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I don't normally address political topics head on and just generally rant incoherently from the sidelines, but well, this whole bank thing is really starting to look grim.
As banks fall, other banks usually buy up their assets and take over their outstanding loans, and things continue on, but the banks can't afford to buy each other anymore. If my lender goes under, and no other bank can afford to buy their outstanding loans, do I no longer owe the remainder of my mortgage? If another bank buys it at a steep discount, why should I pay them more than they paid (plus interest over the life of the loan)? What does this cycle of failures do to property values?
Got your money in a nice safe FDIC covered account? Don't go thinking you do. One bank failure last week is expected to siphon off 10% of FDIC's funds. How many banks are out there? Do the math. They'll get crushed. Unless the Fed issues the funds to them to cover it, in which case, get your wheelbarrows out so you can carry the cash you need to buy groceries when inflation goes out of control.
It doesn't help that we've got a moron who's spent the last seven years raiding the treasury at the helm. In fact, I'm pretty sure that's going to be an aggravating factor.
It's gonna get worse before it can even hope to get better.
As banks fall, other banks usually buy up their assets and take over their outstanding loans, and things continue on, but the banks can't afford to buy each other anymore. If my lender goes under, and no other bank can afford to buy their outstanding loans, do I no longer owe the remainder of my mortgage? If another bank buys it at a steep discount, why should I pay them more than they paid (plus interest over the life of the loan)? What does this cycle of failures do to property values?
Got your money in a nice safe FDIC covered account? Don't go thinking you do. One bank failure last week is expected to siphon off 10% of FDIC's funds. How many banks are out there? Do the math. They'll get crushed. Unless the Fed issues the funds to them to cover it, in which case, get your wheelbarrows out so you can carry the cash you need to buy groceries when inflation goes out of control.
It doesn't help that we've got a moron who's spent the last seven years raiding the treasury at the helm. In fact, I'm pretty sure that's going to be an aggravating factor.
It's gonna get worse before it can even hope to get better.
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(Stephen Dutch also points out that any attempt at fiscal responsibility is usually instantly reversed by the next administration anyway, so there's a nice built-in incentive to max out the budget on stuff you want, because whatever you save is going to spent by the other guys on stuff you don't.
I'd like to think that the people might be more inclined towards fiscal responsibility if we cut every program that someone mean-minded and heartless, like me, would call wasteful, but in reality, I'm pretty much also that cynical.)