'This American Life' Today: Awesome, & Why I'm Now + We Are Headed For A Depression

Discussion in 'Economics' started by ByLoSellHi, Mar 1, 2009.

  1. If anyone here caught 'This American Life' today on National Public Radio, it was amazing.

    They basically simplified the banking crisis and housing crisis, and laid out the case, after consulting with economists, people that worked out bank systemic failures in the past, regulators, etc., that we are on an inevitable course towards nationalizing the banks, and that they won't announce it, because they have to have the tens of thousands of federal employees in place, and all the paper work completed, before making the announcement.

    They spoke about how Citi and BofAmerica hold 25% of all U.S. bank deposits, and how J.P. Morgan, Morgan Stanley and many, many other banks in addition to Citi and BofA are insolvent, and how they are insolvent by literally trillions, as the value of their assets + capital is swamped by the amount of liabilities they have - mainly due to decimated real property values on the inflated loans they made.

    Unless housing values rose 30% or maybe more in the next year or so, which won't happen, there's no way around nationalization.

    Banks also have the U.S. government over a barrel, because if they fail, trillions of deposits will be lost, and we will have a 'depression so large it will render the Great Depression a footnote by comparison.'

    They also shatter the misconception that insolvent banks should loan money out they're receiving from the U.S. Government (taxpayers), as such banks are least able to do so, because that would further decimate their balance sheets.

    One bank analyst at Deutsche Bank Group wrote a memo to U.S. regulators, saying they could either save the banks with taxpayer dollars now, or save them with taxpayer dollars later, when the unemployment rate topped 20%. He also stated unemployment would rise to at least 12.5% regardless.

    Finally, an economist at Duke (I believe Duke) was interviewed, and states the last time that Household Debt as a per capita % of GDP was this high was - you guessed it - 1929. I'm trying to find a chart illustrating this.

    Edit - One chart: [​IMG]

    You would do yourselves a favor to listen to the podcast, which is free to download for a week, beginning tomorrow:


    It's called 'Bad Bank.'

    P.S. - As bad as things are in the U.S., insolvency is even greater in Europe and some parts of Asia. Ouch!
  2. TGregg


    AIG, C, probably BAC and maybe some others need to be taken over, sliced up, sold off and shut down.

    Rewarding failure and punishing success does not (I know this is a shocka to many) lead to more success and less failure.
  3. A Euro Collapse?

    """The European Union will now have to prove whether it is just a fair-weather union or has a real joint political destiny," said Stefan Kornelius, the foreign news editor of Süddeutsche Zeitung in Germany. "The whole project of a joint currency is being tested for the first time. We always said you can't really have a currency union without a political union, and we don't have one. There is no joint fiscal policy, no joint tax policy, no joint policy on which industries to subsidize or not. And none of the leaders is strong enough to pull the others out of the mud."""

  4. Guys, do me a favor.

    Based on information provided, or thought-provoking response of my posts or those of anyone else, rate these threads accordingly.

    There are a bunch of morons who either have some sort of vested interest in seeing only bullish threads posted, or who may actually be bullish and feel so insecure as to neg anything that doesn't comport with their feeble and insecure mindset.

  5. tradersboredom

    tradersboredom Guest

    main reason for the crash of the BAC and C is deregulation of the financial system allowing risky loans and no auditing of risk and derivatives casino.

    this is same for stock market. the stock market such as futures and options is a casino and completely unregulated.

  6. tradersboredom

    tradersboredom Guest

    the chance of house value rising over 30% is 100% over 10 years.

  7. trendy


    And rating threads accomplishes what exactly?
  8. sprstpd


    Actually the main reason is that they are idiotic entities that became overleveraged with idiotic positions and now are getting their comeuppance. They deserve to go extinct with the decisions that they have made. No one forced them to make the stupid decisions that they did.
  9. sprstpd


    Look at Japan during their lost decade to see how far real estate prices can fall. I believe it was 80%+ from peak to bottom.

    I don't think that will happen in the US, but 10 years could easily go by without any house appreciation.
  10. Apples to oranges...

    Prices were highest in Tokyo's Ginza district in 1989, with choice properties fetching over 100 million yen ($1 million US dollars) per square meter ($93,000 per square foot). Prices were only marginally less in other large business districts of Tokyo. By 2004, prime "A" property in Tokyo's financial districts had slumped to less than 1 percent of its peak, and Tokyo's residential homes were less than a tenth of their peak, but still managed to be listed as the most expensive in the world until being surpassed in the late 2000s by Moscow and other upstarts. Tens of trillions of dollars worth were wiped out with the combined collapse of the Tokyo stock and real estate markets. Only in 2007 had property prices begun to rise; however, they began to fall in late 2008 due to the financial crisis.

    #10     Mar 1, 2009