Posted on 07/23/2002 5:11:52 PM PDT by rumrunner
Larry Kudlow mentioned that the Federal Reserve may be meeting tonight to discuss the exposure of Citibank and JP Morgan Chase to derivatives and the stock market collapse.
Possible that both banks have billions of derivatives that need to be unwound. Would collapse the banking industry.
When the Federal Reserve has an EMERGENCY MEETING, it means that there is a potential financial crisis ahead.
The Federal Reserve (which is the most powerful bank in the world) and does not just call emercency meetings on a whim.
If Citibank and JP Morgan Chase have invested billions of derivatives (powerful but dangerous financial instruments), and these derivatives are linked to the companies that have been going bankrupt and are collapsing in the stock market, then these banks may also get dragged down too, which would essentially mean a COLLAPSE OF OUR ENTIRE BANKING SYSTEM.
A DEPRESSION, not just a recession may result from this.
It's like a bunch of dominoes all falling down.
That's about as simple as I can state it.
The former scenario is very scary. We haven't had a major depression since the 1930's. Of course, on the other hand I could have no clue what I am talking about and everything will be OK, with the stock market, banks, and economy all doing very well.
For all of our sake, I hope it is the latter.
Actually, even before the inauguration, Bush and Cheney were speaking out on the economic bubble that had already burst, but they got shouted down by media as being "too negative," and by their pals in both parties on the hill. So they backed off. Mistake. But also, it kept economy from tanking faster. Even bigger mistake.
There was never any doubt.
The hardest thing they had to accomplish , was to achieve their goal without letting on it would happen........
Richard W.
O'Neil is an idiot. Instead of minding the store, he was on some idiotic trip with that doper Bono.
At least the 3rd world got a good deal of lip service from Bush though.
Yep. Because the media convinced the public it was "just about sex". If propaganda doesn't work, why did the Nazis have an office for it?
Wake up. The pubbies are as corrupt as the dems in all of this. Everyone up there deserves the wrath of the citizenry. At the current rate, it won't be long. Invest what little money you have left in pitchforks.
Nope, the Clintons were crooks.
So with the Prince buying in with another $500M (to $10B)on the 18th at $38.00, his net loss for two business days is $2.9B (Shares from $38 to $27 or - 29%)
Amazing with such a huge bet on C; his intell didn't know of the raping upcoming in two short days by handiwork of Clinton/Rubin. Now he knows what it feels like to be an American taxpayer between 1990 - 2000.'
True.
What were the republicans? Potted plants?
Most institutions use derivatives so they can do something risky, make a lot of money, and lay off some of the risk and profit to someone else. Use of derivatives are excellent vehicles as long as markets remain in "normal" conditions. Normal means within 2 std deviations of past behavior. The US banks have deravatives totalling over 100 trillion dollars (that is trillion with a t) in notional value. Long term capital management tried this in 1998 and almost blew up the world's financial system because their models did not include russian debt default and the asian currency crises as possiblitilties. A lot of these derivatives are outside normal conditions and are possibly ready to blow up. If I'm scaring you, I'm already scared.
This is as good a time to take a look at what you have, family probably, a reasonably secure job probably, no great amount of credit card debt probably. We should not be afraid of this. If we stay calm and lucid we can survive anything except asteroid 2002 NT7.
We have nothing to fear but fear itself. Somebody said that, but it was before my time. Got a recipe for sawdust bread?
Totally not true. It was liberal media hype that sold you that number. They used that initial figure if you assume 50 billion borrowed for 30 years at 8 percent and that all resolution trust corp. assets would end up with zero value. This was a worst case scenario. The actually result was 50 billion borrowed for about 5 years, after which a recovering real estate market allowed for recovery of most of the money. The real cost was in the neighborhood of 30 billion in 1989 dollars or about 60 billion in 2002 dollars. To prove my case without a google search, the biggest blow ups were Lincoln under Keating and Vernon of Jim wright fame and M corp which was eventually taken over by bank one. Those three cost maybe 9 billion dollars and those were the biggest. Mcdougal's bank cost a measley 50 million and silverado (neil bush) was 200 million. You just can't get to 300 billion or a trillion using those figures.
As I recall, they were Senators and Congressmen.
You should have a few thousand on hand and make sure that the rest is fdic insured. That is just because the folks at the old Lincoln Savings and Loan told you it was insured does not make it so. In the Lincoln collapse, many depositors were lied to about what type account their money was in and many were in uninsured accounts.
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