Are banks going to start failing?

[David]

I got a call from a relative yesterday asking my opinion. They said they have about a million dollars in an FBTX (stock symbol) bank in various CD's. I'm not a financial guy (somehow I managed to get an economics degree in a previous life without learning anything about economics ), but I looked at their financials and suggested my relative get their money out even with a penalty of about $20K. They're taking out all but one CD that's under $100K.

So the question is, "are we about to have banks start failing?"

It sure looks like it to me.

[NICKG]

if you get treasury bonds...you will always get at least your $ back...if the bank fails they are only insured to 100k per account i think

[Porsche-O-Phile]

Yes. I think the next torpedo to hit the financial sector's hull will be more. . . *ahem*. . . "revelatory" information about the extent and depth of exposure banks like Citigroup, Washington Mutual and Wells Fargo have to bad (or potentially bad) mortgages that are going into default. I really feel like these numbers are seriously understated and it could even force one or more of the big guys into bankruptcy.

Yes, I think it's that bad and no amount of "funny accounting" is going to offset the fact that when people bought houses for way more than they were worth with money they should never have been allowed to borrow in the first place.

People right now CANNOT AFFORD HOUSING (unless you're Wayne), whether they're living in it or looking to buy it. It is way, way, way, WAY out of whack with salaries and historical proportion of household income. Until this comes back into balance, we're going to have very big problems in the financial sector.

Just one guy's opinion, but I think this stuff is all pretty much common sense and gets right down to basics/fundamentals. Somewhere along the line, banks got too "sophisticated" and started basing their behavior on models/analysis that are completely disconnected from the basics.

[nostatic]

times like these I'm glad i don't have a lot of money, but do have lots of ammo.

[lendaddy]

Originally Posted by Wayne at Pelican Parts

YES. But there is a trick, this little nugget is worth it's weight in gold:



-Wayne

Yea, I'm going to go a head and file this under "Things I'll likely never need to know."

[Rick Lee]

Originally Posted by nostatic

times like these I'm glad i don't have a lot of money, but do have lots of ammo.

True dat!

[dtw]

I know someone who has pulled a majority of their money out of the market and has purchased gold. Some 'in the market' but a lot of it, actual ounces troy of gold. Seriously. Not sure how it would look in tinfoil hat form, I should mention it.

[David]

Originally Posted by Wayne at Pelican Parts

YES. But there is a trick, this little nugget is worth it's weight in gold:

http://www4.fdic.gov/EDIE/

It's a klunky tool, but it shows you what your FDIC coverage could / should be if you make some relatively easy changes to your account. Adding beneficiaries will add $100K worth of insurance *for each veneficiary* onto the account. Here's a non-real world example, if you had $700K balance:


-Wayne

I didn't know about that either until yesterday (I guess I don't have enough money to know such things.) My mom (not the relative in my first post) said she had over $100k in the same bank in 2 CD's but one of the CD's has me as the beneficiary so she should be covered.

[lendaddy]

Originally Posted by dtw

I know someone who has pulled a majority of their money out of the market and has purchased gold. Some 'in the market' but a lot of it, actual ounces troy of gold. Seriously. Not sure how it would look in tinfoil hat form, I should mention it.

I still don't get the gold thing at all. OK "at all" is a stretch, but I don't get it.

"Hi, I want a loaf of your bread...here's .004 ounces of gold"

"Gold? I don't want your gold, I need oil and/or wood for my barn. Got any of that"

"But I transferred all my wealth into gold when the economy collapsed, don't you have to take gold?"

"WTF do I want with your shiny metal? Bring me a 2x4 and we'll talk."

"But the radio ad said......"

[stomachmonkey]

Originally Posted by lendaddy

I still don't get the gold thing at all. OK "at all" is a stretch, but I don't get it.

"Hi, I want a loaf of your bread...here's .004 ounces of gold"

"Gold? I don't want your gold, I need oil and/or wood for my barn. Got any of that"

"But I transferred all my wealth into gold when the economy collapsed, don't you have to take gold?"

"WTF do I want with your shiny metal? Bring me a 2x4 and we'll talk."

"But the radio ad said......"

Saw something on craigslist yesterday where some guy was looking to buy a motorcycle and had some silver ingots to pay with.

[Rick Lee]

Originally Posted by dtw

I know someone who has pulled a majority of their money out of the market and has purchased gold. Some 'in the market' but a lot of it, actual ounces troy of gold. Seriously. Not sure how it would look in tinfoil hat form, I should mention it.

About 10 yrs. ago I had to go to some folks' house to take a loan app. When I got there, they were browsing through a wife catalogue, looking for a wife for their son. When I asked them what they were using for a down payment, they said gold. I asked if that was gold certificates or what exactly. They said, "No, we have gold." My underwriter told me I'd have to go back and take photos of it. But I think they ended up just paying cash for the place and maybe the dowry too.

[Porsche-O-Phile]

I think copper is worth more these days in terms of manufacturing value than gold.

[Spud]

The thinking with these gold bugs is that when the economy colapses and the paper dollar is worthless, then gold and silver will be the new money. Everyone will know the value of an ounce of gold/silver, and this will be how goods are bought and sold. If you need a 2x4 you go to the guy that's selling 2x4's and give him an amount of gold/silver = to the cost of his goods. He is selling 2x4's so he can get gold/silver to buy carrots for his kids. The guy selling carrots wants gold/silver to buy milk, and so it goes.

[wrecktech]

Originally Posted by lendaddy

I still don't get the gold thing at all. OK "at all" is a stretch, but I don't get it.

"Hi, I want a loaf of your bread...here's .004 ounces of gold"

"Gold? I don't want your gold, I need oil and/or wood for my barn. Got any of that"

"But I transferred all my wealth into gold when the economy collapsed, don't you have to take gold?"

"WTF do I want with your shiny metal? Bring me a 2x4 and we'll talk."

"But the radio ad said......"

I have to agree here, I have always thought gold was worthless. If the economy collapses food, water and fuel will be the new currencies.

[Porsche-O-Phile]

And ammo.

[Neilk]

Originally Posted by 125shifter

I didn't know about that either until yesterday (I guess I don't have enough money to know such things.) My mom (not the relative in my first post) said she had over $100k in the same bank in 2 CD's but one of the CD's has me as the beneficiary so she should be covered.

David,

Don't get any ideas now that you know you are on her good side.

[Bill Douglas]

With the economy in termoil (spelling) the gold price is all over the place, so you really need to know what you're doing to buy it at the right time.

Historically speaking, paper currency was just a "one dollar share" of the gold bullion that the central government owned. But certain governments just keep printing the stuff, so each "share" is a smaller share.

My sister has rather a lot of money in cash and I recommended she foccus on not loosing it rather than trying to make an extra % more in profit this year. I said to put it into what we call an On Call account where you can go in any time and get the cash out without it being fixed term or needing to wait a week or two for administative reasons (and will have lost it by then if the bank is in trouble).

[JeremyD]

Buy fuchs - they seem to be on only thing that's not dropping in price.

[Rick Lee]

Originally Posted by Porsche-O-Phile

And ammo.

In a real crisis, which would you rather have? A case of ammo or some gold? Seems to me lead is the better buy. Besides, ammo prices have skyrocketed recently.

[Rikao4]

well if I have the ammo and gun..I take your gold..
not your's Rick..you have gun too..
I go find someone with gold but no-gun.
Rika