From the Wall Street Journal:
FDIC Readies for a Rise in Bank Failures
The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation's housing and credit markets continue to worsen.
The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.
"Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states that are suffering severe housing-market problems like California, Florida, and Georgia," said Jaret Seiberg, Washington policy analyst for financial-services firm Stanford Group.
From the sheer force of what's happening, the media has had to let information be admitted step by step.
The end product is a Depression. Let me explain how we must get there.
The media let you know about the "subprime crisis". Unfortunately, they didn't tell you that too many mortgages across the credit spectrum were issued without much regard for any qualifier EXCEPT the credit score. Until just recently, you were even able to "rent" portions of other people's credit instruments, thus bolstering your own credit score. So the entire system of issuing mortgages allowed many people to not only bid up the price of housing, but to take out home equity that simply didn't exist ... all based upon farcical or fake assurances that such debts could be repaid.
So, slowly the media is exposing people to the truth of the "mortgage crisis". But that's still not the truth, since as credit lines dry up, the banks are quite simply overextended in all credit avenues. That's why the GOVERNMENT is trying to extend credit (i.e. print money) for the banks, and private sources are NOT.
Hence, this is a credit crisis. But even that's not the entire story, since the weak system of money issuance in the USA is based upon a singular flaw, and that flaw is the MONETIZATION OF DEBT.
Money in the West's financial system is not created from wealth, but from debt. The bank didn't loan you money for your mortgage; it CREATED the money from even WRITING the mortgage in the first place.
So when a clean $1000 billion of mortgages and excessive-mortgage-margins were created, then that means $1000 billion of money was created into the system. That money then started chasing a lesser amount of goods.
So houses and food and energy started a strong climb.
BUT ... the working class of the nation has been either stagnant or falling in their real purchasing power, since their wages didn't keep up with all of this. And corporations are hardly going to be increasing wages 50% or so in order to match American workers to the levels of money and debt service that already exist.
So after this period of obscene asset speculation, and price increases, there must be a Depression as too many businesses close their doors, with their wealthy owners retreating to their overseas accounts and domestic properties. At home, the already serious lack of a real (i.e. manufacturing) economy will be the foundation of Lego blocks underneath a brick and concrete-block house built upon it. The collapse of hypercredit business on top of a lack of fundamental business will send millions out of work and without options.
There will be plenty of housing, however. It's not like anyone has to be homeless. Counting houses and condos that are empty and for sale or lease, and also counting apartments for let and vacation homes, the vacancy rate in the nation is about 13%. The only reason we won't be able to house our legions of neo-homeless is that we will value the rights of the title holders (i.e. banks, trusts, wealthy fuckers, etc.) over the millions of people who will have no other option.
And before anyone calls me a Socialist for thinking that, let me promptly inform you that the Socialist government created this credit crisis by insisting on taking interest rates to nearly zero, among other acts, hence letting people bid on houses like they were stocks. The government had years any many points of opportunity to stop this criminal exercise of shill bidding. They refused. So now we're all fucked. Socialistic redistribution is the only way out of this, other than simply letting borrowers collapse ... and we must note the government is now considering a RTC form of bailout for that. Another trillion dollars. (And people think that I'M a Socialist?)
I've spent the last 5 years preparing for this Depression. Have you?
...because our local union was able to buy the savings and loan at the corner of Broadway and Eastern for less than $100,000 from the corporation responsible for liquidating the assets. We kept it for several years until we bought another building. There has always been two factions in our local: one which feels the "pride" of ownership coupled with the financial gain of renting out space to pay for utilities. Our second building on Broadway also housed the Aurora Gonzalez organization. Now there is discussion about selling the building (it might be cheaper to rent). There are security problems that are turning off a lot of members to the location (they stole the valuable metal from the air conditioner last summer). So this latest sell off of assets for these failed institutions will result in some other institutions getting cheap properties.
U.S. Economy: Confidence Falls, Producer Prices Rise (Update1)
Select Quote: "Higher energy and food bills also are hurting consumers' outlooks and their ability to spend on non-essential items. The amount of Americans must spend each month on debt service, housing, medical care, food and energy rose to 66.9 percent of their total spending in December, the highest since record- keeping began in 1980, according to Bloomberg figures."
You are exactly right. This is all about energy. Congress subsidizes the joke known as ethanol which is made from cattle feed which raises price of feed which raises food prices. We subject ourselves to foreign oil and let others "exploit" there land while we refuse to "exploit" our land but buy from other "exploiters." It really doesn't make sense. We are practically held hostage to oil because of the fear of nuclear power and drilling in the US. Either somebody comes up with something 10X's better than oil or we start drilling here or we are done for.
The economy runs on energy, when energy becomes so expensive (it is a staple for most transportation and heating and everything else) everything else suffers.
... the Capitalists with all the money are NOT forming a large and widely-available set of energy-efficiency products so that we millions of Americans can prepare for the future of scarcity. The question is: WHY?