Too big to fail? Hmmmm…. Where are all the S&Ls these days? How about Lehman Brothers or Bear Stearns? And the FDIC or SIPC are going to be able to cover all the losses?
GS, Lehman Brothers and Bear Stearns were too little to save, so they got eaten. Goldman, BofA, Wells Fargo, Citibank, etc. (the ones who were “too big to fail,” and therefore, got “saved,” were just as insolvent as Lehman and Bear, but were bigger, and therefore had the juice to be “saved.” Their salvation did not come from the FDIC, nor the SIPC, which are agencies (allegedly) tasked to protect us “depositors” if (when) the bank into which we’ve deposited our meager $$, can’t cough up what we’ve put in. And as long as the failures are small banks, with modest deposits, they’ve been able to do so.
But when a larger bank system reaches that point, the authorities don’t deplete the few paltry billions they have for minor emergencies, they “arrange” for the smaller system to be bought (absorbed) into some larger banking company (an action that the FDR administration would have prosecuted under the anti-trust laws.) When all of the biggies become insolvent simultaneously, the fedgov colludes with (i.e., obeys) the Federal Reserve, and though already insolvent itself (many times over) passes new laws allowing the Fed to “print” (synthesize) $$, and hand it over wholesale to the insolvent TBTF banks. The Fed, for its part, allows the insolvent US fedgov to “borrow” the additional dollarized electrons in our names, promising to wring it out of us, as the Fed might demand. We taxpayers, through the agency of our beloved fedgov, borrowed more than we can ever repay, in order that the $multibillion salaries (and bribes) could continue, unabated.
But there will be a reckoning. The next step will eliminate all that fol-de-rol pretense of borrowing, since the new banking laws (Dodd-Frank, and its descendants) have already transformed us (sheepizen-depositors) from customers of the banks, into their creditors. Whatever we deposit (savings, checking, etc.) are “unsecured loans” to the bank which, if the bank finds itself inconveniently unable to cover its loans (to the Fed, or other larger banks) may be used for the needed repayment. As depositors, we’re at the bottom of the list to be repaid. (No wonder Barney retired.)
Further, the next round of laws (if they haven’t already enacted them) will compel those of us who have them, to”contribute” to saving the TBTF, out of our 401-k’s, IRAs, Pensions, and other retirement plans, whenever they next need. And when the fedgov spends more than it takes in, the need is inevitable. Not to worry — Zero has already invented the MyRA. The fedgov takes whatever you have saved, and gives you whatever they decide you really need. Ask the Kulaks how that worked out.
- This reply was modified 2 years, 1 month ago by L Tecolote.