The Beginning Of The End
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Too Big To Fail Banks Are Taking Over As Number Of U.S. Banks Falls To All-Time Record Low

Lower East Manhattan - Photo by Eric KilbyThe too big to fail banks have a larger share of the U.S. banking industry than they have ever had before.  So if having banks that were too big to fail was a "problem" back in 2008, what is it today?  As you will read about below, the total number of banks in the United States has fallen to a brand new all-time record low and that means that the health of the too big to fail banks is now more critical to our economy than ever.  In 1985, there were more than 18,000 banks in the United States.  Today, there are only 6,891 left, and that number continues to drop every single year.  That means that more than 10,000 U.S. banks have gone out of existence since 1985.  Meanwhile, the too big to fail banks just keep on getting even bigger.  In fact, the six largest banks in the United States (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) have collectively gotten 37 percent larger over the past five years.  If even one of those banks collapses, it would be absolutely crippling to the U.S. economy.  If several of them were to collapse at the same time, it could potentially plunge us into an economic depression unlike anything that this nation has ever seen before.

Incredibly, there were actually more banks in existence back during the days of the Great Depression than there is today.  According to the Wall Street Journal, the federal government has been keeping track of the number of banks since 1934 and this year is the very first time that the number has fallen below 7,000...

The number of federally insured institutions nationwide shrank to 6,891 in the third quarter after this summer falling below 7,000 for the first time since federal regulators began keeping track in 1934, according to the Federal Deposit Insurance Corp.

And the number of active bank branches all across America is falling too.  In fact, according to the FDIC the total number of bank branches in the United States fell by 3.2 percent between the end of 2009 and June 30th of this year.

Unfortunately, the closing of bank branches appears to be accelerating.  The number of bank branches in the U.S. declined by 390 during the third quarter of 2013 alone, and it is being projected that the number of bank branches in the U.S. could fall by as much as 40 percent over the next decade.

Can you guess where most of the bank branches are being closed?

If you guessed "poor neighborhoods" you would be correct.

According to Bloomberg, an astounding 93 percent of all bank branch closings since late 2008 have been in neighborhoods where incomes are below the national median household income...

Banks have shut 1,826 branches since late 2008, and 93 percent of closings were in postal codes where the household income is below the national median, according to census and federal banking data compiled by Bloomberg.

It turns out that opening up checking accounts and running ATM machines for poor people just isn't that profitable.  The executives at these big banks are very open about the fact that they "love affluent customers", and there is never a shortage of bank branches in wealthy neighborhoods.  But in many poor neighborhoods it is a very different story...

About 10 million U.S. households lack bank accounts, according to a study released in September by the Federal Deposit Insurance Corp. An additional 24 million are “underbanked,” using check-cashing services and other storefront businesses for financial transactions. The Bronx in New York City is the nation’s second most underbanked large county—behind Hidalgo County in Texas—with 48 percent of households either not having an account or relying on alternative financial providers, according to a report by the Corporation for Enterprise Development, an advocacy organization for lower-​income Americans.

And if you are waiting for a whole bunch of new banks to start up to serve these poor neighborhoods, you can just forget about it.  Because of a whole host of new rules and regulations that have been put on the backs of small banks over the past several years, it has become nearly impossible to start up a new bank in the United States.  In fact, only one new bank has been started in the United States in the last three years.

So the number of banks is going to continue to decline.  1,400 smaller banks have quietly disappeared from the U.S. banking industry over the past five years alone.  We are witnessing a consolidation of the banking industry in America that is absolutely unprecedented.

Just consider the following statistics.  These numbers come from a recent CNN article...

-The assets of the six largest banks in the United States have grown by 37 percent over the past five years.

-The U.S. banking system has 14.4 trillion dollars in total assets.  The six largest banks now account for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.

-Approximately 1,400 smaller banks have disappeared over the past five years.

-JPMorgan Chase is roughly the size of the entire British economy.

-The four largest banks have more than a million employees combined.

-The five largest banks account for 42 percent of all loans in the United States.

-Bank of America accounts for about a third of all business loans all by itself.

-Wells Fargo accounts for about one quarter of all mortgage loans all by itself.

-About 12 percent of all cash in the United States is held in the vaults of JPMorgan Chase.

As you can see, without those banks we do not have a financial system.

Our entire economy is based on debt, and if those banks were to disappear the flow of credit would dry up almost completely.  Without those banks, we would rapidly enter an economic depression unlike anything that the United States has seen before.

It is kind of like a patient that has such an advanced case of cancer that if you try to kill the cancer you will inevitably also kill the patient.  That is essentially what our relationship with these big banks is like at this point.

Unfortunately, since the last financial crisis the too big to fail banks have become even more reckless.  Right now, four of the too big to fail banks each have total exposure to derivatives that is well in excess of 40 TRILLION dollars.

Keep in mind that U.S. GDP for the entire year of 2012 was just 15.7 trillion dollars and the U.S. national debt is just 17 trillion dollars.

So when you are talking about four banks that each have more than 40 trillion dollars of exposure to derivatives you are talking about an amount of money that is almost incomprehensible.

Posted below are the figures for the four banks that I am talking about.  I have written about this in the past, but in this article I have included the very latest updated numbers from the U.S. government.  I think that you will agree that these numbers are absolutely staggering…

JPMorgan Chase

Total Assets: $1,947,794,000,000 (nearly 1.95 trillion dollars)

Total Exposure To Derivatives: $71,289,673,000,000 (more than 71 trillion dollars)

Citibank

Total Assets: $1,319,359,000,000 (a bit more than 1.3 trillion dollars)

Total Exposure To Derivatives: $60,398,289,000,000 (more than 60 trillion dollars)

Bank Of America

Total Assets: $1,429,737,000,000 (a bit more than 1.4 trillion dollars)

Total Exposure To Derivatives: $42,670,269,000,000 (more than 42 trillion dollars)

Goldman Sachs

Total Assets: $113,064,000,000 (just a shade over 113 billion dollars – yes, you read that correctly)

Total Exposure To Derivatives: $43,135,021,000,000 (more than 43 trillion dollars)

Please don't just gloss over those huge numbers.

