Storm Clouds Risin'

[tekla]

I went to the bank just a few minutes ago.  The receptionist type guy who I usually joke with didn't look all that humorous today.  And, indeed in 12 minutes or so I heard him answer three phone calls that were all asking the same question.  "How much are my accounts insured for?"

Now people just don't wake up and say "Honey, what's the weather going to be like today, and oh, by the way, how much does the FDIC cover our accounts for?  People only ask that when they are very afraid.

The UAW people I talked to in Mich. were laid-off, with no idea when the lines are going to open again.  The auto excs I spoke with had no idea either.

There is a list of over 150 banks in trouble.  Freddy Mac and Fanny Mae, who together own half the paper on houses in the US are both in deep trouble and have been for over a year, and no solutions, no billions of dollars tossed after the problems have stemmed them in the least, its just good money after bad.

Last weeks collapse of the IndyMac bank in SoCal took 10% of the money the FDIC has on hand to handle such events.  At that, they still had a panic when they reopened.

Houses in American Canyon, that 2 years ago sold for $600K are not moving now at $400K, and that's almost a quarter of a million dollar loss in just two years.  How many people can handle that?

How many people can afford to make payments on a house that is worth a lot less then they are paying on it?

[NicholeW.]

There are definitely problems, in fact Ferria Chideya (sp?) had a fellow on her "New's & Notes" night before last talking about the banks' situation. It's beginning to look like Bear-Stearne isn't going to be the only crasher in this regard. And there was a lot on NPR last night about the same sorts of things.

On a more positive note, maybe, oil went down y'day to about $138/barrel due to fears about the building economic crisis and the fears that oil is one of the primary contributors. Wonder how much the Federal Reserve & the Treasury Dept had to do with that? They showed no inclination 3-4 months ago to try to "rein-in" speculators who were being blamed for the initial increases to $100/barrel.

N~

[lady amarant]

Thing is, I doubt that the drop in oil will be anything more than a temporary reprieve. You can pump your reserves back into circulation to ease demand, but once those reserves are gone, and let's be honest, we all know they are more or less gone, there's only one direction.

As over there, things are rather grim in South Africa, with banks not even repossessing cars any more simply because they have nowhere to put them. Houses of course don't have to be put anywhere, so those repossessions are chugging along merrily. Of course, that's ultimately as bad for the bank as for the customers, because ultimately it squeezes their cash flow, and that is when they fold.

I watched "Peak Oil: The end of Suburbia" over the weekend, It's a couple of years old, and in one clip it features a meeting amongst some of the world's top geologists and economists and other earthy-people, and they were predicting pretty-much exactly what we are seeing happening now ... except they were predicting a timeline of 2010 to 2012.

Things are going to get a lot worse for all of us.

~Simone.

[lisagurl]

I have a hard time understanding people that put money in a bank and do not know what amount is insured. Second I have no pity for people that borrow more than 80% of what they paid for the house. The crash of 29 was due to people only needing 5% of the investment to borrow the rest. The government raised the standard tax deduction to a point where you must finance over 100k to even start to get a break on taxes. Not much of an incentive for people to save money as they tax the interest.

[tekla]

Current savings rate in the US is zero.  And I don't think its due to being lazy.  Its because the cost of living is rising faster than the rate of income.

Welcome to the new third world.

[lisagurl]

Its because the cost of living

I think it is the cost of desire that marketing has created. People do not need 75% of what they spend money on. Check any trash bin to see the waste. Not to mention entertainment and travel.

[tekla]

Which is why I don't watch TV, but I do help make it when I can.  Them checks cash real good.

[Mnemosyne]

I agree that it is not just the cost of living, it is the "spend now, worry later" attitude that is prevalent. You know how "priceless" that MasterCard can be.