the only ones to die. As has been said over and over- socialism for the rich, dog eat dog for the rest...and dog WILL eat dog when the time comes.

The sad part is that most people will never understand that this was done to them deliberately, and thus will never lash out at the people who really killed them.

[Winnipegosis]

3. Very bad?

Perhaps, but no so bad as to cause a catastrophe.

European and Russian markets are also in the tank, but America is much stronger overall and is well within the means of a successful recovery.

Patience.

[NMDemDist2]

4. what makes you say that? we've outsourced our manufacturing

we don't make anything anymore except weapons and a few cars.

Europe has kept at least part of it's manf. base at least.

Russian has a ton of oil/gas, they're in the best shape of all.....

[aquart]

7. And global warming is about to move our wheat belt up to Canada.

But hey, why worry?

[Winnipegosis]

11. Well

...then maybe will send down a few more million barrels of oil, just for the heck of it.

[Winnipegosis]

10. Russia is in "good" shape

until oil goes below $50/barrel, then things get hairy, especially if it goes below $40. It's sitting on $500 billion in currency, and Putin is no dummy.

Europe is not a rosy picture by any means.

despite the current liquidity problems, I still think America will come through these tough times, alright.

Of course if you watch the doom and gloomers on TV, you might think differently.

[sarcasmo]

47. This is why Russia had a warship hanging out with Hugh Chavez today.

[tama]

18. lol and yada yada n/t

[Zhade]

46. "America is much stronger overall" - on what do you base that, wishful thinking?

Jingoism won't put food in people's mouths.

[Winnipegosis]

53. "Wishful thinking"has NOTHING to do with it.

What other country would even CONCEIVE of such a thing as a 7 freakin' trillion bailout....

When America wins, it wins BIG, and when it loses, sometimes that's BIG too.

Your election was BIG. Ours in Canada, was no biggy, just a little election.

Just as Obama says, America will recover and be fine, and, if I may be so bold: it will out-recover the rest of the world, and then some.

Just watch.

[ORDagnabbit]

5. most here wont listen... a number of people post and have posted for years about this trainwreck..

buy food
buy metals
buy protection
meet your neighbors
get the gardens ready


www.moneyasdebt.net
http://www.freedomtofascism.com/


Obama is very much like FDR but before it gets better it is going to get a whole lot worse.

[Double T]

8. When over 7 trillion is committed to these extremely corrupt financial........

institutions to save themselves from themselves, you know the US Government and world has gone completely mad. The whole damn economy and financial system is imploding and all WE hear is a bunch of happy talk from the wall street cheer leading shills on cnbc; these idiots have got to be kidding.The irrational exuberance will soon turn back to extremely ugly reality as this disastrous mess continues to feed on itself with no end ANYWHERE insight. The US dollar will have little buying power around the globe which will drastically fuel inflation here at home. The whole GD thing has got to crash before WE can start over; starting over will be a protracted process over many years or decades.

[earth mom]

13. Yep, that's it in a nutshell.

:argh:

[Mind_your_head]

15. You're right.

The "happy talk" can go on for quite awhile....bubble after bubble (kind of like having 'gas')....ultimately "truth wins out".

Thankfully, that's how this world is constructed.....that truth, and mother earth "wins out".

[CrispyQ]

39. "CAPITALISM AT THE EXPENSE OF ALL LIFE"

http://carolynbaker.net/site/content/view/851/1/

snip...

All it takes is one stroll down Wall Street to get that Wall Street is "America's" temple district - the sense of being on "holy" ground is palpable - and all it takes is one glance to get that none of the financial wizards really knows what's going on... they know not what they have wrought, they know not whom they have robbed; they have invented a house of lies so complex that they themselves can no longer follow the plot or the floor plan. What we know - and what they know, and what Bush knows and Obama and McCain - what they all know- is that the $700 billion the US government has earmarked for the swindlers and deniers is going to cover the lie, is going to keep their asses out of prison, is going to prevent revolt against their system, which profits at the expense of all of us.

(emphasis mine)
=====
Great article. Long, but well worth the time to read.

[JCMach1]

12. Not going to happen... most of the world is in worse shape than we are

Expect a run on the pound or euro long before there is one on the dollar...

[Art_from_Ark]

14. Viewed from my position, there has been a run on the euro and pound

In yen terms, both have lost more than 25% of their highest yen valuation, in just the past year.

[JCMach1]

17. Good point... but there is more to come esp. with the Pound

[Deja Q]

25. Also true. Plus, with all the talk of hyper-inflation, the fact we have deflation starting shows

nobody can predict squat.