Let them sink in for a moment.

Goldman Sachs has total assets worth approximately 113 billion dollars (billion with a little "b"), but they have more than 43 TRILLON dollars of total exposure to derivatives.

That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 381 times greater than their total assets.

Most Americans do not understand that Wall Street has been transformed into the largest casino in the history of the world.  The big banks are being incredibly reckless with our money, and if they fail it will bring down the entire economy.

The biggest chunk of these derivatives contracts that Wall Street banks are gambling on is made up of interest rate derivatives.  According to the Bank for International Settlements, the global financial system has a total of 441 TRILLION dollars worth of exposure to interest rate derivatives.

When that Ponzi scheme finally comes crumbling down, there won't be enough money on the entire planet to fix it.

We had our warning back in 2008.

The too big to fail banks were in the headlines every single day and our politicians promised to fix the problem.

But instead of fixing it, the too big to fail banks are now 37 percent larger and our economy is more dependent on them than ever before.

And in their endless greed for even larger paychecks, they have become insanely reckless with all of our money.

Mark my words - there is going to be a derivatives crisis.

When it happens, we are going to see some of these too big to fail banks actually fail.

At that point, there will be absolutely no hope for the U.S. economy.

We willingly allowed the too big to fail banks to become the core of our economic system, and now we are all going to pay the price.

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  • K

    It was never truly about too big to fail. It was to make sure the mega wealthy and the elite never lose a penny. And with the number of people in this Country, who live their life in a semi comatose state. It will happen again. Fascist states of america, of the rich, for the rich, and by the rich.

    • MichaelfromTheEconomicCollapse

      Unfortunately for the wealthy, many of them are going to lose an enormous amount of money in the years ahead.

      Sadly for them, most Americans will not have any sympathy for them at all.

      Michael

      • davidmpark

        Expecting a lot of murder/suicides.

        Just want to put it out there – don’t anyone do it.

        • nekksys

          I’m just expecting the suicides. The rest of them will “go away” because of starvation.

          When the SHTF, I will show the starving rich folks exactly the same mercy Christ will show them on Judgement Day:

          Depart from me. I never knew you.

          They heard the same gospel I did. They made the choice to hoard up riches for themselves rather than helping out their fellow man by extending a hand to those in need.

          Depart from me. I never knew you.

          I can’t think of a more chiling collection of words to hear when my belly is grumbling and my wife is starving but these rich folks choose to money over mankind. Even their charitable giving has a string attached in the form of a tax write-off!

          Depart from me. I never knew you.

          I never want to hear those words… Ever.

        • DiscouragedOne

          I think you are right, although the only way I could ever shoot a person would be in self-defense, I certainly would never go looking for it.

      • ConcernedAmerican

        May the wealthy be shown the same sympathy, empathy, mercy, and compassion they have shown the working poor, and the homeless. We all reap what we sow.

        Perhaps the wealthy should have considered the seeds they were sowing? Perhaps when the poor man begged for the crumbs that fell from the table of the wealthy, the wealthy should have had mercy and shown kindness? Matthew 5:7, James 5.

        However, the poor are often very kind, merciful, thoughtful people, willing to give their last dollar to someone more needy. So, I believe the wealthy will find mercy from the poor, even though the wealthy likely don’t deserve mercy, and likely did not extend it to the poor. Many poor have actually read the Bible, and actually live the Bible.

        • DiscouragedOne

          I started out poor, now I am middle class, and I don’t feel sorry for a lot of the poor, because I have known some and they were as greedy as the 1%. Now, if they are down through no fault of their own, if they want a job but can’t find one, those are the people I will gladly help. The ones who feel I should give them what I worked hard for? They could have done the same thing I did, but instead they want to profit from my hard work and get what they don’t deserve. I say they are 2 extremes, and they both involve greed and selfishness.

          • Enzo

            I so agree with you sometimes the poor are much worse in character than the rich
            It sound like our friend thinks all poor are good and all rich are bad. This is So Off does he live in the
            Real world at all?

    • Rodster

      They are riots have been springing up around the world all because of economic co0nditions. You can add Thailand as the latest entry.

      • K

        Yes I saw that. Things are getting noisy in the Ukraine as well. Even here, there seemed to be a few more black friday incidents than normal. There is a great deal of anger out there.

        • Nicnak

          they tried to enslaved Thai In debt. farmers and others have been requested to borrow money and catch fishes in ponds after their rice has been bought against fiat certificate by their Thai government runed by Shinawatra .
          she wanted to borrow money to build high speed train(she got some $ under table for her self and her family, included taksin) . Who need high speed trains to carry vegetables and rice ?

          many have borrowed money to buy cars and ipads just to get same life you have.

          these governments are mostly corrupt and tell us stories that world would be fantastic if we borrow more.

          • PeaceAngel

            Are you in Thailand now?

            THIS is the same story that has taken place in the US for a hundred years. THIS take over didn’t start with Obama and Americans know less than everyone else in the world about what is happening in the White House.

            Americans have been turned into dumbed down and drugged up (on RX, Ipads and iphones, sports, TV and all electronics that they have no clue what it going on in their nation. All our news outlets are owned by the same machine that owns Wall Street, the politicians and the banks and they say everyday that our recession is over and has been and that all is well in La La land again and they all stick their heads back into the sand and buy more Chinese crap.

            THERE is no hope in these situations without exposure of the government evils and without the citizens holding them accountable and that is not happening.

            The FEDS are scrambling to disarm Americans before they figure it out and before they come to haul us all off to the FEMA concentration camps they plan to herd all Americans into.

            Five million Americans will expatriate this year and next year and almost four million expatriated over the past four years and they are the ones who KNOW what is happening and know their fellow citizens will not likely wake up until the hit the camps.

            It has become against the law to be homeless in the US and the FEDS are a forcing the homeless into the camps and telling them they cannot come out.

          • nekksys

            I want more info on this “being illegal to be homeless.” Can you point me to a story somewhere?

          • PeaceAngel

            Sorry, I have been away from my computer for several days.

