Bailout for Dummies – Part I

[TheBreeze]

An excellent article over at Zero Hedge that shows us all how screwed we really are:

As more data emerges, Zero Hedge believe the real risk to the Bailout program is in fact the liability side of the balance sheet. The bottom line is that every dollar printed by the Treasury directly goes to fund (and dilute) a dollar in deposits, bypassing M1-M3. If the $8 trillion pool in total deposits realizes that it is supported by assets which even the government is saying are worth fractions on the dollar, the risk of a wholesale systemic bank run becomes unstoppable even with all the government backstops in place, as the latter will be contingent on continued willing recipients of those rapidly devaluing pieces of paper known as U.S. Treasuries and once that assumption is questioned or outright proven false, all bets are off.

http://zerohedge.blogspot.com/2009/04/bail-out-for-dummies-part-1.html

[jpinpb]

I’m a dummy, so I want to understand. How can the banks collapse if the government – I mean taxpayers – will continue to pour money in the black hole (and hearts) of the banks?

Seems like there’s no end to how much the government (taxpayers) will give. It’s not a flesh wound. The patient is bleeding to death, but they keep pumping blood into it. The monster is not dying as long as the blood (money) keeps flowing.

[jpinpb]

I’m a dummy, so I want to understand. How can the banks collapse if the government – I mean taxpayers – will continue to pour money in the black hole (and hearts) of the banks?

Seems like there’s no end to how much the government (taxpayers) will give. It’s not a flesh wound. The patient is bleeding to death, but they keep pumping blood into it. The monster is not dying as long as the blood (money) keeps flowing.

[jpinpb]

I’m a dummy, so I want to understand. How can the banks collapse if the government – I mean taxpayers – will continue to pour money in the black hole (and hearts) of the banks?

Seems like there’s no end to how much the government (taxpayers) will give. It’s not a flesh wound. The patient is bleeding to death, but they keep pumping blood into it. The monster is not dying as long as the blood (money) keeps flowing.

[jpinpb]

I’m a dummy, so I want to understand. How can the banks collapse if the government – I mean taxpayers – will continue to pour money in the black hole (and hearts) of the banks?

Seems like there’s no end to how much the government (taxpayers) will give. It’s not a flesh wound. The patient is bleeding to death, but they keep pumping blood into it. The monster is not dying as long as the blood (money) keeps flowing.

[jpinpb]

I’m a dummy, so I want to understand. How can the banks collapse if the government – I mean taxpayers – will continue to pour money in the black hole (and hearts) of the banks?

Seems like there’s no end to how much the government (taxpayers) will give. It’s not a flesh wound. The patient is bleeding to death, but they keep pumping blood into it. The monster is not dying as long as the blood (money) keeps flowing.

[TheBreeze]

I believe he’s talking about deposits above the FDIC limits (which I think are currently $250K?).

[TheBreeze]

I believe he’s talking about deposits above the FDIC limits (which I think are currently $250K?).

[TheBreeze]

I believe he’s talking about deposits above the FDIC limits (which I think are currently $250K?).

[TheBreeze]

I believe he’s talking about deposits above the FDIC limits (which I think are currently $250K?).

[TheBreeze]

I believe he’s talking about deposits above the FDIC limits (which I think are currently $250K?).

[davelj]

[quote=TheBreeze]I believe he’s talking about deposits above the FDIC limits (which I think are currently $250K?).[/quote]

Wrong. The $8 trillion represents ALL deposits in the domestic banking system. All DDA accounts now have unlimited coverage. And through CDARs, anyone (individuals or businesses) can get up to $50 million in time deposits fully covered by the FDIC. Uninsured deposits are a pretty small portion of the total at this point. (Prior to the crisis they were about 30% of the total.) Anyone that has uninsured deposits at this point isn’t paying attention.

Now, the real question is how you can have the temerity to post such an article without even understanding what the author is trying to convey. I just don’t get it. Bizarre.

[davelj]

[quote=TheBreeze]I believe he’s talking about deposits above the FDIC limits (which I think are currently $250K?).[/quote]

Wrong. The $8 trillion represents ALL deposits in the domestic banking system. All DDA accounts now have unlimited coverage. And through CDARs, anyone (individuals or businesses) can get up to $50 million in time deposits fully covered by the FDIC. Uninsured deposits are a pretty small portion of the total at this point. (Prior to the crisis they were about 30% of the total.) Anyone that has uninsured deposits at this point isn’t paying attention.

Now, the real question is how you can have the temerity to post such an article without even understanding what the author is trying to convey. I just don’t get it. Bizarre.

[davelj]

[quote=TheBreeze]I believe he’s talking about deposits above the FDIC limits (which I think are currently $250K?).[/quote]

Wrong. The $8 trillion represents ALL deposits in the domestic banking system. All DDA accounts now have unlimited coverage. And through CDARs, anyone (individuals or businesses) can get up to $50 million in time deposits fully covered by the FDIC. Uninsured deposits are a pretty small portion of the total at this point. (Prior to the crisis they were about 30% of the total.) Anyone that has uninsured deposits at this point isn’t paying attention.

Now, the real question is how you can have the temerity to post such an article without even understanding what the author is trying to convey. I just don’t get it. Bizarre.

[davelj]

[quote=TheBreeze]I believe he’s talking about deposits above the FDIC limits (which I think are currently $250K?).[/quote]

Wrong. The $8 trillion represents ALL deposits in the domestic banking system. All DDA accounts now have unlimited coverage. And through CDARs, anyone (individuals or businesses) can get up to $50 million in time deposits fully covered by the FDIC. Uninsured deposits are a pretty small portion of the total at this point. (Prior to the crisis they were about 30% of the total.) Anyone that has uninsured deposits at this point isn’t paying attention.

Now, the real question is how you can have the temerity to post such an article without even understanding what the author is trying to convey. I just don’t get it. Bizarre.

[Author]

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