[Hannah Bell]

16. Hey, it's just money. A state-sponsored illusion, you know.

If things get too bad, we declare a Jubilee Year & start over.

The real wealth remains, even when currencies burn.

[tama]

19. All real wealth

is monetized into capital monetary wealth - fetish. It's going to hurt like a fantastillion bucks. The burning.

[TwixVoy]

20. So naive

you really need to read about what is going on.

[DemReadingDU]

30. the people over at the blog, The Automatic Earth

Ilargi and Stoneleigh have a deep insight into the upcoming depression.
There is an introduction, usually by Ilargi, followed by related articles from around the world. There are always interesting comments to read at the end of the daily posting, by the authors and other posters.
http://theautomaticearth.blogspot.com/

edit to add:
11/25/08 stoneleigh says... (this is in the comments section)
I'm sorry I can't offer you a more cheerful vision, but sugarcoating things wouldn't help anyone as it would only foster denial, complacency and inaction. At TAE we give you our honest opinion of humanity's prospects, even if it's one you wouldn't want to hear. It's the only way we can warn people in time for them to save what they have.
http://theautomaticearth.blogspot.com/2008/11/debt-rattle-november-24-2008-new-day.html


Here's another blog, Generational Dynamics by John J. Xenakis.
.
.
There will be more bailouts attempted, but they will fail. Everything will fail. This is a generational catastrophe, and cannot be stopped any more than a ten mile high tsunami can be stopped.

It's time for people to realize that they should be preparing themselves and their families for the worst, instead of just praying for a huge miracle on January 20. Obama may be able to walk on water, but even he can't stop the huge generational catastrophe that's coming.

There's far worse to come. Expect a huge generational stock market panic and crash, including the imploding of tens or hundreds of trillions of dollars of CDSs and other credit derivatives, and the collapse of 401Ks, hedge funds, and money market funds. Expect many, many millions more foreclosures, bankruptcies, and job losses. We are headed for a financial disaster of massive proportions, and it's time for people to stop lying to themselves and others about it.
http://www.generationaldynamics.com/cgi-bin/D.PL?s=InRzoK&d=ww2010.weblog


Do you have other blogs that you read?

[NJCher]

35. looked 'em over

The first two links look pretty good and I will read them more in depth later. The third one--that writer lost me when he claimed the housing crisis is because of "stupid boomers."

It's because of lack of regulation.



Cher

[DemReadingDU]

38. Of course lack of regulation caused the housing crisis, but

But why did the boomers get rid of the regulations that the depressioners put into place? Xenakis goes into detail, generationally, why depressioners acted the way they did, why boomers act the way they do, why genx-ers act the way they do. Quite interesting.
It takes a long time to read each of those postings to understand them, and he's been posting for years, so a person may need to back up and read a few older postings.

[BuelahWitch]

21. Do you have an actual link for this?

Nothing in LBN or any news source I can find. I know many here on DU think themselves amateur pundits, but posting "US is not officially bankrupt" and not providing any source is like yelling fire in a theater.

[NJCher]

32. I was about to post the same thing

Please, posters, if you're going to make a claim of this magnitude (or really, of any magnitude), remember that at about this time of day, a whole group of us are just coming to the forum from being at work all morning. We haven't seen the headlines yet, nor have we delved into all the threads. The least you can do is post your reference or source.



Cher

p.s. thanks to the poster who listed those blog links that envision the way things may play out.

[DemReadingDU]

41. Chris Martenson: The Crash Course videos

The Crash Course, What is it?
The Crash Course seeks to provide you with a baseline understanding of the economy so that you can better appreciate the risks that we all face. This is a series of 20 video chapters, each video is between 3 and 18 minutes in length, meaning that all 20 chapters should take about 3 hours, but they need not be watched all at the same time.
http://www.chrismartenson.com/crashcourse


About Chris Martenson, PhD.
Executive summary: Father of three young children; author; obsessive financial observer; trained as a scientist; experienced in business; has made profound changes in his lifestyle because of what he sees coming.
In his bio, Martenson goes into detail how he arrived at his conclusions and opinions, and why he's dedicated to communicating them via this excellent series of videos and additional articles.
Please click the link to read the rest of his bio...
http://www.chrismartenson.com/about


P.S.
Martenson has developed a great website that is full of additional helpful information. Browse thru the public resources page...
http://www.chrismartenson.com/resource-listings

There is some great information in the Essential Articles section. Everything is organized by subject category.
http://www.chrismartenson.com/EssentialArticles


home page link
http://www.chrismartenson.com/

[Winterblues]

22. You go bankrupt when you have no money and can't get any to pay your debts

It would seem to me Citibank just received all the money it needs with more guarantees their outstanding loans would be covered. This is in no way bankruptcy.

