Insane - Can they take our money ???

[RJP]

How many have noticed this, and what do you think.

Hidden inside the AIG funding package there is a clause that seems to permit raids on individual accounts. The (private) conglomerate financial firms are permitted at this point to use private individual funds to relieve their own liquidity problems. Or so it seems. So .... basically unauthorized loans from our personal assets (accounts). I don't want to sound political here as I know it is against the policy of this forum ... I am biting my tounge. I will say one thing ... has the USgov and wall street become so corrupt (or desperate ... or both) that they have now put into policy legal raids on our personal savings. The artical was in the Financial Times and has been coverd in other places since (Including Bloomberg, I believe).

Quote:
The Fed also suspended rules that prohibit banks from using deposits to fund their investment banking subsidiaries.
The Fed’s intervention was followed on Monday by the .......

Could it happen in the U.S.?

A shit storm is comming people. Get ready.

 

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[kimberland]

Well, I'm not an expert,
but I thought that was the whole business of banking.
You loan your money to the bank,
getting interest (very little) as compensation
they loan it back out again at a higher rate
and make a profit off the spread.
Your money is gone the second you make a deposit.

That's why there's deposit insurance.
We wouldn't need insurance
if the money was already guaranteed.

Or am I totally off base?

 

[AroundTheWorld]

Your money is gone the second you make a deposit.

Not only gone, but multiplied! There isn't enough paper money out there to actually physically hand everyone the balance that is in his/her account.

 

[RJP]

Up to this point, I don't believe it was possible for them to use our deposits to fund their investment banking subsidiaries. In other words ... I don't think BOA could credit their depositors brokarage/money market/checking/savings accounts to the reserve account of (failing) Merrill. Either way ... I suppose our money ends up as an FDIC liability when the bank or it's subs goes belly up. But, this potentially puts our money at more risk, which is why, I suppose, there was a rule against it. Either way, I do not think it is a good sign, and I don't think we agreed to this when we put our hard earned money into the banks.

 

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[Russ H]

I don't think we agreed to this when we put our hard earned money into the banks.

RJP. I'm not being sarcastic or flip here-- just what did you think banks did w/your money when you gave it to them? Kept it in a vault and never used it for anything, but paid interest?

And Sonya is also correct--- deposits are just the tip of the iceberg. Banks are allowed multipliers on the deposits they get. Like it or not, that's how the banking system works, currently.

Or perhaps I'm totally misunderstanding your concerns/questions.

Could you please clarify?

Thanks,

-Russ H.

 

[LightHouse]

I am not sure if it was here or another forum but there were a few links that were videos of an easy way to show how banks worked, how they were started, etc etc. they may be on youtube by now.

 

[Russ H]

Thanks, Lighthouse.

I'm guessing that since more folks are now asking these questions, more info will be googled and readily available to help people learn about our banking system and financial markets.

If this is the first time they've learned about it, I think there are going to be LOTS of people who are SHOCKED (and unhappy) with how things actually work. :cuss:

Longterm, though, I think this is going to be great, as more and more people learn how the system runs! :smx9:

-Russ H.

PS I also expect posts from Randallg/Edge/GreatBear/Piranha telling us "I do understand the markets, but I never expected them to change the rules on us!"

 

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[TaxGuy]

ahh yes it's bad enough that the dollar has already gone below the Looney, granted it has bounced back, after this fiasco how long before it dips below the peso(exaggeration, I know)

my mom worked for a bank and my dad has told me time and time again that people don't rob banks, THEY ROB US!!!

They can legally rip off consumers and do it behind a bunch of fine-print and legal text, this doesn't even include the whole housing crunch, this is all the hidden fees i.e. the $1 service fee I would have to pay for using my debit card as a debit card(but if I say "credit" there is no fee).

The best of all is how kimberland mentioned that they give you the pittance of "interest" while they make ten-fold or more by investing YOUR money, i.e. my "high yield" savings account with Chase that has a low balance(<$1k) and pays a whopping .64% while I'm sure Chase is investing MY MONEY with at least a 6.4% return... either through loaning it out or giving it to their criminal friends on wall-street. On top of that these banks make BILLIONS off of tax lien/foreclosure investments b/c they have the capital(OUR MONEY) to buy 'em up at will and when things go sour like they are now, they got good ol' Uncle Sam and again, OUR MONEY(taxes) to bail them out.... sorry for the p#%#^^$^ comment, but while we should have a laissez-faire economy(as well as a laissez-faire forum), the sad reality is this is an example that ours is far from it!!! :smxE:

 

[RJP]

