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We’ve got the situation of a dog chasing it’s tail down a bottomless pit. It’s virtually a mirror image of the 1930’s except in this case, rather than farms, it’s residential real estate. Thus when we read the article, we note: “Banks that backed these projects are taking it on the chin, recording huge losses as they foreclose on property and make sales at a fraction of the original loan price.In the past year, 16 Georgia banks have failed, more than in any other state, largely because of residential real estate losses. Dozens more are struggling.”

The FDIC has already intervened, i.e., taken over 78 failed banks this year and near broke. Many would say, well, the FDIC can’t go broke because the Fed can always print fresh dollars to prime the FDIC; the problem with that is that the collateral for the dollar, if you will, i.e., the value of goods, services, production and property of the underlying economy is falling precipitously in value which can lead to only one thing, a devaluation of the dollar.

Then there’s another 2 shoes to drop; 1) as heard on the Radio this a.m., while the Banks appear to have regained their footing, they won’t be able to withstand a collapse in “commercial real estate” which is doubtless set to occur because commercial real estate loans are short term and are comming due to reset at the same time that many of the existing loans are near or at default and the value of the underlying properties is in steep decline due to high vacancy rates. None of the commercial bank loan Banks are presently willing to or capable of re-setting those loans; the final shoe is 2) One Quadrillion in “derivatives” on the books of these very same banks. That’s 1000 Trillion. If my understanding is correct those derivatives turn out to be instruments the banks created to borrow against the loans they had made.......at a ratio of 30:1. Even the Feds can’t absorb One Quadrillion in losses which means the banks.......go down.

I’m still researching the matter but one analyst I’ve been following is suggesting we’d best be putting some cash aside to prepare for a “Bank Holiday”.