Opinion & Commentary By Linda Sutter – June 8, 2023 – Cartoon Credit to B. Rich Hedgeye
In 2008 when the banks went under there was a loss of $520 billion dollars. 1 1/2 years ago 722 banks informed the Feds they had 50% of unrealized losses. They have gambled in the market and have lost big.
Currently 4 banks collapsed this year totaling 532 billion dollars. 1/2 trillion total losses for banks. Just 4 banks this year had greater losses than 2008.
Folks we are in a world of hurt. This is not depression. This is not a recession. This is an economic collapse.
If you combine this with other nations trying to get rid of the dollar in the world, especially with Cina leading this we have a big problem. So what are we going to do about it?
This is where personal finance comes in. Get yourself out of any unnecessary debt. Unnecessary debt means credit cards. Do whatever necessary to pay it off even if it means taking on a second job.
Make whatever you can while you can because it is not going to last.
The big banks within United States about 6 of them plan to buy up all the small banks. It will literally be a blood bath. The question is will we be able to rely on the FDIC when these small banks go under?
To put in perspective the FDIC is pretty much close to being out of money. Especially if the larger banks keep failing . The old saying is don’t put your eggs in one basket. You may want to have accounts in other banks as a resource if one closes you have a way to get fund’s.
We are going to experience hard times. It’s time to become frugal. That means stop eating out for every meal. Stop buying things that collect dust or look pretty. We need to go into survival mode. Store away can foods, frozen foods as this year farmers may not come through.
When can we expect to notice significant change? Late this fall . And throughout 2024
Good article Linda. Many of us remember when Chetco Federal Credit Union (CFCU) failed during the 2008 financial debacle. I still remember parking spots filled to the brim, and the lines of people who either had direct deposits of their paychecks to the bank, or relied entirely on their savings at CFCU to make their monthly payments. Thankfully, I had backup banking options established and was able to pay bills through my alternate account. Those poor souls who relied entirely on CFCU for their financial transactions were in a world of hurt.
For those who were not impacted by Chetco Federal’s collapse, I will reveal what happens when a bank fails. When a financial institution is failing, the Treasury Department sends what amounts to a financial SWAT team; only without any guns. They show up unannounced just as employees arrive for work, and the employees are told to leave. The doors are locked to everybody, and that is when the audit begins. The Treasury Department determines what the Institution’s liabilities are, and what assets they have available to pay their debts. These assets include the value of outstanding loans, Treasury Bills, various investments in stocks and bonds, and depositors savings. During the audit, everything inside the bank comes to a halt; employees are without a job, and depositors cannot access their savings or make any transactions.
It takes three months on average for a financial institution to be restructured; audited, sold to another institution, or liquidated. In the case of Chetco Federal Credit Union, they were sold to Coast Central Credit Union. My pension check was set up for direct deposit to CFCU, and it takes at least a month to be mailed checks directly, or change the direct deposit to another bank; assuming there is already an existing bank account to direct deposit the funds to. I now make a habit of keeping at least one or two months of monthly expenses on hand at my alternate financial institution, just in case my primary bank fails.
What changed between 2008 and now is that Banks are no longer to be “Bailed-Out;” at least that is the concept in-theory. Now, depositor’s funds are considered property of the bank, and fair game during liquidation, regardless of FDIC coverage. Yes, the FDIC is in serious trouble, and the assets that are on hand have been rapidly depleted by Fat Cats in the large investment Banks.
My belief is that the new Central Bank Digital Currency will allow the Federal Reserve and Treasury Department enough wiggle-room to work hocus-pocus slight-of-hand to bamboozel the public once again. Instead of people lining-up at the doors of banks and at ATMs, they will be encouraged to negotiate with Artificial Intelligence Customer Service Agents over the internet or by phone with automated voice systems. No crowd control issues or public unrest. As bills go unpaid, and each of us gets fleeced of our savings and homes, we can silently pack our camping equipment into a backpack and join the rest of the homeless. At least, that seems to be the plan.
Linda, you hit the nail on the head once again; each of us must prepare for the inevitable crash. Our circumstances are worse than the Great Depression. Back then, a majority of our population lived in small towns and rural farms. Those tough people were accustomed to hard lives because the USA was still not entirely hooked-up to electricity or telephones; they still know the old ways of survival. For the most part, they could grow their own food and survive without stores and money. God help us all when this next crash happens!
One might read John Pugsley’s 1981 book “The Alpha Strategy” as his advice is still relevant 42 years later.