Posted on 01/21/2009 11:56:32 AM PST by mojito
Yesterday the Dow Jones industrial average shed a little more than four percent and ended under the 8,000 mark, the biggest decline on an Inauguration Day in the index’s 124-year history. The S&P 500 posted a 5.3 percent fall. Asian and Europe markets today followed suit as investors around the world began to realize the extent of the weakness of European and American banks.
Nouriel Roubini, the New York University economist, thinks American financial institutions are carrying $3.6 trillion in credit losses. Of that amount, half belongs to banks and broker dealers. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion,” he noted. “This is a systemic banking crisis.”
(Excerpt) Read more at commentarymagazine.com ...
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aS0yBnMR3USk
It’s not hard to see how this will play out. Congress will borrow a few hundred billion more to pay for part of the bailout, and the Fed will simply print money to subsidize the rest of the bailout. Anyone with savings will pay the hidden tax in the form of inflation. The financial system WILL get bailed out- it always does in major developed economies.
I heard an economist on CNBC say last night that eventually we’re all going to just multiply our savings by .93 (and this is excluding any stock loss or asset value deprecitation) to pay for this financial crisis. Sounds about right to me.
Have they banned Ben from his magic printing press yet?
The Obama Miracle continues!
>> I heard an economist on CNBC say last night that eventually we’re all going to just multiply our savings by .93
I wonder where he got that factor “0.93”.
Frankly, it sounds high to me. I expect dollar holders to see much more than 7% of their wealth vaporized in the fire of inflation before this is all over.
Between a Depression first and than an inflationary binge, I suspect that 7% of their wealth will be all that remains.
> I heard an economist on CNBC say last night that eventually we’re all going to just multiply our savings by .93 (and this is excluding any stock loss or asset value deprecitation) to pay for this financial crisis. Sounds about right to me.
Ergo, the message is clear: the less you save, the less you pay. Either you spend it, or the gummint will.
Not a problem. Rush today spoke of the Obamadroids, eyes glazed and drool stringing from their mouths, yesterday pledging their allegiance to The One, not the U.S. How can we fail?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.