[Mudoria]

23. We're all doomed...

I heard it on DU :eyes:

[Deja Q]

26. .

:rofl:

[BuelahWitch]

27. And Dick Cheney wipes his butt with sandpaper to keep the mean coming

You heard that on DU too! ;)

[greguganus]

42. Go Wolfpack! Neener neener! n/t

:hi:

[robcon]

24. Citibank is not bankrupt - nor is the U.S.

Citibank might become bankrupt, but as long as the Fed can create money, the U.S. can pay its bills.

Hyperinflation is the risk (Zimbabwe, Argentina/Brazil in the 80's, Weimar Germany in the 20's, etc.) for the U.S.

[tama]

28. Not true

There is no guarantee foreigners will accept dollars that Fed creates for delivered goods (e.g. oil). And there is no good reason for foreigners to keep accepting dollars. Dollars have no real value, only faith value.

When Iceland collapsed, their krona was not accepted by anyone as money. The world lost faith in krona. Iceland could not buy anything from abroad and import foreign goods, like macaroni.

[Hydra]

34. People don't get it

"Cold, hard cash" only has value as long as people believe they can buy something with it.

That's what the talking heads are trying so hard to do- keep the faith in a piece of paper.

[mikelgb]

31. No tears from me. FUCK CITIGROUP!

[BlueEyedSon]

36. [citation needed]

[NorthCarolina]

37. Time to get rid of the Fed? Perhaps this monetary crisis gives us just that chance

On June 4, 1963, a virtually unknown Presidential decree, Executive Order 11110, was signed with the authority to basically strip the Federal Reserve Bank of its power to loan money to the United States Federal Government at interest. With the stroke of a pen, President Kennedy declared that the privately owned Federal Reserve Bank would soon be out of business (which I think likely sealed his untimely fate). The Christian Law Fellowship has exhaustively researched this matter through the Federal Register and Library of Congress. We can now safely conclude that this Executive Order has never been repealed, amended, or superseded by any subsequent Executive Order. In simple terms, it is still valid.

When President John Fitzgerald Kennedy - the author of Profiles in Courage -signed this Order, it returned to the federal government, specifically the Treasury Department, the Constitutional power to create and issue currency -money - without going through the privately owned Federal Reserve Bank. President Kennedy's Executive Order 11110 gave the Treasury Department the explicit authority: "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury." This means that for every ounce of silver in the U.S. Treasury's vault, the government could introduce new money into circulation based on the silver bullion physically held there. As a result, more than $4 billion in United States Notes were brought into circulation in $2 and $5 denominations.$10 and $20 United States Notes were never circulated but were being printed by the Treasury Department when Kennedy was assassinated. It appears obvious that President Kennedy knew the Federal Reserve Notes being used as the purported legal currency were contrary to the Constitution of the United States of America.

"United States Notes" were issued as an interest-free and debt-free currency backed by silver reserves in the U.S. Treasury. We compared a "Federal Reserve Note" issued from the private central bank of the United States (the Federal Reserve Bank a/k/a Federal Reserve System), with a "United States Note" from the U.S. Treasury issued by President Kennedy's Executive Order. They almost look alike, except one says "Federal Reserve Note" on the top while the other says "United States Note". Also, the Federal Reserve Note has a green seal and serial number while the United States Note has a red seal and serial number.

President Kennedy was assassinated on November 22, 1963 and the United States Notes he had issued were immediately taken out of circulation. Federal Reserve Notes continued to serve as the legal currency of the nation. According to the United States Secret Service, 99% of all U.S. paper "currency" circulating in 1999 are Federal Reserve Notes.

Kennedy knew that if the silver-backed United States Notes were widely circulated, they would have eliminated the demand for Federal Reserve Notes. This is a very simple matter of economics. The USN was backed by silver and the FRN was not backed by anything of intrinsic value. Executive Order 11110 should have prevented the national debt from reaching its current level (virtually all of the nearly $9 trillion in federal debt has been created since 1963) if LBJ or any subsequent President were to enforce it. It would have almost immediately given the U.S. Government the ability to repay its debt without going to the private Federal Reserve Banks and being charged interest to create new "money". Executive Order 11110 gave the U.S.A. the ability to, once again, create its own money backed by silver and realm value worth something.