            This program to do away with the homeless is the same plan that the FEDS have legislated to do away with 90% of the world’s population. AGENDA 21 signed by BUSH sr and made law by Clinton is the New World Order agenda to kill off 90% of the world’s population and imprison the rest. America is the model for the 178 nations who signed it and the plan has already been legislated by our past 7 presidents and is in full operation. America is over.

      • Rodster

        You can add Argentina as the latest to the growing list of Nations that are seeing civil and social unrest due to economic conditions.

    • ConcernedAmerican

      “Of the rich, for the rich, and by the rich.”

      Brilliant!

    • A D

      What is comical is how people say that Sam Walton was so wonderful, he had a ‘special’ relationship with CHINA. Sounds like a really swell guy, the #1 CHINESE importer…

  • Tim

    This is why QE cannot end! The Fed is trapped.

    • Rodster

      Yup, it’s been checkmate since 2009

      • Gene Baugh BBA

        I would say checkmate since 2000. A secular bear market of 17 years would end in 2017.

        • Rodster

          I refer to 2009 because that sealed the fate. There have been some really bad triggers including 2000 but even in 2000 and 2008 there was still an exit strategy aavailable albeit “very painful”.

          Now the exit strategy has been eliminated, ‘it’s either we collapse because we taper or we collapse because we don’t taper’.

          That was the scenario we entered when The Fed chose printing money.

        • Tim

          A bear market in what, Gene? Stocks? I don’t gamble in the (rigged) stock markets, but do you really believe equities have been in a bear market for the past 5 years?

  • Gay Veteran

    4 words prove there is NO capitalism in America: too big to fail

    • Rodster

      Ah, yes Senor Celente !

      • Gay Veteran

        Gerald Celente, a very wise man

    • JustanOguy

      It’s called Crony Capitalism.

      • Gay Veteran

        or fascism (the merger of state and corporate power)

    • El Pollo de Oro

      1776: the United States of America was established as a democratic capitalist republic.

      2008: the former USA, now The Banana Republic of America, embraces the “too big to fail” doctrine and fully embraces the Mussolini/Franco/Somoza/Trujillo model of government.

      “This isn’t capitalism. In capitalism,
      no one is too big to fail. This is fascism.” —Gerald Celente

      • Gay Veteran

        oh, fascism started in America well before 2008

        • El Pollo de Oro

          Fascism definitely started in the BRA well before 2008, although it escalated in 2008 with the bailouts (when the already-sick patient went into full cardiac arrest). When we were told that the banksters were “too big to fail,” it was obvious that capitalism was dead in the BRA.

  • Paul

    On the first day of Christmas my U.S government gave to me a free Obama phone!

    On the second of Christmas my U.S government gave to me a welfare check and
    a free Obama phone!

    On the third day of Christmas my U.S government gave to me food-stamps, a welfare check, and a
    free Obama phone!

    On the fourth day of Christmas my U.S government gave me higher taxes, more food stamps another welfare check, and a free Obama phone!

    On the fifth day of Christmas my U.S government gave me QE4, higher taxes, more food stamps,
    a welfare check, and a fifth Obama phone!

    One the sixth day of Christmas my U.S government gave to me a student loan bubble,QE4in,
    government a taxin, another batch of food stamps, my welfare check, and a free Obama phone!

    On the seventh day of Christmas my U.S government gave to me a derivatives bubble,
    a student debt explodin, QE4in,higher taxin, food stamps, a welfare check I did not
    have to work for, and a free Obama phone!

    On the eighth day of Christmas my government gave to me $2 billion a day added to
    our national debt, derivatives a bubblin, a student debt explodin, QE4in,
    government a taxin, my entitlement to food stamps, a welfare check, and my eighth Obama phone!

    On the ninth day of Christmas my government gave to me a cooked BLS report, 2Bill in
    national debt, derivatives a bubblin, a student debt explodin, QE4in, government a taxin,
    food stamps, a welfare check, and a free Obama phone!

    On the tenth of Christmas my government gave to me QE5, a cooked BLS a cookin,
    2 Billion in national debt, derivatives a bubblin, student debt explodin, QE4in,
    higher taxes, my food stamps, a welfare check, and yet another Obama phone!

    On the eleventh day of Christmas my government gave to me a stock market crash,
    QE5in, BLS a cookin, National debt explodin, derivatives a bubblin, student debt a soarin,
    QE4in, government a taxin, my food stamps, my welfare check so I can
    inhale bath salts, and shiny new Obama phone that is free for me!

    On the twelfth day of Christmas my government gave to me an economic collapse,
    stockmarket a crashin, QE5in,BLS a cookin, National Debt explodin, derivatives a bubblin,
    student debt a soarin, government a taxin, food stamps so I can buy Santa some cookies,
    the welfare check, and my twelfth Obama phone!

    • Nicnak

      I hope all your Obama phones are iPhones… You can resell them on eBay for a good price … :-) and buy an Obama iPad to register for a free Obama care! :-)

    • PeaceAngel

      THAT is PRICELESS

      Merry Christmas to you.

    • A D

      You forgot the illegals they need Obomaphones as well, healthcare, housing, welfare and Mr Oboma listens to the criminals sob stories…

    • A D

      60%+ believe the Gov owes them money, food, obomaphones, healthcare ALL paid by someone else. If you object you are labeled racist, since he is our dear leader.

    • A D

      Obomaphones and racial division, strife, class envy, just pure 100% evil Oboma with his FLIES on his face.

  • seth datta

    It is the end game of control. All the TBTF are beholden to the bank of international settlements, which is the final debtor to be owed and will own everything. It is claimed the Fed will own the entire bond market by 2018. As such, the banking oligarchy will ‘own’ the United States by this point. And with globalization, they are playing this game with other countries, destroying them, like Greece and Cyprus.

    The book of Revelations talks of this and even non-believers would have a hard time to deny that there is correlation with prophecy. Once the bankers ‘save the day’ by suggesting that the debt can be wiped away by a cashless, anti-God one-world-global-currency, their empire will be complete. From that day on, if you disagree with the bankster, your credit will be turned off and you will not be able to buy nor sell. This is assuming you took their mark/image in the first place, which assures you an eternity in hell according to the Bible.

