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Jul 23 2008

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Grant

The Looming Financial Crisis: Harbinger of Socialism

Posted at 11:29 pm under Ideas, Rants

I’m no financial wizard. I don’t have a stock porfolio or large sums of cash hiding in an offshore account. But even a financial dummy like me can see that the recent Freddie Mac and Fannie Mae bailout signals that there’s something seriously wrong with our economy. This bailout follows quick on the heels of the IndyMac bank failure earlier this month — the third largest bank failure in U.S. history. And what’s worse is that these events are not isolated. IndyMac’s failure, the fifth one this year, followed the collossal collapse of Bear Stearns in March. By comparison, there were three such bank failures in 2007. How many in 2006? None. And in 2005? None.

Guess how many banks are expected to fail in the short term? “It’s our view that regulators are expecting 100 to 200 banks to fail” (U.S. News, July 15). Looks like Wachovia may be next. From today on CNBC: “Wachovia Posts $8.6 Billion Loss, Slashes Dividend.”

So what’s congress doing? They’re running up a criminally enormous deficit, and they’re cracking down on citizens’ privacy. (Way to go, congress!) Their answer seems to be for the state to own it all while the little guy is scrutinized and squeezed for every penny possible (as if we were the ones who caused this problem!).

View this 7-8 minute video by Congressman Ron Paul on the Housing Bill passed today. It’s very, very sobering.

9 responses so far

9 Responses to “The Looming Financial Crisis: Harbinger of Socialism”

  1. Mark Rosedaleon 24 Jul 2008 at 12:53 pm 1

    I was just reading a book called Fleeced. It just came out. If you haven’t heard of it you should go out to a book store and read the first chapter. I would preface by saying I think some if it is hyperbole, but it still gives a potential snapshot of our future.

  2. Granton 28 Jul 2008 at 10:54 am 2

    Here’s the FDIC’s Failed Bank List.

  3. Granton 31 Jul 2008 at 11:14 am 3

    An update from The New York Times, “Bush Signs Sweeping Housing Bill”

    WASHINGTON — President Bush signed into law on Wednesday a huge package of housing legislation that included broad authority for the Treasury Department to safeguard the nation’s two largest mortgage finance companies and a plan to help hundreds of thousands of troubled borrowers avoid losing their homes.

    Mr. Bush signed the legislation, which Congress approved last week, shortly after 7 a.m. in the Oval Office, the deputy White House press secretary, Tony Fratto, said.

    The law authorizes the Treasury to rescue the mortgage finance giants, Fannie Mae and Freddie Mac, should they verge on collapse, potentially by spending tens of billions in federal monies. Together, the companies own or guarantee nearly half of the nation’s $12 trillion in mortgages.

  4. Hannahon 02 Aug 2008 at 3:56 pm 4

    So, forgive my ignorance, but what does it mean if my bank fails? Do I lose all my money or something? (I’m envisioning a run on banks and general panic of the Great Crash of ‘29 proportions here!)

  5. Granton 02 Aug 2008 at 5:05 pm 5

    If our economy were a human body, a cascade of failed banks would be analogous to it “crashing.” Ever watch E.R.? No wonder they use the same term for both medical and financial bottoming-out.

    I don’t intend to spread FUD, but the outlook, according to some analysts, is NOT good. The FDIC is supposed to insure every depositor up to $20,000… which sounds really great until you realize that that’s an INSURANCE corporation. Insurance works only so long as funds hold out, only as long as there’s more income than outlay. When the payoffs outweigh the amount of money available, then the corporation fails.

    Here are some Google links:
    What do I do if my bank fails?

    … and here’s a site with more information:

    http://www.christopherspenn.com/2008/07/13/what-if-the-fdic-fails/

  6. Granton 02 Aug 2008 at 6:36 pm 6

    With Sun Trust Bank of Atlanta taking over the assets of First Priority Bank in Bradenton, FL, we’re up to 8 bank failures so far this year:

    http://www.fdic.gov/news/news/press/2008/pr08065.html

  7. Adamon 04 Aug 2008 at 11:21 am 7

    Grant, Just wanted to point out that Ron Paul was in the same fraternity I was….Lambda Chi Alpha. It’s very cool knowing the bond we both share even though I’ve never met him.

  8. Granton 04 Aug 2008 at 11:26 am 8

    Cool!

  9. Granton 27 Aug 2008 at 6:43 pm 9

    Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.

    Via Reuters

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