"If you bring forth what is within you, what you bring forth will save you. If you do not bring forth what is within you, what you do not bring forth will destroy you."

Sep 13, 2007

Banks in Trouble

Are the banks in trouble?
By Mike Whitney
Online Journal Contributing Writer

Sep 10, 2007, 01:25

“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" -- (cont.)


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-Cormac McCarthy-

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'The nationalist not only does not disapprove of atrocities committed by his own side, but he has a remarkable capacity for not even hearing about them'.....'Every war when it comes, or before it comes, is represented not as a war but as an act of self-defense against a homicidal maniac.'.....'In times of universal deceit, telling the truth will be a revolutionary act.'.....'War is peace. Freedom is slavery. Ignorance is strength.' George Orwell

war is terror

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