Why the Worlds Major Banks are on the Verge of Collapse

reply to post by Power_Semi


Great explaination on the current, Thanks. How about a futurecast?

I've been asking others and they can't tell me, maybe you can. Friends and I have been speculating what the next shock and awe might be and we came up with credit cards.

Mortgages and stocks aside, there are many Americans with 1, 2, 3 maybe even 5+ maxed out credit cards. The circumstances could be from medical problems, out of work, gambling etc. It could also be just a single mom that is using credit to buy clothes food and health care for the kids and the bill is stacked up but not maxed.

What happens to these guys? Do the credit card companies (BoA, Chase, et al) raise the rates to the max to recoup instant cash? If the debtor defaults, do they come get his paid for house and car? Prison for the j6p debtor?

Since the banks aren't trusting and not loaning to each other, seems like j6p is their only cash banquet. I would think they would eat us before they turn on each other.

Your thoughts, please.

S&F

Great post, I doubt the central banks will be able to stop this with injections of cash, better to leave the market and fraud squads to sort this out.

I was under the impression that credit cards were lumped into the whole "credit crisis" thing we have going. I don't think it was ever solely pertaining to mortgages, but maybe I'm wrong. I'd be interested in seeing some conversation on this as well.

Yeah, everyone knows this already, but I would like to thank an0maly33 for his funny arsed youtube link, hilarious stuff.

Originally posted by cigarshark
reply to post by Power_Semi

 

Great explaination on the current, Thanks. How about a futurecast?

I've been asking others and they can't tell me, maybe you can. Friends and I have been speculating what the next shock and awe might be and we came up with credit cards.

Mortgages and stocks aside, there are many Americans with 1, 2, 3 maybe even 5+ maxed out credit cards. The circumstances could be from medical problems, out of work, gambling etc. It could also be just a single mom that is using credit to buy clothes food and health care for the kids and the bill is stacked up but not maxed.

What happens to these guys? Do the credit card companies (BoA, Chase, et al) raise the rates to the max to recoup instant cash? If the debtor defaults, do they come get his paid for house and car? Prison for the j6p debtor?

Since the banks aren't trusting and not loaning to each other, seems like j6p is their only cash banquet. I would think they would eat us before they turn on each other.

Your thoughts, please.

Hello,
yes I'd predict credit cards will be a major problem before too long. The bundling of mortgages into "securities" has caused obvious problems, a lot of people don't realise that credit cards debts were also bundled in the same way & sold on, so you'd imagine that theres a similarly big problem with that as well. It could well be that some of that has become apparent already, but I don't think so. The problems that triggered all of this revolved around investment banks not being solvent, not individuals.

Undoubtedly as more & more people struggle & default on loans & debts, the insurance companies involved as in the first post will start to topple like dominos & it'll have the effect of banks having to write their assets down further & further, making the liquidity problems worse & requiring more government funding.

A lot of pension funds invested heavily into mortgage & other debt based securities so it might well be that a lot of people suddenly see their pensions worthless.

Apart from that who knows where its going, but I think somewhere not very nice. An inflationary depression perhaps?

Various governments could end up unable to pay social security, government employees, etc - who knows, but to all intents & purposes I think that a lot of banks, businesses, & even countries are technically bankrupt, the only thing holding it all together is confidence that the system still has some value.

If that goes, which it may do if more & more bad news keeps coming, then it could be time to get out the wheelbarrows to be able to carry enough money to buy a loaf of bread.

liquidity injections, normal market forces, fraud convictions, will not restore confidence and cause the old free-flow of credit to resume...



the public & a reluctant market will need to return to the valuations prior to the era of the CDS...
as i see it, the DOW market, wages & compensation, house/real estate
valuations, even autos & air travel prices....will need to revisit their pre CDS valuations, so that the public psychology will feel OK to resume business.


i.e. a DOW 8,000 or even a few hundred points lower, as an example.
anything not approaching that degree of downturn, (approximating the 2002 stock market) will only be looked upon as untrue...

& everyone will suspect that the plunge-protection-team, along with the Fed & Treasury, engineered a market 'crash' to an acceptable limit (say 9,150) for the purpose of culling the banks & finance houses to a more manageable & easily regulated number.



:p
the DOW is only down 30% for the year, houses are only down 16%...
we're half-way there....& not at the bottom the MSM bubblevision economic experts try to pawn off on the masses...
thanks,

[edit on 9-10-2008 by St Udio]

reply to post by Power_Semi


What an abolutely excellent post...I learned a lot. Thank you so much. I'm not a financial person at all...although I do understand what you've taken time to explain to us, but having read and re-read you post, I keep thinking how were they allowed to use an unregulated practise to such a huge degree? Was there nothing in place to prevent it? I have to go and read this again....please tell us more if you have it.

Cait

I guess that just makes these planned vacations by AIG an even bigger kick in the face. Great thread most of the material I kind of knew but didnt know how to put it all together like you just did and that makes things look real easy. To take it a step further I feel this is why the government is spending money like there is no tomorrow to "paper" up the gaps in credit as you put it. This means the government will have to print more and more and more money to cover all of this credit. I still dont see how the dollar is as strong as it is that is what I cant figure out. But once again AIG going on luxurious vacations while it F****ed the world is a really big kick to the groin.

Do any of you ever watch Peter Schiff? Theres a ton of videos on You Tube.

He's been saying this stuff for ages & predicted the last 2 years absolutely spot on.

It's very impressive to look back & see how things have panned out.

Originally posted by Power_Semi
Do any of you ever watch Peter Schiff? Theres a ton of videos on You Tube.