    It is time to get right with God, learn to be self-sufficient (starve the beast by obeying God’s laws) and know that the Lord may not give you riches, but he WILL provide in times of need. And burn those who disobeyed. The banksters WILL fall; it is only logical, for their own insanity and ignorance will destroy them.

    • 65starship

      your imaginary god won’t do anything

      • seth datta

        Go back to the hole you came from.

        • 65starship

          why because i point out your delusions

      • jaxon64

        starships are imaginary…a loving Creator and Intelligent Designer of the cosmos is real….

  • DJohn1

    The debtors are the loaner’s slaves. That too is in the Bible and is correct. If you owe someone money you become their slave.
    We as a nation owe China a whole bunch of money.
    Guess where that leads towards . . .
    When their time at the Casino is ended, someone has to pay the piper. All those derivatives can fold up and be worthless. When that happens, not if, the bankers become slaves too.
    Mortgages are only profitable if they are based on economic reality. Reality check is that with high unemployment demand is down for owners wishing to sell their property. Demand down means prices are down. These derivatives are based on Mortgage Packages. Those packages are full of foreclosed properties. Numerous people with unemployment have crashed and burned financially. In one block alone in an average community there might be 5 foreclosed properties on a street of 25 houses.
    Here is how it works. The bank and the government get together. The rule is that the house must sell for two-thirds of the value of the money owed in the mortgage. The government picks up the cost of the other third. The people are still liable down the road for the money the bank lost, but often have went totally bankrupt.
    This brings down the value of the properties in general. What sold for 104% of value 5 years ago is often now worth about 80% of what it was previously worth on the open market.
    The real estate tax system is really based on past value! But eventually every six years there is a new assessment of value in most counties. We are at that point now. And the value is based on market value. The assessor is cheating. He is valuing the properties higher than they are worth. But a lot of people are challenging that value in appeals. Still Real Estate taxes are down and things supported by those taxes are going under.
    The derivatives market is made up of real estate.
    Class one mortgage packages are bought and sold all the time. Usually in a number of house loans.

    So the entire derivative market is likely to crash and burn at any time. When that happens none of these too big to fail banks will survive the crash.

    • ConcernedAmerican

      Even those that skipped college because they were trying to be financially responsible, by avoiding debt, are slaves. If one gets up every day to go sonewhere they really don’t want to go, to do something they don’t want to do, aren’t they also slaves? If one is working very hard for very little pay aren’t they near slavery. Many of the working poor, and blue collar people, might feel like they are very close to slavery. Do these people’s lives belong to themselves? Do they truly have a choice in continuing to work at a job they are miserable in?

      Good point about debtors being a slave to the lender. I just wanted to add more food for thought.

  • davidmpark

    So, that’s it then?

    Give up? The United States is finished?

    Well… yeah, I guess that’s it.

    I wanted to fix it. This news of the banks and the news of the constant iniquity and little trust amongst each other; even if the raw materials were opened and such, the damage has been done.

    I know that a multi-sided civil and international war was on the horizon. Wanted to advert it. Save lives. Have peace and prosperity. There must be a reset then. Maybe we’ll get it right the next round.

    I’ve got plans and some means to do it. The Church is also prepared better for what’s coming and will be the rally point. Wonder if I play my hand right, maybe those raw materials could be bought for a song? Or a pound of oats?

    • Gene Baugh BBA

      It’s just a depression. The United States is not finished. We have survived four of these things and this is the fifth. Don’t give up on your country yet.

      And next time, fifty or sixty years from now, it will happen all over again.

      • Azrael

        No, there won’t be another one and this country won’t survive simply because the crash will be so large that there will be nothing left – the amount of debt and speculation floating around in our economy far exceeds all public and private property in it.

        • Rodster

          Agreed, It will be worse than Detroit. There is NO way we bounce back from this because of the level of criminal corruption from those at the top including the 2 party gang in Wash DC and The Federal Reserve.

          That’s why the Govt is so hellbent on disarming the public. They are expecting a violent pushback and they don’t want an angry, armed population. This only happens when you are expecting the worse. It will be The Hunger Games for us and the World when the dust settles.

          That’s what The Elite want.

        • JustanOguy

          Not entirely true. Wall St. will certainly burn but numerous opportunities will be created for those that can think outside the box..

          Just do a little studying up on the Great Depression and see who thrived and who crashed.

          Some of today’s biggest companies were founded in the Great Depression.

          • davidmpark

            At the moment, kids can’t even open a lemonade stand without a food handler’s permit, a business license, a sales tax permit, a temporary occupants license… I don’t see any new Fortune 500 companies coming out of this depression.

            The underground economy is far more stable than our current public economy. Not the black market; that’s something entirely different. The new powerhouses will probably come from there.

          • Azrael

            There can’t be a thinking outside the box when you no longer have a box.
            Some people thrived during the Great Depression because there was still enough wealth to redistribute. What will it happen when there will be nearly none left?

      • davidmpark

        Thanks for the encouragement.

        The only thing left is for enough state’s to call a constitutional convention to try and fix this without Columbia’s involvement and input. If that happens, then there’s a chance we could fix this.

        So far, I don’t know if any have passed resolutions for a constitutional convention. The people need to put on the pressure.

  • Fred

    I keep hear. That. It’s going to crash on the brick is it going to crash

  • Gene Baugh BBA

    There may soon be even fewer banks if the markets move up from 2009 was just a bear market rally that is about to roll over into a final leg down to bellow the 2009 lows.

  • JailBanksters

    Two questions:
    1. Why Do we need Banks?
    2. Why can’t the Bank be Government Owned ?
    and 3rd, Why do we need Inflation ?
    and 4th, If a Money=Gold and Silver do we really need Central Banks?

    • Azrael

      Welcome to the Communist party – at least you realized by yourself that Marx was right.

      • JailBanksters

        A Government run Bank does not mean communism, in fact it would ensure a Capitalist System stays a Capitalist System.