Banks have "LIMITED USE" of our deposits. (Based, of course, on risk). That's why banks have also been know as "custodians" of public money. Russ, I've got no problem if my money is loaned (or multiplied by fractional reserve banking, and then loaned) to you for a Bed and Breakfast in CA (Providing, of course, you meet the requirements of being a safe loan). But this is different. There are regulations designed to protect depositors. When the barriers between investment banking and commercial banking are destroyed, that is reason for concern. Deposits in commercial banks are protected by federal insurance if they fail. (This may prove to fail also if their is a systemic failure of the financial/banking system). I don't have time now to comment further. I will try to post more later. It is a good thing to get people interested in this. This is HUGE, and it is happening NOW. Which is why our government is doing the unthinkable to try to stop it. Our FED is out of money. It is that simple. (Unless they suddenly found a few trillion under a rug in the white house). The treasury is warming up the printing presses. No government has ever printed (debased their currency) out of this type of crisis in the history of the world.

A good starting point would be Sec. 23 of the Fereral Reserve Act.

Also check out Glass-Steagall Act. (Innacted in 1933) (This may be the last nail in the coffin of Glass-Steagall)

 

[LightHouse]

I havent found the exact one i was looking for but here are a few for starters.

Federal reserve series
[ame=http://www.youtube.com/watch?v=1AzdQNKkonc]YouTube - How the Federal Reserve works. Part One[/ame] ( part 1 of 5) click on users videos for the rest

another money series
[ame=http://www.youtube.com/watch?v=_36o9TZovGY]YouTube - The Truth (1of 5) about Money: "Money as Debt"[/ame] (part 1 of 5) this is ok from what ive seen

i will look for the other set, im going to search the board later, i haven't watched this series entirely yet of either of the two.

 

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[Russ H]

Thanks to Lighthouse, JScott, and RJP for clarifying and explaining further. Excellent information. And much appreciated.

RJP, I read your first post to say that you were shocked that banks invested your money (I still read this when I revist your post, sorry). So the additional info you provide now makes your first post make more sense, to me.

(sheesh, why am I always the clueless one on these forums? Goes back to that my "dumber than I look" thing . . . )

OK, rant warning . . .

. . . people don't rob banks, THEY ROB US!!!

The best of all is how kimberland mentioned that they give you the pittance of "interest" while they make ten-fold or more by investing YOUR money, i.e. my "high yield" savings account with Chase that has a low balance(<$1k) and pays a whopping .64% while I'm sure Chase is investing MY MONEY with at least a 6.4% return... either through loaning it out or giving it to their criminal friends on wall-street. On top of that these banks make BILLIONS off of tax lien/foreclosure investments b/c they have the capital(OUR MONEY) to buy 'em up at will and when things go sour like they are now, they got good ol' Uncle Sam and again, OUR MONEY(taxes) to bail them out.... sorry for the p#%#^^$^ comment, but while we should have a laissez-faire economy(as well as a laissez-faire forum), the sad reality is this is an example that ours is far from it!!!

Here comes the rant:

Sorry, vr4playa, but I've got to say it:

You're complaining that when you give others your money, they make more with it than you!

Sooooooo . . .

STOP giving them your money, and work to get your own higher returns!

And STOP WHINING!

.64%? 6.4%?

6.4% is crap, unless you've got millions and want to park it and live off the interest.

This is the fastlane, bubba.

Start looking at how you can make 64% annual returns.

Or 640%.

There are people on these forums who have just that.

Stop being the victim and DO SOMETHING!

OK, rant over. Apologies to all for my spittle flying all over as I foamed at the mouth while ranting.

-Russ H.

 

[TaxGuy]

Russ I do respect your opinion, but just remember that was an example... the small amount in that savings account was the "startup capital" from the business I ran from Oct last year until April and nowhere close to the total profits I turned before I decided I wanted to go in a different direction.... considering $500 was my investment I did make over 1000% return(and it helped me to buy my first house), it's just that lousy savings account that gave me terrible returns

 

[Russ H]

Whining is still whining, vr4playa.

You never mentioned that this money was the liquid capital for your business-- you just complained that the banks were robbing you.

Just look at your post. See any positive energy in it?

I do apologize for biting your head off, but in my opinion, these past 3 months there have been far too many posts COMPLAINING or WHINING-- from a number of diferent folks on these forums.

This is a community of upbeat, positive proactive DOERS. I love that.

Time was, when an idea or venture was discussed in a thread, virutally every single post was encouraging-- and if posters had critique, or contrary ideas/expertise that could benefit the OP, the OP had the good grace to accept the input/feedback with gratitude, even if they never intended to use it.

That has changed.

And you'll notice that we're already seeing less of some of the more positive upbeat posters.

I don't want this to become a crappy remake of the richdad forums.

Any ideas on how to change the tide would be warmly welcomed.

(and again, apologies to all for being so full of p*ss and vinegar today. I've no idea why).

