This is what has happened in the US banking system, where deregulation and lack of oversight has allowed banks to create a veritable haven of fraud, fiscal piracy, collusion, delusion, confusion and systemic failure. Swapping of worthless, toxic, boiler room brewed “mortgage backed securities” and “securitized mortgages” between banks and their subsidiaries has resulted in the collapse or merger of some of the nation’s oldest and here-to-fore renown investment brokerage houses.
And now, the taxpayer is expected to fork out a blank check for these and future failures, because these institutions are “too big to fail.” The Administration knows what is going to happen in 2009, when more consequences of unregulated madness hits the nation’s bloodstream.
Some say the calamity is so poisonous, so toxic that it will restructure the nation’s economy and banking system entirely. Analysts believe that as many as a thousand banks may fail before this crisis ends.
As author and investment banker Christopher Whalen noted recently:
The contagion in the financial markets continues to spread. While we should applaud the actions taken so far by the US Treasury and the Fed to stabilize the financial system more action is needed. This crisis began with concerns about liquidity, but is becoming a solvency crisis. (“FDIC Won't Run Out of Money, But WaMu May be Toast”)
Whalen believes that by July 1, 2009, 110 banks with $850 billion in assets will have failed. (Ibid) And that’s optimistic. New York University Professor Nouriel “Dr. Doom” Roubini believes that a third of the nation’s regional banks will go belly up:
Another financial observer of such pessimistic, bearlike qualities that he's dubbed "Dr. Doom" is New York University economics professor Nouriel Roubini. He's the guy already with the reputation of calling — in 2006 — today's financial car wreck, from the housing bust and oil shock to crippled investment banks and a diminished Fannie Mae and Freddie Mac. In an August New York Times magazine profile, he predicts a $1-trillion cost for the housing crisis, the end of a third of the nation's regional banks and foreign indebtedness so high it "might be the beginning of the end of the American empire." (Robert Trigaux, “Alarmists Sounding More Like Realists”, St. Petersburg Times, 9-21-08)
Many of the ‘conspiracy theorist’ crowd believe the whole thing is but smoke and mirrors, that the “crisis” is manufactured. Bet that as is may, whether this meltdown is manufactured or is the culmination of greed, financial piracy, deregulation and lax regulation enforcement, the end result is the possible meltdown of the US economy and the loss trillions of dollars in real estate, investment and retirement assets, not to mention jobs.
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