        And, And at the moment we have a Capitalist System that privatizes the Profits and Socializes ALL the Loses. That’s Communism!. It’s a Capitalist system with Communist tendencies, which is different to China with a Communist System and Capitalist tendencies.

        • DiscouragedOne

          Point taken, but our government is so corrupt it will happen either way, what is the difference?

          • JailBanksters

            To change it needs a absolutely massive civil uprising. Which is why the ones at the top have ensured they stay at the top with all the Military Toys to protect against change. It would need the Military to switch sides.

    • Ludwig von Mises

      We don’t have inflation!

      • JailBanksters

        I get the sarcasm
        But the real Inflation is enormous, but most people don’t realize that smaller food packaging and the same price is stealth Inflation. And it is not just Food, it’s everything. That’s why it’s stealthy, people can’t put 2 and 2 together.

    • Gregge K Johnson

      You could have been a song writer ,for John Lennon.

  • Michael Payne

    Gold and Silver are on a steep decline. Seems to me that the banking problems are solved.

    The big banks take over, and so no bank is ever going to fail.

    Your article is like the icing on the cake.

  • Tim

    The yield on the 10-year hit a high of 2.86% today. Taper off.

    (Sigh)

    • Ohio Loan Officer

      For every 10 point tick up in the 10 Year we are seeing about a 5% slowdown in home buying. That will then translate into a further decline in home prices.
      The Law of Supply & Demand will always rule the day.

      • Tim

        This confirms my belief that the Fed will not taper because they cannot allow interest rates to rise. Thanks for sharing that.

      • JustanOguy

        Spot on. For people like me that understand cash flow, I love low home values. Too many people look at low home values the wrong way… partially because the Banksters and Government don’t want low home prices and have brainwashed everybody over the years.

        Seriously… WTF should anybody care if their home is worth $1 Million dollars unless they are going to use it as an ATM machine or sell it?

        In Europe and the U.S., we have homes / farms / land that have been in the family for 50+ years…. that obviously have no mortgages.

        Rule #1 — Own thy own home free and clear. That would go a very long way so people would not be slaves of debt.

        • ConcernedAmerican

          Rule#1 is impossible in the USA due to the fact that we rent our land, farms, homes from the government in the form of property tax. Some people are losing farms/homes that have been in the family 50+ years simply because they can not afford the property taxes.

          • Douglas M. Green

            E. Zachary Wright! And with our debt problems mounting, those property taxes will increase to finance the ponzi. Any captive customer, i.e. bridge tolls, alcohol and tobacco taxes, and property taxes will be used to raise money. I read yesterday where a toll into Manhattan costs trucks OVER $100 now! Anything captive will be viewed as a cash cow and indeed we RENT our property from the gubment and “rents is gonna be too damn high!”

  • Douglas M. Green

    Michael, the true exposure of the banks is bad enough as it is that you do not have to mislead with your article. When you say a bank has exposure to $100 trillion of derivatives, a layperson reader thinks they could lose $100 trillion and you do nothing to clarify that misperception. In reality, the bank’s exposure is, for example, the difference between a fixed rate of 4% and a floating rate of 3% times that notional value of $100 trillion, or $1 trillion. Still a lot of money that could easily cause cascading defaults and take the system down, but please do not throw figures out there that you know will be misconstrued by anyone who is NOT schooled in finance. I love your articles and agree with 99% of what you say, but nonfinance people need to know the true figures as best you can convey them and this issue is misleading.

  • sonofseawolf

    Hi micheal and ec bloggers,
    a long long time ago in a galaxy far far away, lol.
    a dark and swarthy Emperor said to Darth banker,
    ‘everything is going according to plan. soon, young bankers will be one of us. And, the rebellion will be crushed.’ Lol.
    protect yourself at all times 14/5

  • XSANDIEGOCA

    We have learned nothing. 2008 was a time to dismantle these Godzillas. Now, they are bigger than ever and when they go the Fed will be unable to bail them out. Only China has the reserves to do it. It will be done quietly but in an atmosphere of fevered desperation. You can be sure the Chinese will exact a fearsome price. America will become a colony of China in all but name. Americans will stand by railroad tracks, starving, as their wheat rolls by on its way to China.

  • Mondobeyondo

    How ’bout another BBB (Big Banker Bailout)? – aka TARP v.2014…. since it worked soooo well the last time around?

    • jaxon64

      No more bailouts–the next financial “crisis” will see a Bail-IN. The banks will be authorized to access clients accxounts, pensions, 401k’s, retirements, IRA’s…whatever…it will be more complex in our country than Cyprus but I believe that aging americans and retirees will be hit really hard with a form of confiscation when the next bubble bursts…

      • El Pollo de Oro

        Jaxon64: I couldn’t have said it better myself. The Great Cyprus Bank Robbery, as Gerald Celente calls it, set a dangerous precedent, and it’s only a matter of time before a bail-in comes to the BRA. Self-employed people who set up IRAs rather than counting on social security alone are already being kicked in the gut good and hard by the low interest rates, but the bail-in will break a lot more ribs for good measure.

  • JustanOguy

    Thanks for pointing all of this out…. you should follow up with educating your readers of how to find a good solid regional or local bank.

    I personally do NO banking/business with the banksters and the regional bank I do bank with is one of the most liquid banks in the U.S. that is highly conservative and does not play roulette.

  • El Pollo de Oro

    “Capitalism is dead. It was killed by four words: too
    big to fail.” —Gerald Celente

    Capitalism
    is a system that, although imperfect, generally works well when there is a lot
    of competition. But the banksters who control The Banana Republic of America
    are anti-competition, anti-free market, anti-entrepreneur, and pro-monopoly,
    and they are even more powerful now than they were when they went into cardiac
    arrest in 2008 and got bailed out at the taxpayers’ expense with the help of
    both wings of The War Party (Democraps and Republi-kkkons). Mussolini had a
    word for that type of economic system: fascism. The problem with fascism is
    that, much like communism, it is unproductive. It is only a matter of time
    until Banksters of America or Goldman Sachs go into cardiac arrest again and
    are begging for more bailouts, but good luck with that because the middle
    class, historically the favorite cash cow of the IRS (Immoral Rapists and
    Sadists), is being obliterated. There are millions of Americans who were middle
    class back in 2008 but are now the neo-poor, and even if the banksters tax them
    at a rate of 100%, it won’t make a difference.