-Russ H.

 

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[RJP]

Russ was "right on" in his other post today. Whatever comes at us, we need to be ready to deal with it. In light of current economic events, eveyone should be at minimum getting their financial house in order. I for one would be interested in hearing what others are doing. The way our leaders are acting these last few days, it seems they know this thing is big. These guys know that by dabasing the currency, they run the risk of an Argentina or Zimbabwe or Japan or even Germany (Weimar Republic) type meltdown. These are drastic measures they are taking.

Thirty-first on First
Feb. 29, 1932 (Time Magazine)

Following a ruling by the governing board of the New York Stock Exchange that, after April 1, member firms must not lend securities without written consent of the owners, an action to curtail short selling, President Hoover declared:

"There have been discussions between myself and officials of the New York Stock Exchange on the question of bear raids. . . . During the latter part of January . . . there was a large increase in the short account which unquestionably affected the price of securities and brought discouragement to the country as a whole. I again expressed [my] views to the managers of the Exchange that they should take adequate measures to protect investors from artificial depression of the price of securities for speculative profit."

And from the New York Times article yesterday:

As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,†the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.â€

So ........... What are you guys doing??? There are a lot of bright minds on this forum. What steps (if any) are people taking. This is still America; the greatest county the world has known. We have the freedom to do whatever we wish. Even if the current situation turns out to be not as severe as it now looks, it makes sense to at least take some small steps (just in case).

Some steps I have already taken and/or am in the process of investigating:

- Investigate the financial stability of your bank(s). Are they at lease "B" rated? Might as well be with a bank that is in better shape to weather the storm. (Some economist are pridicting at least 1000 bank closures before this is over). You can find ratings at bankrate.com and thestreet.com. Who wants to go thru the hassle of a failed bank.

- Reduce debt. Pay off credit cards and any revolving debt. Try to get out of adjustable rates and switch to fixed rates if possible.

- I'm looking into Swiss annuities now. Does anyone have any experience with these?

- I am also looking at Swiss bank accounts as a temporary holding place for cash to hedge any futher decline in the U.S. dollar. This has to be done in person with your passport. I am looking into Swiss banks with branches in Canada (of course with the funds held in Swiss francs.)

- Real estate in other countries. What countries??? Anyone look into this? I am thinking of Uruguay. Mostly because I would like to travel there. Great beaches. Mild weather all year long. Low crime. Many Europeans vacation there. Lots of Beef! I love beef! Lots of clean water. Rising real estate values. Still afordable beach front properties.

- Cash. Have some cash and be ready. My grandfather spoke many times about the great depression and how real estate could be bought for pennys on the dollar after.

Any ideas anyone??

 

[MJ DeMarco]

I bought Gold on Friday at about noon. By the closing bell, it was already up 4%.

I will be buying more as well as silver. Hard assets seem to be the best insurance policy if a meltdown occurs.

 

[unicon]

Go back to conceptual big picture concepts!

All this activity is about buying time, there is nothing productive about it unless you put it under the financial function and even this is a too late defensive structuring.

Any and every entity has the basic 4 functions of Buying, Selling, Production, and Finance.

If you could look at the US and its fully integrated Balance Sheet (I wish someone here had those numbers including unfunded liabilities which is 70 trillion alone) it would show that the US is and now has a capacity problem (the first question in business).

The capacity problem is a financial problem in that the US is using up all its goodwill and restructuring capability and it no longer has any more room. Taking on debt that can no longer be serviced. provides only one way out - nationalizing the currency.

Financial restructuring is only good when it is for Production, that is why the bail outs are so intrinsically bad because it rewards all the wrong people. The concept is to buy time for the "Institution" but if the bad behavior is just repeated the substance of the problem has not been solved. The bail outs are not a proactive action to support productivity, but a reactive action to buy time only. This is not the purpose of the financial function.

The burden is pushed as always into the court of "Production" which also has a capacity problem in that our greatest technological growth took place in the 90's where the production was the greatest putting lots of money in government coffers. The "Production Concept" can produce miracles but to burden it with a handicap of 10 years of spending and waste not to mention a balance sheet absorbing all the worlds liabilities bailed out is not reconcilable.

Hardship will increase production as the beauty of debt is that it is always paid back "by the borrower or the lendor." This will result in power to the people independant of government as people only go to zero, negative is only on the balance sheet, the lendors will pay the debt.

The credability of government is gone long ago, currently their is a sales job going on to the rest of the world while nationalizing the debt (printing like wildfire). Pure production cannot get us out of this problem it is just a fact.

Finally the US can only be a Snake Oil Salesman to its people and the rest of the world only so long as time is of the essence - there is no easy way out and its back to basics.

 

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