IS THE PARTY OVER?
January 4, 2009
We have been watching the Stock Market, the multi-billion dollar bailout, bank closings, mortgage defaults and now the entire economic mess is being turned over to the “unelected financial elite.” Patrick J. Buchanan writes: “The Crash of 2008, which is now wiping out trillions of dollars of our people’s wealth, is like the Crash of 1929, likely to mark the end of one era and the onset of another. We are witnessing what happens to a prodigal nation that ignores history and forgets and abandons the philosophy and principles that made it great. For years Americans have spent more than we earned. We saved nothing. Our standard of living is going to fall. The party’s over. What we are witnessing today is how empires end.”
Ron Paul stated: “The bailout is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. You can’t stop a problem of too much spending and too much deficits and too much monetary inflation with more of it. So I’m positively opposed to the bailout and believe it will just delay the correction that is required.” Paul goes on to say: “We are in the middle of something very big. We’re not talking about trillions of dollars, the obligation is immeasurable. An economy structured on debt and credit lies at the root of the current financial meltdown. The end comes when the people reject the dollar and I think we’re getting awfully close to this. The answers are in the free market, sound money and our Constitution.”
Thomas M. Hoenig, President of the Federal Reserve Bank of Kansas City wrote in the fall issue of the President’s Message, “I can tell that if you are asking the question; is my money safe in my bank? – the answer is almost always, Yes. Between l980 and l994 more than l,600 banks nationwide either failed or received financial assistance amid turbulence in agriculture, energy and real estate markets. The number of banks involved in that crises is far larger than what we are seeing today. The Federal Deposit Insurance Corporation (FDIC) said 117 institutions were on its ‘PROBLEM LIST.’ Out of approximately 8,500 commercial banks, this represents only a little more than one percent of all banks. The number also makes it clear that banks remain a good place to store your money. Moreover, even if your bank fails, you will get all your money back up to $l00,000 immediately.” (The $l00,000 figure was recently changed to $250,000)
Hoenig goes on to say: “As far as the customers of a failed bank are concerned, the FDIC is the insurance agency and customers will get their money the next business day.”
A NOTE OF INTEREST – A married couple could actually hold three accounts in the same bank. One under each individual name, one in a joint account, and have $750,000 worth of their deposits covered by the FDIC.
Having lived through that period when more than 1,600 banks failed, I remember very well what happened. A high percentage of those banks were in rural areas and farming communities. The problem came about because farmers had overextended in land purchases and when interest went to 20% they couldn’t make their annual land payments. These community banks were taken over by larger regional banks that weren’t so heavily involved in farm loans.
This time it isn’t small community banks losing millions of dollars. Today it’s Bear Stearns, IndyMac Bank, Lehman Brothers, Fannie Mae, Freddie Mac… the list goes on, all mega-banks involving not millions, not even billions, but trillions of dollars. Refinancing is out of the question. Those l,600 plus banks that were taken over in the l980’s were small banks, many with fewer than one billion dollars in assets. At that time the number of community banks decreased by 36%, while larger banking organizations increased their shares of banking assets significantly. Today when Bank of America purchased Merrill Lynch, and JP Morgan Chase acquired Bear Stearns, it shows how vast amounts of financial power is being concentrated into the hands of a few financially powerful elite.
According to the Kansas City Federal Reserve, more than 100 central bankers, policymakers, and economists recently met in Jackson Hole, WY. The title of the meeting was “Maintaining Stability in a Changing Financial System.” Ben Bernanke, Federal Reserve Chairman; Mario Draghi, Governor of the Bank of Italy; and Stan Fischer, Governor of the Bank of Israel, discussed the Financial Crises in Historical Perspective. This crisis is of historical perspective and is affecting finances on a world wide basis.
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Joan Veon sees the crisis as a globalized, feudalistic structure that the Europeans and Commonwealth countries have. America’s move to feudalism is in the process of being finalized. The backbone of the middle class is home ownership, which also includes the property under the building. Joan believes that the new system will change America’s entire mortgage structure to leasehold, a system used all over Europe, whereby individuals will pay a monthly rent to the owner of the property that their house sits on. There will be a total restructuring of property rights in America to fit our new third world status. All of the rights of property ownership will be changed forever - - “Gone With the Wind.” Pat Buchanan may have been right when he said “the party’s over.”
© 2009 Derry Brownfield - All Rights Reserved