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If the system were to truly collapse, and we have seen a glimpse of it with the liquidity/credit crisis, things would be bad beyond imagining. When banks no longer have faith in each other or the system, then it's every bank for itself. The system grows ever tighter and no one can get any loan. Your collateral requirement will be 75%. This is partly what happened in the depression of the 30's.
In this area of NY State, many farms went bankrupt as the spiral down developed. Upstate was once almost 90% farmland. The result of that is why there are vast tracts of state owned land throughout NY-the state ended up with the deeds of all the broke landowners after all the succession of banks passing assets on to the last bank standing finally escheated to state ownership(there's a term I haven't used lately) when all the banks were gone. Some counties have never recovered. There was no hope of selling the properties at foreclosure because no one had any cash left. So your state will end up with all the property in that scenario. This is gloom and doom at it's finest.
The social fallout is intense. That is where the Oakies came from, remember? Vast groups will be displaced. My family was a victim as well, after great-grandpa lost the mill in PA they set off on a great adventure looking for work. Ended up in SC and then to NY. Ma, Pa and 6 kids! They eventually had a happy ending, but it took a world war to put everyone back to work!
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