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No - Americans, Paradoxically, Do Trust The Big Banks

Tyler Durden's picture




 

Overnight, Frank Partnoy and Jesse Eisinger released an epic magnum opus titled "What's Inside America's Banks", in which they use over 9000 words, including spot on references to Wells Fargo, JPM, Andy Haldane, Kevin Warsh, Basel II, Basel III (whose regulatory framework is now 509 pages and includes a ridiculous 78 calculus equations to suggest that banks have to delever by some $3 trillion, which is why it will never pass) to give their answer: "Nobody knows."

Of course, while this yeoman's effort may come as news to a broader cross-section of the population, is it well known by anyone who has even a passing interest in the loan-loss reserve release earnings generating black boxes formerly known as banks (which once upon a time made their money using Net Interest margin, and actually lending out money to make a profit), and now simply known as FDIC insured Bank Holding Company hedge funds. This also happens to be the second sentence in the lead paragraph of the story: "Sophisticated investors describe big banks as “black boxes” that may still be concealing enormous risks—the sort that could again take down the economy." So far so good, and again - not truly news. What however may come as news to none other than the author is that the first sentence of the lead-in: 'Some four years after the 2008 financial crisis, public trust in banks is as low as ever" is, sadly, wrong.

Why is it wrong?

Because as we showed a week ago, the general public's "trust" and faith in banks is not expressed through the stock price of their equities, something which these days is largely determined by the Federal Reserve and the banks themselves, who not only give each other "Conviction Strong Buy" upgrades on a frequent basis but also buy each others' stocks in the biggest circle jerk imaginable, or even through slurred anecdotes at the local pub bashing Ken this and Jamie that. Instead it is expressed by how much trust the general population - the public - has put on deposit, literally, in the form of money, in either checking or, worse, savings (because under ZIRP there is no interest income, and having a savings account merely locks up one's withdrawal options) accounts with various financial institutions, or as The Atlantic calls them black boxes.

The truth is, that as of December 18, there was a record $9.2 trillion in total bank deposits: this is not only the evil 1%-ers money, but money from mom and pops - the public - who have saved cash all their lives, the bulk of it from hard work, and instead of keeping it in cash have decided to hand it over to the banks for "safe keeping." As a reminder, deposits (even savings deposits under ZIRP) are the effectively equivalent of currency in circulation. Or physical money. Money, which in a fractional reserve system is created by the fed and by private commercial banks (sometime it is surprising how much confusion there is about the money creation process: we will address this in a later article) when they create loans.

The problem, as we noted recently is that since the Lehman failure, US commercial banks have not created one incremental dollar in loans, and in fact the total amount of loans outstanding has dipped by some $120 billion in the past 4 years! And yet US bank deposits keep soaring, and as noted above have just crossed $9.2 trillion for the first time ever. Thank you Federal reserve excess reserves and shadow banking system repo (and other) transformations.

In other words, so explicit is the trust in banks and stability of the Fed-backstopped banking system that a whopping $2 trillion in excess deposits over loans have been parked at US banks.

Notably, all of the above ignores the fact that as of January 1, 2013 the FDIC's Transaction Account Guarantee program expired, making millions of depositors effecitvely unsecured creditors in what are the world's most insolvent (and most central bank backstopped) banks. This consolidated unsecured claim according to the WSJ amounts to some $1.5 trillion.

And it gets worse, because one aspect untouched in the Atlantic piece is that it is this excess differential in deposits over loans that allows banks to all be glorified, depositor-insured hedge funds and use the excess delta to gamble with risk free, Treasyrt backed depositor capital (courtesy of the Gramm Leach Bliley act which ended Glass Steagall) in the way that the JPM CIO was nothing but a massive "hedging" hedge fund with $323 billion in AUM.

This is money that the "London Whale" and his team used to distort the fixed income market so much they effectively became the market (as the Atlantic piece touched upon).

One can only wonder what other assets the banks have invested using this excess deposit base, although we are confident that valiant mainstream media effort to truly uncover the depth of the US banking system's manipulation of the US saver will gradually become apparent and known to all. 

It is precisely this "money on the sidelines" that allows the banks to bid up risk assets to such stratospheric levels that the Fed can claim victory, that the financial system can continue the theater that it is capitalized thanks to a substantial equity tranche, and that social orders can be preserved in a society in which the only thing that appears to matter is the closing trade of the Russell 2000.

