“I want to know where the hells all this money going?
Somebody has to be on the receiving end. Four, five, six big banks? Who is holding the cash?”
I can answer that one. The problem for the banks is that they were given, say (for example, using small numbers), $1M in deposits. They lent it out to people that never had a chance of paying it back, and then who’s property values declined to, say $600k (and really less than $500k, when they bank tries to sell it after it’s been trashed in foreclosure).
But the depositors did not forget about their deposits, and the government insured them. Given the margins that banks operate on, the banks were toast. So any money they get must go towards paying back those depositors. As to lending drying up - that’s simple - the banks will not put any more of their money at risk, at least until they can reasonably health - right now they’re sick as a dog.
Good post!