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Are you a "creditor"?


Kevin Depew of "5 Things" writes: Welcome to the Depression. No, don't drop whatever it is you're doing. Don't get up. It's not going anywhere. It will wait. It's just going to sit over here in the corner and read a magazine while you do whatever it is you need to do.

A Depression doesn't run hot and fierce like some crazed meth burner. A Depression is methodical, purposeful, patient. It will build a shelter out of tree branches and newspaper, light a small, well-contained campfire and wait you out, brother. While you feed on the empty calories of denial and popcorn, it will quietly gather shards of broken dreams and fashion them into a terrible weapon of blunt force reality.

It's a hell of a thing to call this day and age the next Depression. It's dangerous tinfoil hat territory inhabited mostly by screeching lunatics and volatile nutjobs. But by the time they get squeezed out by reputable folks the whole gig will be up, the circus will have left town.

(rest of article) http://www.minyanville.com/articles/index.php?a=18055

Of course, IndyMac customers are finding out "FDIC insurance" ain't all it's cracked up to be (and it can't count so well, to boot). Finally, because I just make it all up, I thought I'd quote a figure of greater au-thor-i-tah and less tinfoil than myself to tell you that your odds of getting "your" money are only as good as your place in line.

"Meeting creditors' demands for payment requires holding liquidity--cash, essentially, or close equivalents. But neither individual institutions, nor the private sector as a whole, can maintain enough cash on hand to meet a demand for liquidation of all, or even a substantial fraction of, short-term liabilities. " - Fed Res Chr Ben Bernanke  http://www.federalreserve.gov/newsevents/speech/bernanke20080513.htm (ugh, there I go citing real sources again)

For those that rode one of the smaller busses to school, the 'boss' of all the banks just said the banks don't have enough cash for everyone to get their money out.

He continues ... "Doing so would be both unprofitable and socially undesirable. It would be unprofitable because cash pays a lower return than other investments. And it would be socially undesirable, because an excessive preference for liquid assets reduces society's ability to fund longer-term investments that carry a high return but cannot be liquidated quickly."

I.e. go back to sleep. Move along. Nothing to see, here. Tell that to these people ... http://www.latimes.com/news/printedition/front/la-fi-indymac16-2008jul16,0,5489094.story

Entry #133


time*treatComment by time*treat - July 17, 2008, 11:56 am
Is your name on 'the list'? http://www.youtube.com/watch?v=C4SwK8cdujc
Blame the customers? http://www.youtube.com/watch?v=WGH9669qGls
Rick GComment by Rick G - July 17, 2008, 1:22 pm
These are bad times. I believe a depression is right around the corner. If Israel or its puppet government (the US) attacks Iran, the ensuing price of oil will cripple our already fragile economy. Better go to Wal-Mart to get your tent and gun while they're still in stock.

justxploringComment by justxploring - July 18, 2008, 4:26 am
The article in the latimes is scary, but why in the world would someone deposit more than $100,000 in any one bank? I know someone who put much more than that in BoA after the sale of a home and had no idea that the limit was $100,000. I told him to go back and put the money in a revocable trust (it's in a CD) and to move some of it as soon as possible. I don't think BoA will fail in the near future, but this article shows you can't trust the bank records. To Rick & time*treat, maybe you'll disagree with me, but panic & fear will definitely shut down the banks if everyone starts pulling out their money. Indy Mac had most of its money in loans and there may have been fraud too. FYI there is a tool now on BankRate that lets you check the CAEL rating of your bank. A 1 is the highest, 5 is the lowest.

BTW I learned something about safe deposit boxes if anyone is interested. I'm closing mine! I called the FDIC and the contents may not be accessible after a bank fails. (I knew they weren't insured) Imagine putting your winning lottery ticket in a safe deposit box and the bank fails. You finally get it after the expiration date. In FL you have only 60 days to choose the lump sum.   I never got the answer to my question however. All I asked was "so what happens to my safe deposit box if my bank is closed?" He said something like "After it's purchased by another lending institution..." But why can't you take out the contents right awat if they have nothing to do with the FDIC in the first place?
justxploringComment by justxploring - July 18, 2008, 5:21 am
time*treat, if you don't mind I want to add another thing the man at FDIC said which makes sense to me, although they're obviously not handling things well at Indy Mac.   (I had read some of these articles too.)   The man said that nobody will lose a dime if insured. The panic is because the regulators need to see proof "because anyone can say Sue Johnson is my sister, but how do we know without a birth certificate?" So those accounts are put on hold for a few days until this can be sorted out. Well, so I don't keep posting, let's talk about this next year, okay? (Yes, I am keeping my money in the bank.) Maybe at that time you'll have the last laugh. Hope not. I won't do well living in my car.

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