Yet the paradox deepens when one considers that it is precisely this money being parked with the banks, instead of being demanded for circulating purposes that has so far avoided rampant inflation. Putting the $2 trillion in just excess deposits over loans in perspective (not the entire $9.2 trillion): there is $1.1 trillion of currency in circulation. Should all this money be pulled and enter the broader economy, one can kiss any CPI data massaging goodbye.

Which brings us to the jist of the story: on one hand, the public may be disenchanted with the US banking system, but on the other, the explicit trust has never been greater. And therein lies the rub: should this trust evaporate, and should deposits be pulled for whatever reason, not only will banks be forced to unwind a myriad in risk positions they likely still have on, but the sudden increase of what even the Fed would have to admit is M1 would result in an explosion in the prices of goods and services as suddenly three dollars are chasing what previously there was only one dollar in demand for.

So, yes, the Atlantic wrote a great story on the black box nature of the US bank system, but they missed the true punchline: America's banks and the American public are gripped in the most hated yet symbiotic "love hate" relationship in history. Should the trust truly evaporate, then the banks will have no choice but to pull the proverbial pin and send risk tumbling, and inflation soaring.

Perhaps that is the precise reason why nobody: not bank management teams, not sellside analysts, not regulators, not accountants, certainly not the Fed, not legislators, and last but not least, not the US public, is ready or even cares for a true peek inside the black boxes that make up the US banks?

Pick your poison?

 

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Thu, 01/03/2013 - 16:19 | 3119830 IvyMike
IvyMike's picture

People trust City-Statism (Civilization) too, another ponzi scheme. What else would you expect?

Thu, 01/03/2013 - 16:31 | 3119867 Unprepared
Unprepared's picture

What's your point?

Thu, 01/03/2013 - 16:36 | 3119886 DoChenRollingBearing
DoChenRollingBearing's picture

Calculus, bitchez!

Thu, 01/03/2013 - 16:45 | 3119915 economics9698
economics9698's picture

"State power ultimately depends on the perpetuation of a body of beliefs and superstitions about the benevolence and necessity of the state, and the alleged evils of private property, free enterprise, individual liberty, and the civil society. Because the citizens always outnumber any ruling class by many orders of magnitude, they must somehow be made to acquiesce in the ruling class’s plundering of their society in the name of “progress,” “nationalism,” “the greater good,” “socialism,” or whatever.

Beatings, imprisonment, torture, and mass murder are time-tested tools of the state, but they can be very costly and can instigate a revolution. Therefore, relentless propaganda is often relied upon instead to secure the power and privileges of the state and statists.

Once the people of the Soviet empire finally understood that socialist propaganda was all a big lie, the regime was doomed. At that point it was always just a matter of how much beating, imprisonment, torture, and mass murder the thugs and criminals who ran the Soviet government could get away with to keep the system going."

Dilorenzo

Thu, 01/03/2013 - 17:00 | 3119976 NotApplicable
NotApplicable's picture

The implicit backstop of TBTF cannot be considered "trust," but rather the lesser of two evils.

Thu, 01/03/2013 - 17:54 | 3120135 AldousHuxley
AldousHuxley's picture

I wouldn't put too much stock into what Americans do or trust en mass as they are pretty much ignorant bunch waiting for hard life lessons to be taught.
But stupidest are great to exploit and also entertaining according to Chinese

Thu, 01/03/2013 - 17:07 | 3119994 IvyMike
IvyMike's picture

State society = agricultural civilization, and needs brutal force in every one of it's various sociopolitical variants, whether babylonian, roman, socialist, or capitalist.

"Agriculture creates government." ~Richard Manning, Against the Grain, p. 73

"Civilization [State society] originates in conquest abroad and repression at home." ~Stanley Diamond, In Search of the Primitive: A Critique of Civilization, p. 1

"...we chose the latter [agriculture] and ended up with starvation, warfare, and tyranny." ~Jared Diamond, PhD, (UCLA School of Medicine,) The Worst Mistake In The History Of The Human Race

So anybody who advocates or promotes Civilization (City-State, State society) is necessarily a Statist.

Thu, 01/03/2013 - 17:12 | 3120015 economics9698
economics9698's picture

Ivymike aka Greenbacker Mike.

