Leraconteur

I like what you said, but I wonder why 16 banks? Why not just one: the United States National Bank? Backed by the full faith and credit of the United States government. Then just abolish the FDIC and if people want to bank with their local institutions, they can do so at their own risk and peril.

Regardless, many banks ARE going to implode. The SPX is going to crater. Joblessness is going to moonshot.

And to my friend Brucelee, let's review, and on the record. SPX all time closing high on 10/9/07 = 1565. My guesstimate is a minimum 66.6% beating (oh no, the mark of the beast). Mathematics shows that 1565 x .333 = 521 target for the SPX (this assumes no changes in the SPX components). Unfortunately, history shows things usually go well past targets.

you need more than one bank to de-centralize risk...we have risk far far to centralized and all these big banks were like lemmings following each other off a cliff

when you have one or two super huge quasi govt entities (see fre fnm) or super huge banks, and they **** up, they got us (the us taxpayer) by the balls cause they are too big to fail...we need to make sure no one gets too big to fail in the future...at least that is how i have felt about it for a long time...

i wish we'd separate fre fnm into smaller players too

Seabass

Some good points. But it seems to me that de-centralizing risk has been a failure. You did mention FNM and FRE, which didn't go bust, but their business plans have failed.

My suggestion of the United States National Bank makes no mention of a publicly traded company. Taxpayers would be the shareholders. Given a MANDATED charter of 11 to 1 leverage, they should be able to avoid the **** up. And as I said, citizens could still deal with any local institutions they chose, but WITHOUT any FDIC insurance. Obviously, the USNB would be able to offer much lower rates to those wishing to deposit, and probably lower lending rates. If citizens don't like those rates, then deposit or borrow from somewhere else with the increased risk.

And further, the CEO of USNB would be appointed by Congress in a public hearing. But just in case, no one that has ever worked for Goldman Sachs would be eligible.

Just my thoughts on a superb Saturday.

Uummmm no that is a big fail IMO

we have centralized risk throughout this entire crisis...merged too big to fail with too big to fail...merging CFC MER with BAC for just one example...they are too big to fail so we give em money...fre fnm were so insolvent so we give them money(remember gov't madates before fre fnm bailout for them to buy more mortgages)...keep in mind, this money is your and my future income streams...no what we need to do is bust all these fat insolvent pigs into 100's of smaller banks...everything the govt does is:

corrupt

favors political donors

on the backs of hard working american's future income streams via taxes

is based in fear

i dont want to be forced to be long anything just cause i live in the US...bush, paulson, and ben have already forced me to be and it is sick...i support capitalism with all my being...but in no way do i support being forced to do anything...ensuring banks are not to big too fail ensures we never see this type of problem again...your "idea" just smacks of socialism and is ripe for corruption...yeah a govt run bank that has a competitive advantage over other banks...uhmmmm that is just like a fre fnm banking entity ripe for corruption and a bailout cause it is "too big to fail"...ummm more of that type of crap??? oh wait seen enough with the tarp and paulson/bernanke and the current actions with C BAC....geeeeeesh...how can you think this would solve any problems...it would only serve to further **** taxpayers!

appointed by congress....pleeeeze...decentralize risk is the answer we have yet to explore...ensure players never get too big to fail...that is the way to go...your idea is more staus quo BS that got us into this mess...

"I like what you said, but I wonder why 16 banks? "

~$50B a piece.

16 banks gets competition going, and maybe down the line they can be privatised for a profit. Think AT&T and the Baby Bells.

"what is your best guess as to where the markets end up? do you agree with gen's take on what the ultimate consequences are in his latest ticker?"

Damn, Bruce.

I am flattered beyond compare that you asked me and mentioned me in the same sentence as KD.

I am a modest player here. Maybe sharper than most, but certainly not the wealthiest.

I agree with Gen. Unless we stop this we are doomed.

Now that said, I want to quote Churchill:

"Americans can always be counted on to do the right thing...after they have exhausted all other possibilities."

--Winston Churchill

It might be...MIGHT BE...the case that after Ben, Hank, George, and Barack go through Ben's thesis, pull the trigger the 7th time (ok, so it's a revolver...) and come up empty, and all hell is breaking loose, that they MIGHT, THEY JUST MIGHT go through Genesis' list of suggestions. Just one or two would be a massive improvement and save our skins.