    Michael
    T. Snyder predicts: “we are going to see some of these too big to fail banks
    actually fail.” Yes, and when that happens, the pain will be severe…….much more
    severe than during the 1930s. Hell, we are already at Great Depression-level
    unemployment (John Williams, Shadow Stats). So imagine how much worse things
    will be when Goldman Sachs or Banksters of America goes under and that casino
    known as the American middle class has been boarded up. 1932 and 1933 will look
    like a damn joy ride compared to the hell that lies ahead.

    • wombobobo

      Capitalism has been killed by people like gary2fembot

  • El Pollo de Oro

    If you’re an aging, cynical Gen-X-er like myself, you might be old enough to remember all the horror stories that abuelita/nonna told you about The Great Depression when you were growing up. The abuelitas/nonne from that generation were great at kicking butt and taking names (definitely not the upspeaking Valley Girls of today), and they had plenty of horror stories about the miseries of the 1930s (bread lines, Hoovervilles, folks who had done well during the 1920s lining up down the block to wash dishes and scrub toilets). I remember thinking, “Mamma mia, I hope I never have to go through that.” Well, fast forward to 2013. The more I weigh the evidence, the more I see that things are going to be much more painful than any of those Great Depression anecdotes I heard growing up. This is going to hurt……a lot.

    • DiscouragedOne

      My Mom and her siblings were children during the Great Depression, I heard all about it. I think this will be worse when it happens too.

    • pubpubpub

      Back to the land, my friend.

    • Orange Jean

      My dad was in his late teens during the Great Depression, but we grew up not so much with horror stories… as with practical advice and examples on how to survive if such a thing were to happen again.

      I’m sure it helped that both my parents and grandparents grew up poor (money wise) and knew how to “make do”. I also had years when I lived with very little money, but managed to survive. I don’t know how much this might help someone help someone, but I’ll share some basic info below on how we did this, for any of you interested.

      We had a fairly large family (5 kids) by today’s standards but common then. We owned 10 acres of land, half kept in hay fields and well suited for either farming or grazing animals, in a place where you could
      support your family on 10 acres if you needed to. My father’s father had a dairy and dad and the uncles knew how to raise and milk cows and take care of them, even though they didn’t keep any when I was growing up. When I was young my dad had honey bees and kept chickens and a garden and things like fruit trees and grape vines were used for landscaping.

      We were taught to honor work, and all us us kids were expected to get a part time job at 16 and when we did we were charged 50% of our take home pay for “room and board”. We were also expected to save at least half of what was leftover after that. We were expected to leave home and support ourselves at 18.

      My family didn’t have a lot of cash (dad was a firefighter), but did a lot of things to conserve money. My brothers were expected to learn how to fix their own cars, plumbing and things that broke (my dad’s specialty… seemed he could fix anything). My father didn’t approve of hunting but the boys were all taught to fish. We were all encouraged to learn to cook and garden, and as a girl I was encouraged to learn to sew, knit, etc. Lights were always shut off when someone left the room and not used if there was enough daylight for whatever you were doing. Heat was not turned on until it got really cold outside and us kids spent most of the time playing outdoors… so we were used to it. Radio and TV were never put on unless someone was actually listening or watching it.

      We also did a lot of things like kept food in storage (large freezer and a big basement with shelving full of canned goods, always bought things like toilet paper in bulk). We bought most of our food in bulk like whole cases of canned goods an would stock up on things like day old bread at places my parents, aunt and uncles found where we would go on short trips annually to buy food that were “seconds” (but safe). And we always ate from what we stored. Candy and sweets only allowed a few times a year so there wouldn’t be big dental bills.

      We also always checked the town dump first when there was something other than food that we needed, before buying it. No shame attached to dumpster diving here!

      Entertainment was mostly activities that cost little or nothing or were educational… like playing outdoors, going on picnics or “mystery rides”, swimming in the local swim hole in the summer or ice skating and sledding on our pond and hills in the winter, reading books from the library, or a few times a year going to a museum.

      In retrospect, I think it was a good way to grow up and did help prepare us to live with very limited cash flow. We all know how to be frugal. The knowledge of how to do things never leaves you and so main thing I would worry about if we have another depression would be more about health concerns or crime.

  • 2Gary2

    Go Obama-tax those mother fing rich and spread the wealth–this is why I voted for you.

    I believe this is the defining challenge of our time: Making sure our economy works for every working American.
    It’s why I ran for President. It was at the center of last year’s
    campaign. It drives everything I do in this office. And I know I’ve
    raised this issue before, and some will ask why I raise the issue again
    right now. I do it because the outcomes of the debates we’re having
    right now — whether it’s health care, or the budget, or reforming our
    housing and financial systems — all these things will have real,
    practical implications for every American. And I am convinced that the
    decisions we make on these issues over the next few years will determine
    whether or not our children will grow up in an America where
    opportunity is real.

    Greg Sargent:

    “This is a major speech on a topic that American presidents normally stay away from,”Tim Smeeding, an expert on inequality at the University of Wisconsin, tells me, adding that it compares in some ways to Franklin Delano Roosevelt’s addresses. “The fact that a sitting president faced with a crowded agenda had the courage to discuss this overarching problem is historic.”

    A few key takeaways from the speech: Obama described the decline in economic mobility as a direct
    consequence of inequality — as opposed to arguing that lack of mobility
    is itself the problem — and as the product of trends that are decades
    in the making. He cast the need to ensure that ”opportunity is real” for
    our children as “the defining issue of our time.”

    Obama also argued that current levels of inequality and lack of
    opportunity as out of sync with the country’s founding values, noting
    that “the premise that we’re all created equal is the opening line in
    the American story,” and that the way to preserve that promise is to
    ensure that “success doesn’t depend on being born into wealth or
    privilege, it depends on effort and merit.”