[tama]

44. Correction

Not "nearly $9 trillion" but $10,6 trillion. :)

[Tierra_y_Libertad]

40. A T-Bond Bubble Waiting to Burst - St Petersburg Times (Russia)

http://www.sptimes.ru/index.php?action_id=2&story_id=27704

Remember when the Dow Jones industrial average touched 14,000 a year ago? When gold reached $1,000 per troy ounce in May, and Moscow’s RTS market index was trading above 2,500? Or when a barrel of oil cost $147 in July?

When the bubble in the U.S. housing market deflated in mid-2007, a massive wave of money began sloshing around the world, quickly inflating and then bursting a series of speculative bubbles in various markets.

Now it is up to the final bubble — the U.S. government debt bubble. Treasury bond yields have been falling steadily over the past year and a half as investors looked for safety amid collapsing markets and economic uncertainty — the yield on the 10-year Treasury bond fell from more than 5 percent to 3 percent. Falling yields mean that bond prices have skyrocketed; the price of the 30-year T-bond is at a record high.

But T-bonds may no longer offer the traditional safety on which investors have usually counted. On the contrary, bond prices may plunge just as spectacularly as house prices, commodity prices and stock prices have in recent months. What’s remarkable is that Russia may end up playing a key role in the deflation of the U.S. government debt market.

[CoffeeCat]

43. Can someone explain this to me?

You mention that the FDIC "did not have enough assets to cover the loss" of Citibank.

Noted.

I remember when Washington Mutual failed. Buried deep in a couple of stories, were a couple
of lines about the FDIC being "stretched" due to this bailout. They had enough resources to
cover the losses, but the comments seemed to indicate that they could not be stretched much
further.

THAT WAS ONE BANK. ONE.

Am I overreacting? Is this not terrifying? WaMu was one of the nation's largest banks, but
it was one bank. What happens when massive bank failures happen?

Our government has been on a roll--royally screwing the peasants (those who aren't multimillionaires).

If the FDIC was "stretched" due to WaMu's failure--then don't we have to at least consider that if
massive bank failures happen that the FDIC really won't be able to cover those deposits?

Two other questions that needs answered. What is the process by which American recover money lost
from bank failures? Do they write to the FDIC? How long does it take to recover funds? If people
lose ALL of their money--and even if it takes one month to recover funds (and that would be warp
speed for the government), that would be cataclysmic.

I'm just trying to understand all of this.

[HamdenRice]

55. The FDIC can't run out of money unless the US does

It is backed by the US govt. What they mean is that the FDIC acts like an insurance company. It charges banks premiums to ensure the customers depositors and maintains a very big pool of money from those premiums to take over banks and pay depositors if a bank fails. So what they are saying is that the premiums may not be enough to cover the failures, but if so, the US just appropriates money to the FDIC as they did during the 90s bailout of the S&Ls. That's what they would do if the FDIC runs out of premium money now.

Generally, the FDIC works really, really quickly. Most of the time, people don't even notice that their bank has failed or they might be unable to access their accounts for a day or two. The FDIC often resolves things over the weekend: the bank fails Friday, but by Monday, customers can get their money. The FDIC usually forces the failed bank to be taken over by a healthy banks. The reason they work so fast is that they don't want customers of other banks to get scared and cause a run on the bank or other banks.

The peculiar thing about banks is how much they rely on confidence. A healthy bank -- one with lots of deposits and performing assets -- can fail simply if people get scared and withdraw their money; but the bank could still be basically sound. Merging it with another bank restores confidence and the failure is basically over.

When a bank actually is insolvent, its because it has bad assets (like loans that aren't being paid back). If the FDIC merges it while making up the difference between the amount of the good assets and the deposits, while merging it, even a bad bank can get back to business.

[gristy]

48. You gotta link for this? No? I thought so.

Our largest bank has just gone bankrupt and FDIC did not have enough assets to cover the loss.

[pitohui]

50. they don't need assets. they got a printing press

in all my years and beers and in all the banks i've had money in, when they went bankrupt, i was never inconvenienced for a moment, i never lost a dime

you are not going to lose the money you had at citi

deep breaths, it's going to be OK

[unkachuck]

51. "...dump US backed assets like they were the toxic loans they are."

....the reason they're scrambling so hard and fast....capitalism as we know it, is on the line....if this ends in a protracted global depression, nobody anywhere will play US capitalism again....billie and warren will have to go out and get a job....

....but this could be a good thing....what do we want our new Socialist Market Economy to look like? How will it work for us?

[lib2DaBone]

57. the dollar is going to drop.. and the price of gas is going to $7 gallon

.. dont be fooled. Dont run out and buy that Hemi 4 wheel drive super cab. IMHO

[lib2DaBone]

58. ....Our only hope is that Jan 20th can get her sooner......