“Tons of Money” - Heavy Concept
By Daniel at 30 September, 2009, 9:26 am
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“We have tons of money to protect insured depositors,” FDIC Chairman Sheila Bair said. “This is really about the mechanics of funding.”
http://www.cnbc.com/id/33071391
Karl Denninger says:
“The entire banking system and likely The Fed, given the quantity of Fannie and Freddie paper it has been and is “eating”, is insolvent. These facts are why the government is lying - they’re well-aware of the near-zero cure rates and know that these facts mean that the banking industry has nowhere near sufficient capital to withstand these losses without folding like a paper cup getting stomped on by an elephant.
(Remember that these numbers do not include any commercial real estate losses and we have found that banks are frequently over-stating their claimed values for these loans by 50% or more - as was seen with Colonial.)
It gets better. The FDIC has a negative balance both in its fund balance and the reserve ratio projected for the end of the quarter, which is, big surprise, tomorrow. Oh, and there is this pesky problem that the FDIC has - contrary to its mandate - been issuing bond guarantees for banks, so if and when that banking insolvency is recognized the FDIC will implode into a gravity well also, since it is on the hook for the entire deficiency of those bonds that were issued with its “guarantee” should they default.”
http://market-ticker.denninger.net/archives/1476-The-Banking-System-Is-Insolvent.html
So the banking system is insolvent. And the FDIC has a negative balance. And the US government has $70-80 trillion in unfunded liabilities. And the Federal Reserve is full of toxic assets and is looking longingly at money market funds:
http://jessescrossroadscafe.blogspot.com/2009/09/fed-and-those-money-market-funds-redux.html
So everybody’s broke! How come there isn’t more discussion about this? So what’s holding up a complete collapse? Just smoke and mirrors? Am I missing something?
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