Quote:
Originally Posted by Ron61
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Think about this - at the end of 2007 the FDIC balance sheet indicated a reserve balance of just over $53 Billion. At year-end 2008, the FDIC reserve was $19 Billion. YIKES!
There are two important facts to note about the balance sheet.
First, as of December 31st (2007), the FDIC only anticipated losses of insured institutions to amount to $124 million in 2008.
Second, about $19.0 billion of their assets are held in U.S. Treasury securities and mostly at face value. Two questions arise. What is the market value of those securities today? What might the market value of those securities be if they lose their AAA rating?
Thus, it should be apparent that if additional financial institutions go under, the staff of the FDIC will be swamped and their reserves will be significantly reduced, particularly, if another large institution fails. It should not be forgotten that many of these financial institutions are interwoven into a financial web. When one part of the web is torn, it affects the entire structure.
The FDIC is in big trouble - we just may be doomed.
On the other hand, just think what would happen if the FDIC was not able to pay out deposit balances when necessary - therefore, if the FDIC goes south, America goes south. Unfortunately, with what is happening - that scenario becomes a possible reality.
By the way, the FDIC has a $100 Billion line of credit with the Federal Reserve and the Federal Reserve, along with the Treasury Department can simply print more money to take care of this short term.
Long-term, US Currency is in the dumper and with all the Obama 'stimulus' money - money that we don't have also going into circulation - look for hyper-inflation in the near future......I'm thinking that this may be a
perfect storm, just like in the movie and you know what happened in the movie.