He's been saying this stuff for ages & predicted the last 2 years absolutely spot on.

It's very impressive to look back & see how things have panned out.

I watch Peter Schiff like there is no tomorrow But me like him is wondering why the hell the dollar is not tanking. My only guess is that its so bad everywhere else that even as bad as America is right now its the lesser of the evils. Crazy times indeed.

reply to post by airteck


How does banks that hold all our money go broke they have all the money I dont understand and it seems that is the subject everyone is talking about I think it is a farce for somthing else is it to divert our attention from something else do u have any thing to lighten me thanku .............

reply to post by airteck


How does banks that hold all our money go broke they have all the money I dont understand and it seems that is the subject everyone is talking about I think it is a farce for somthing else is it to divert our attention from something else do u have any thing to lighten me thanku .............

Thank you for explaining it so I could understand it. I Just have one question the pension portfolio lost 2trillion dollars, the monies lost on Wall Street. Who actually gets all this monies that are being lost? This is probably a stupid question, but not big on economics till lately.

Star & Flag for your wonderful post

Originally posted by RWAN99
reply to post by airteck

 

How does banks that hold all our money go broke they have all the money I dont understand and it seems that is the subject everyone is talking about I think it is a farce for somthing else is it to divert our attention from something else do u have any thing to lighten me thanku .............

Because they use leveraging. This is used in things like futures, or spreadbetting - it is in essence a form of big gamble.

How it works is that say you want exposure to £1 Trillion of securities, you don't actually need £1 Trillion - you don't pay the full market price, you just need a small percentage as a deposit against it - the lower the risk, the lower the percentage.

So if you have £100 Billion in deposits, & only need to put down 10%, then you can get exposure to £1 Trillion worth of securities.

If the price goes up as you expect, you can sell your exposure & pocket the profit plus get your 10% deposit back, less a small commission.

However, if it goes against you.... then you need to come up with the money, & if you've gambled 10 times or more than you actually have available in money, then you've got a problem.

If you think back to the great depression & how people were investing in stocks by buying on margin - it's just like that - you can lose a lot more money than you started out with.


I told you I couldn't explain it as eloquently as the guy in the first post

Finally someone is talking about the 'politically correct' lies that are so prevalent in our society. After the Great Depression, a law was passed requiring banks to have 10% of assets available in the vault. So they banks said 'Great! So we shall keep ALL the deposits in there, and loan out 9x what we really have. Just like before, the most 'business' we could drum up, is about that amount.' Now, with the current $700 Billion scam, they slipped in that the banks no longer have to have that 1/10th. A european on here said that their banks cannot counterfeit money to loan, as ours do. But they are hurting worse? How is that? Derivatives? Another thing that really alarms me, is that if I started selling cars, with a pink slip that I fictitiously made up, and the real owner came along, I'd get put in jail for fraud and grand theft. That is what are called 'naked shorts'. Brokers are selling shares in companies that are not really theirs to sell. So if your 401k fund has all their stocks dissappear, will noone go to jail, or be shot, because it is 'politically correct' to steal in this way? We MUST adjust our culture to not be in debt just to have a car to work, or a house to sleep in. Why is this supposedly 'Christian' nation so hung up on debt, counterfeited by bankers? Are there NO leaders who will lead in the way we need to go? I think our civilization is collapsing; truth is now negotiable.

reply to post by cigarshark


Thank you for the thread and explanation!!

What happens to these guys? Do the credit card companies (BoA, Chase, et al) raise the rates to the max to recoup instant cash? If the debtor defaults, do they come get his paid for house and car? Prison for the j6p debtor?

There is no debtor prison. There used to be in the UK and I am sure elsewhere, but not here.

They cannot take back everything that people have purchased on credit as that is not feasible, cars - yes. But with so many going down it will be an insurmountable task. It does not matter with all the late fees and threats that creditors do as there is nothing they can do but ruin your credit ratings which will not be that important when you are up to your chin in alligators!

Most are most likely using credit to pay off the dead horse of a house payment and are trying to exist on credit. It is a save your own arse program. When you get this low it doesn't matter what agencies think or report.

NOTE: Most can stay in their houses for up to a year or more after making the last payment on a house! My daughter-in-law was a very high paid national mortgage lender and gave this explanation to a friend who had not paid on her mortgage in a year and has not heard anything from her lenders (she still is residing in her home - mortgage not being paid).

It used to be that the marshal would come and give you minutes to get out of your house after the year of non-payment is up, and even help by putting your furniture out on the lawn. But, now her attorney said they would give her a months warning before she is kicked out of her home.

With so many defaulting and with many more expected by next spring...it is going to be next to impossible to govern this legal mess with a million homes or so that have defaulted.



[edit on 9-10-2008 by MatrixProphet]

That article was chillingly to the point.

Wow!

kudos to the person that wrote it.

The DOW just dropped almost 700 points today to around 8500


That should be a good clue that things are not going well.

reply to post by an0maly33


Thank you for that vid. Monty always brings a smile and truth in the form of humour!

Originally posted by an0maly33
I wonder ultimately what would happen if all the banks DID fail. Who would then possess the land and wield authority to foreclose/repossess it?

BTW, we just gave AIG more money - after they had their little half-million dollar vacation:

money.cnn.com...

[edit on 9-10-2008 by an0maly33]

I was hoping that someone had their head up in class today! Yes everyone A.I.G. has asked for ANOTHER bail out and not only that they have another client big ticket treatment trip planned that was discovered....Guys I have called my local and state political rep and I have made it clear as of today I will do all in my power to make sure their re-election doesn't happen if we do not start bringing these people in to face criminal charges I urge everyone in here who give a crap to do this.