    And, crucially, Obama described the overall problem as the result of the rich pulling away from the rest.
    He noted that the share of the country’s wealth is increasingly going
    to the top while tax cuts for the wealthiest have cut into investments
    that benefit the rest, emphasizing that this has made it harder for poor
    children to escape poverty.

  • A D

    Mr Oboma is doing exactly what he said he was going to do, ‘spread the wealth’. With socialism everyone lives in MISERY. But they get Obomaphones, welfare, foodstamps, HUD…..

  • piccadillybabe

    The Volcker rule may save the American people from the these mega banks and their ability to bring on massive economic calamity with their high-risk trading practices. This rule is rearing its much dreaded head in the legislature and and it is set for approval on December 10. The Volcker rule is slated to stop banks with federally insured deposits from making trades that could threaten their stability. The TBTFs will be stopped dead in their tracks and will have to start doing business without the adrenaline rush and putting the economy at risk any longer. I am sure Wall Street is not happy, no more criminal mischief with this rule.

    • DiscouragedOne

      Let’s see if it actually happens, it would be nice.

    • Joe Kleinkamp

      The people who run the banks are a whole lot smarter than the people who run the government. Bankers already have plans to make up for anything lost to the Volker rule should it be implemented. In fact, once the rule is fully read and understood people will find it’s a whole lot less restrictive than the politicians want us to believe. The pervasive influence of the lobbyists almost guarantees it.

      • piccadillybabe

        JP Morgan was fined to the tune of $920 million for violating trade laws when the “London Whale” lost billions in bets last May. It was also fined over $80
        million for credit card scams in an unrelated incident. None of their shanagins is going unnoticed anymore. They are being held accountable and fined accordingly.

  • A D

    All I know is I got the FREE OBONGOCARE and a OBONGOPHONE with the King of Welfares face on it.

  • A D

    OBONGOCARE is the best healthcare, like the USSR winter is the cure…

  • Citizen X19

    If you were in the banking business, would you put your banks in poor neighborhoods? Only if you want few depositors and you like to be robbed on a regular basis. Believe it or not, banking is a business, not a social program.

  • Joe Kleinkamp

    No sympathy for the banks but why would they keep branches open when they’re not needed? Years ago we’d all stand in long lines defined by the velvet ropes waiting to cash our paychecks on Friday evenings. Or make deposits or withdrawals or apply for loans or cash social security checks or buy bonds or cash public assistance checks. Most of those things are now taken care of electronically online or at ATMs or using debit cards at retail stores. You enter a bank now and chances are you’re the only customer there. In poorer neighborhoods payday loans and the cash economy have made banks obsolete.

  • Philip Arlington

    It is how banks are regulated which matters, not how large they are.

    Banking in the UK was dominated by the Big 4 for almost a hundred years, and it didn’t do any harm until Gordon Brown introduced “light touch” regulation after falling for the idea that financialization boosts growth. The Australian and Canadian banking sectors are dominated by a handful of banks, but they largely escaped the folly due to effective regulation.

    • Anon

      Effective regulation? What are you high on and would you please share as it must be some good stuff if you think our banks are even close to regulated. Did you not see any of the numbers in the article above? If there was any regulation at all these banks wouldnt have trillions of dollars loaned out that they dont have.

  • DJohn1

    My parents lived through the depression. My Dad became a printer before World War II. He did not go to college though I considered him to be extremely well educated. He worked for 50% wages. Served a 7 year apprenticeship and became a journeyman printer. With his craft union card, he could go anywhere and work anyplace in the world back then.

    They used to walk instead of ride a bus because the token amount for a bus did not meet their plans. The were engaged for 3 years before they finally saved enough to get married in 1937. In 1939 the entire world blew up around them. The British Pound went from an exchange of $5 a pound to around a $1.80 a pound. It never really recovered. They went to socialism because there was nothing else out there at the time to save a bankrupted nation.
    In 1949, my parents gave up. They saved enough money and went to Canada. Dad found McCalls in Dayton, Ohio in the 50s and we came here and stayed. Eventually we all became citizens in this country, though my brother having been born here didn’t need to apply for citizenship.
    That was the 50s. This is now. I noticed a long time ago that money was unstable. That you save money but the money you save is worth a lot less than it should be worth.
    The game rules have changed. Money I saved in the 50s is worth 10 cents on the dollar! My parents lost 50% of the value of their money between 1939 and 1949!

    My own savings lost over 90 cents of its value between 1970 and 1980.

    Finance and Appraisal is an excellent course in college. It teaches relative worth of money. It teaches you that the price of everyday commodities is the true value of money. If milk and eggs cost x number of cents in 1950. What do they cost today?
    And that is the game that banks have always played with the American Public.
    The rules have changed and what was is no more.
    IN the past, buying a home meant your savings and investment in the house went up by about 4.5% per year. This covered the Real Estate Agent’s fee. People often bought and sold within a 3-7 year period of time. The 4.5% on a $100,000 home added up so that there was a huge margin of profit in actual figures.
    We are dealing with a fluctuating currency and that 4.5% no longer exists. We are actually losing value on property held in the last 14 years.

    So the gambling makes sense to a banker. We are dealing with a fluctuating value of the money earned. What is worth $1 today is easily worth ten cents tomorrow.
    It makes sense to the average person. Why save if the savings is worth 10 cents on the dollar tomorrow? The strategy is to spend everything and go into as much debt as possible and pay it back at 10 cents on the dollar. Only it doesn’t really work.
    Two factors are throwing a monkey into the works.
    1. People are unemployed and no longer earning a living.
    2. Retail goods from abroad have no sense of reality in real value. They are being produced at what in reality should be $10 is actually being sold for $1.
    This also effects prices in Real Estate. Real Estate is just a commodity like any other. That means the house I bought for $100,000 is likely only worth between 70-80 thousand on today’s market.
    The response is people walking away from their homes when they get unemployed. Stick the bank with the house that is worth less than the mortgage you took on it.
    If you are unemployed, on food stamps, and other welfare programs that makes sense. The loser is the bank that loaned you the money.
    The bank must get two-thirds of the value of the mortgage loan you took. But the property is no longer an asset that is worth two-thirds of that value. So the bank fraud is that they sell the loan to foreign investors and stick them with the loss.