If that is the case, look for someone's back-dated thesis to miraculously appear with KD, Market Ticker, and Ticker Forum content. Lots and lots of it...

Leraconteur wrote:

"Unless we stop this we are doomed."

What exactly is "this" ???

I hope it means default the debt, tell the truth, and suffer the consequences.

"This" is clearly the failed policies of Barack, Bush, Hank and Ben.

We keep hiding the debt and not having it default to clear the system, it will just get worse as time passes.

Quote:

Some good points. But it seems to me that de-centralizing risk has been a failure. You did mention FNM and FRE, which didn't go bust, but their business plans have failed.

There is no equity. They failed. They are like -$80b in the hole. They FAILED. That's after capital infusions too.

To Realistic:

Perhaps FNM and FRE are "in the hole". But...neither have declared bankrutcy. Maybe they should, but they haven't. Unless I am missing something, both entities have essentially been seized from public shareholders by the federal government.

So for the record before Genesis bans me, in the USA in 2008, the federal government basically confiscated publicly traded companies from citizens.

If anyone does not get it yet, you are in for a world of hurt.

lera, you're very welcome and the fact (i believe) of you moving out of the country speaks volumes. this i'm surprised on because gen's thesis is were screwed but they are really screwed means our standard of living will drop but only proportionately to every one else.

i hate putting you on the spot but you surely got our attention. is it possible to turn our economy around without going through gen's solutions because it sure doesn't seem .gov is heading in that direction? second, making a calculated decision to leave the country means you've decided on an outcome. if you had to throw a figure out on S&P what would it be? what does the landscape of this country look like if current monetary policy fails? why wouldn't s. korea be in worse shape or equal to the US? sorry in advance for all the questions.

I fully realise SK may go down further than the US, but I want to travel, so I am going anyhow. SK saves money and has a culture of hard work, education, and thrift. They are homogenous and won't riot as much.

Quote:

They are homogenous and won't riot as much.

Do they put that on the MLS listings in the neighborhood? ;)

FRE FNM debacle is a preview of some lame national bank...just a govt run quasi public **** hole in which to further throw money at re-inflating a debt and asset bubble

FRE FNM are still insolvent but so long as they are able to sell their debt (which the govt bailout allowed) their little ponzi scheme can go on

without the gov't bailout they would have failed and then the stock would have been zero

I think we should make fre fnm into like 10 regional players...again decentralize risk so no single institution (ie a national bank as you suggest) can have a chance of threatening the system...too big to fail is a scourge...kill it i say

nothing the government has done during this crisis has addressed the real problem...or maybe YOU just dont get it

Seabass

I like your comments. Of course FNM and FRE are what you said. But...they did not go broke I.E. declared bankruptcy. My feeling is they should have, but as of 1/19/09, it has not happened. It really doesn't matter. Shareholders have been wiped out, yet executives are likely still eating well. And that is just wrong. Genesis might say something, but it is not un-American to say that FNM and FRE today should not exist, especially if paid be taxpayers.

agreed...i just get worked up about this **** as I see more and more gov't doing the wrong thing throughout this whole crisis...and i doesnt help that i am a college student who hears sugar coated BS all the time and i got to send the US my first sizeable tax check...

but you are right in that the key players are still in power and are still delusional...many of them have suffered little consequences of their actions which is sad considering all the damage they have done

fre fnm death would have been interesting event...wonder how that would have played out

Someone please be sure to check & post the new M1 Multiplier this week, I think it is due soon? Maybe the 22nd?

Thursday

Could this have anything to do with the Fed deciding to pay interest on depository institutiions' required and excess reserves? Thus, the banks keeping more of the funds so that they'd get more in interest payment?

The Fed formally announced on Oct. 6th that they would begin doing this.

http://www.federalreserve.gov/newsevents....

TIA.

Nice catch Yatez, and welcome to the forum.

Shouldn't it be out by now? Link?

http://research.stlouisfed.org/fred2/ser....

Heh. Been putting a "reload every" on that site for some time now. Nothing's being published. Yet.

Nothing yet...

It's out!!!! 0.915 Ruh-roh!!

-0.029 from last print, drop of 3%

http://research.stlouisfed.org/fred2/ser....

Uh-oh is right.