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Bank Run Imminent as FDIC Expanded Deposit Insurance Ends Dec 31st
11-15-2012, 01:23 AM #1
Ghost of 51:50 Member
Posts:285 Threads:58 Joined:Nov 2012
As of January 2013 the FDIC stops offering 100% coverage for all insured deposits. That amounts to $1.6 trillion in deposits, 85-90% deposited with the TBTF mega banks. Once the insurance ramps back to $250,000 the FDIC risk amelioration offered to large depositors will cause them to flee from the insecurity of the much reduced FDIC coverage. This money will rotate immediately into short term Treasury securities. The treasury, in order to handle this flood of money, will immediately offer negative interest rates. This financing will resemble the .5% negative interest rate offered by the Swiss and Germans on the funds flooding to their banks from Spain, Greece and Italy.
This will be a bank run much larger than the Euro banks flight to safety.

I have noticed two disturbing matters that will most certainly come as a result of the Fed MBS program.
1. The funds from the Fed purchases will rotate to the Too Big To Fail Banks. This debt is already junk bond status due to the nature of the underwater mortgages and delinquencies, hence the reason for the new Fed goon Squad going after borrowers.
This debt will be as bad or worse than the debt of Greece, Spain and Italy, rated CCC-

2. The banks receiving these funds will rotate the money immediately into short term treasury securities that will be priced at NIRP. the reason for that follows:

3. As of January 2013 the FDIC stops offering 100% coverage for all insured deposits. That amounts to $1.6 trillion in deposits, 85-90% deposited with the TBTF mega banks. Once the insurance ramps back to $250,000 the FDIC risk amelioration offered to large depositors will cause them to flee from the insecurity of the much reduced FDIC coverage. This money will rotate immediately into short term Treasury securities. The treasury, in order to handle this flood of money, will immediately offer negative interest rates. This financing will resemble the .5% negative interest rate offered by the Swiss and Germans on the funds flooding to their banks from Spain, Greece and Italy. This will be a bank run much larger that the Euro banks flight to safety.

4. The Social Security Trust fund must make at least 5-6% return to maintain its balance and provide income to the SS recipients. The TF is still guaranteed to go bankrupt by 2033, 21 years from now. The TF is required by law to invest in Treasury bonds. The actuarial problem now facing the TF is that they will be rolling old bonds yielding 5.6% into a yield pool averaging 1.4%, a 75% drop in income. This dramatic yield drop coupled with a 60% increase in SS recipients from 50 million to 91 million in the next 10 years will assure the TF will go bankrupt in about 10 years.

This irreducible math is going to prove an insurmountable obstacle to those who are recently retired, have long live genes or plan to retire in the next 10 years. If the SS TF goes bankrupt then benefits will be cut by 25% . Inflation adjustments were never able to front run the lost in income. The inflation rate of 8% today and 15% tomorrow will destroy the senior investment pool.
Another few unintended consequences of QE 3. Thanks Ben. May you rot in hell!

http://www.silverdoctors.com/us-bank-run...-dec-31st/

Website: http://www.666themark.com

Blog #1 - The Dream State
http://the-dream-state.blogspot.com/

Blog #2 - RFID and You!
http://rfid-and-you.blogspot.com/
11-15-2012, 01:31 AM #2
JayRodney ⓐⓛⓘⓔⓝ
Posts:31,279 Threads:1,438 Joined:Feb 2011
If that Mayan thing doesn't get us this will...

İmage

wonder.gif
11-15-2012, 01:31 AM #3
Octo Mother Superior
Posts:42,603 Threads:1,469 Joined:Feb 2011
The shït storm will be epic. popcorn2.gif
11-15-2012, 01:33 AM #4
Ghost of 51:50 Member
Posts:285 Threads:58 Joined:Nov 2012
(11-15-2012, 01:31 AM)Octo Wrote:  The shït storm will be epic. popcorn2.gif


Truly. Come over that evening and I'll make us some parmesean cheese popcorn and we'll watch the empire burn. I got to warn you though: I don't use any of that microwave popcorn stuff. I cook the good stuff; on the stove, with REAL parm on it.

cheers.gif

Website: http://www.666themark.com

Blog #1 - The Dream State
http://the-dream-state.blogspot.com/

Blog #2 - RFID and You!
http://rfid-and-you.blogspot.com/
11-15-2012, 02:51 AM #5
オタマジャクシ Member
Posts:1,310 Threads:32 Joined:Nov 2012
The banks are too big to fail so they are too big to run.

At best a bank can do a slow walk or a clumsy waddle.
11-15-2012, 02:55 AM #6
Shadow Mrs. Buckwheat
Posts:12,782 Threads:1,182 Joined:Feb 2011
There won't be any bank runs. If it looks like there will be, the Sentinel Ruling will stop it. coffeetime.gif
11-16-2012, 05:27 AM #7
yankees skier
Posts:5,898 Threads:215 Joined:Feb 2011
I ran to check my accounts. I'm safe. chuckle.gif

Biere.
11-16-2012, 05:32 AM #8
Octo Mother Superior
Posts:42,603 Threads:1,469 Joined:Feb 2011
(11-15-2012, 01:33 AM)Ghost of 51:50 Wrote:  Truly. Come over that evening and I'll make us some parmesean cheese popcorn and we'll watch the empire burn. I got to warn you though: I don't use any of that microwave popcorn stuff. I cook the good stuff; on the stove, with REAL parm on it.
cheers.gif


Sounds great! And hells no, we don't even own a microwave. I make my popcorn on the stove top and eat with Himalayan crystal salt and melted organic butter. Often! beercheer.gif
11-16-2012, 05:39 AM #9
JayRodney ⓐⓛⓘⓔⓝ
Posts:31,279 Threads:1,438 Joined:Feb 2011
chuckle.gif Moving to Finland, the economy and lack of jobs (everywhere) + being self employed proved to me I really wouldn't miss what I don't have to begin with.
Let the runs begin. I'll have another beer. beerbong.gif

wonder.gif



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