  • Stuart

    Assets that come through fraud and deception are they real ?

  • EconomyTrap

    Hey I now this comment is not related but I feel I need to say it…
    Bitcoin will be the cashless society wanted by the globalists for over 100 years, RFID chip implants are right around the corner, put the two together and what do you have?
    We all know about the leaked “2017 deadline” set at Bilderberg meeting to chip every human on earth…and the next year is big for jewish calendar with four blood moons.
    I feeling hopeless lately, don’t now which way to turn, to invest, to prepare…all I know is we better be ready to create your own food, work on your own oldschool vehicles, have a clean supply of water, and be ready to barter with skills, medical, alcohol, food, and the like (forget gold and silver, toilet paper will hold ore value), or I’m afraid you will have to submit to the Mark.

  • Rick Caird

    I have said for a while that Dodd Frank was about reducing competition and propping up the TBTF banks. It had nothing to do with our banking system.

  • Gay Veteran

    One problem is that a LOT fewer people live on farms now. Plus our industrial base is now in China.

    • El Pollo de Oro

      Gay Veteran: As brutal as the Great Depression was, the USA had a major advantage it doesn’t have now: manufacturing. The words “made in the USA” carried a lot of weight back then. Now, the only thing the BRA manufactures is bubbles.

      • Gay Veteran

        listening to Gerald Celente makes you a very educated person!

  • FounderChurch

    Banks are not really businesses and never have been, throughout history. They have always been quasi governmental created entities.

    Unlike real businesses, which make and sell things, banks make nothing and hence can sell nothing. This is why large numbers of countries just take them over. They are not really part of capitalism or free enterprise. Nor are they private property either.

    This is just one more reason they always prefer and support Democrats.

  • Zach Watkins

    Dodd-Frank didn’t fix this here?

  • Drgold

    Just a side note, the number of US Credit Unions are also diminishing greatly, at the rate of over 1 per day, or 365+ per year.

  • pubpubpub

    This has been their plan.

  • pubpubpub

    This is FRB.

  • J M

    I wish more Austrian school economists, or anyone for that matter, would talk more about derivative exposure. People are ignoring this for a reason.

  • Robert Ryan

    Reading some of these incredibly stupid comments it would seem to me that conservatives have orchestrated a campaign on this site to divert attention away from this extremely disturbing article on our reckless banks and once again try and shift the blame for the worsening Economic Crisis onto the poor who barely subsist on paltry government aid. The ENTIRE American Financial Sector should have been PERMANENTLY NATIONALIZED after the Financial Crisis that struck in late 2008/early 2009. The American people never signed on to such a ridiculous monopolistic concentration in the Financial Sector but their ignorance and political apathy has allowed this to occur. If the Derivatives (convoluted swindling instruments that SHOULD BE BANNED) exposure is even a fraction of what is portrayed in this article we are in for an extremely difficult time. Not all of these Derivatives may go bad but many will especially as interest rates inevitably rise. Americans have come to accept insane levels of debt as normal but I guarantee that this will change when the GREATEST DEPRESSION strikes! Call me conspiratorial but I sometimes wonder if the U.S. Government, knowing that the Greenback is ultimately doomed, doesn’t have a New Currency “waiting in the wings.” Even if this is the case the transition from the Dollar to a New Currency will be WRENCHING. I say PERMANENTLY NATIONALIZE the U.S. Financial sector and try the greedy reckless pigs who are currently running it with HIGH TREASON!

  • Robert Ryan

    Derivatives are opaque, extremely dangerous in essence gambling instruments that should be Banned, and this goes especially for INTEREST RATE DERIVATIVES. Nationalize the greedy and extremely reckless U.S.financial sector in its entirety and get rid of the thieving and incompetent Federal Reserve which is a consortium of private bankers and is NOT part of the government. Make it easier for employees to unionize. Restore our manufacturing base and build up our high technology base. America can no longer afford to be the world’s policeman which its not even good at being as it lost major wars in Vietnam, Iraq, and Afghanistan! Develop a crash plan AND BE WILLING TO SPEND THE BILLIONS OF DOLLARS that it is going to take to get us off of depleting fossil fuels. Nationalize the crucial energy sector. What will we use when our Dollar finally collapses from the staggering amount of debt both public AND PRIVATE-now over 50 TRILLION dollars and counting? Will a new fiat currency be issued or are we finally going to get some gold and silver backing of any new currency? China is the rising hegemonic power in the world though right now its debt-ridden economy is in a slowdown mode. But if they recover and then go on to issue a gold-backed Yuan we may all end up carrying Yuan notes around in our wallets or as credits on whatever cards the government decides to issue us. We will no longer have the world’s reserve currency and it could end up being the Yuan. MONEY IS POWER, need I say more? Obama is just another Wall Street puppet, a toe-tapping Uncle Tom for the ten percent of Americans who own 80% of this nation’s financial assets. Don’t you think it strange that no Wall Street executives have been prosecuted for the blatant fraud that they committed during the Housing Bubble of the 2000′s? And yet they’ll arrest and prosecute YOU for stealing twenty lousy dollars! The American people have to stop being taken in by the superstitious claptrap of religion and stop being distracted by sports and start facing the sobering realities that are rapidly approaching. Progressives in this country must become a lot better organized than Occupy Wall Street was. It fizzled after only about a year. We must move forward into the future and this is going to take DETERMINED STRUGGLE.

  • Robert Ryan

    Warning to readers of this site: it is controlled by the Ultra-Right-Wing Patriot Movement! They are not progressives and may have links (though this is not certain) to the Fascist Department Of Homeland Security. They are Christian Fundamentalist nuts and supporters of Corporate Capitalism and this is why they keep taking down my blogs. They are USEFUL IDIOTS FOR THIS NATION’S RICH AND SUPER-RICH!

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