Thu, 01/03/2013 - 17:25 | 3120054 SafelyGraze
SafelyGraze's picture

"but also buy each others' stocks in the biggest circle jerk imaginable"

urban dictionary suggests that perhaps this term is not quite sufficient as a metaphor

Fri, 01/04/2013 - 04:18 | 3121324 SAT 800
SAT 800's picture

It's possible he's referring to a particularly unfortunate thermonuclear test shot called "Mike", which, if I remember correctly, was in the "IVY" test series; hence- IVYMIKE-. it was a nice example of state authority gone coo-coo.

Thu, 01/03/2013 - 18:38 | 3120264 Ghordius
Ghordius's picture

"Monopoly on force", not "brutal force"
States or Cities have no monopoly on brutality

Thu, 01/03/2013 - 19:12 | 3120352 IvyMike
IvyMike's picture

A monopoly of force isn't brutal?

Whodathunkit!

Thu, 01/03/2013 - 19:18 | 3120374 Ghordius
Ghordius's picture

ON force, not of. Like to spin-doctor?
"Free brutality is better?" two can play this game

Thu, 01/03/2013 - 18:45 | 3120291 Ghordius
Ghordius's picture

Upps... I advocate civilized behaviour... Damn!

Thu, 01/03/2013 - 19:10 | 3120348 IvyMike
IvyMike's picture

"Civilized" behavior = WAR.

"War is a staple of civilization. Its mass, rationalized, chronic presence has increased as civilization has spread and deepened."

~John Zerzan
On the Origins of War
http://www.scribd.com/doc/62268835/The-Origins-of-War-John-Zerzan

Thu, 01/03/2013 - 19:19 | 3120376 Ghordius
Ghordius's picture

Staple? Perhaps. But no exclusive rights on it

Thu, 01/03/2013 - 20:19 | 3120523 IvyMike
IvyMike's picture

Study anthropology instead of parroting City-State (Civilization) bromides that soothe and comfort.

The only way to have an organized and prolonged conflict -- that's what war is -- is to have the agricultural surplus of Agricultural Civilization.

An army does march on its stomach.

Thu, 01/03/2013 - 21:03 | 3120678 akak
akak's picture

And a troll apparently marches on his keyboard.

Thu, 01/03/2013 - 16:47 | 3119927 Cognitive Dissonance
Cognitive Dissonance's picture

Stockholm Syndrome.....bitches

<I (heart) my abuser.>

Thu, 01/03/2013 - 17:11 | 3120011 IvyMike
IvyMike's picture

Any "libertarian" who defends Civilization (State society) while calling others "statists" has both Stockholm Syndrome and a full-blown case of the Stupids.

The liberty that sincere libertarians seek was destroyed long ago when State society (Civilization) annihilated Non-State society.

As the famous anthropologist Elman Service noted:

"Many people living? in non-state societies enjoy lifeways that a number of Americans seem intent on reinventing..."

NON-STATE AND STATE SOCIETIES
faculty.smu.edu/rkemper/cf_3333/Non_State_and_State_Societies.pdf

Thu, 01/03/2013 - 17:14 | 3120019 economics9698
economics9698's picture

USA 1776-1860, 1879-1912.

Thu, 01/03/2013 - 17:27 | 3120062 Victorio
Victorio's picture

"Civilization" and the "State" or "State Society" are obiously not mutually inclusive....  stupid.

 

 

Thu, 01/03/2013 - 17:45 | 3120122 IvyMike
IvyMike's picture

Why are idiot LoLbertarian in denial of readily observable data? Civilization = City-State Society.

"The word civilization comes from the Latin civilis, meaning civil, related to the Latin civis, meaning citizen, and civitas, meaning city or city-state."

~Larry E. Sullivan (2009), The SAGE glossary of the social and behavioral sciences, Editions SAGE, p. 73

"Civilizations have distinctly different settlement patterns from ordinary societies...civilizations have a more complex political structure, namely the state. State societies are more stratified than other societies; there is a greater difference among social classes. The ruling class, normally concentrated in cities, has control over much of the surplus that constitutes wealth and exercises its will through the actions of a government..."

~The International Society for the Comparative Study of Civilizations
Western Michigan University
wmich.edu/iscsc/civilization.html

"Today less than 0.001 per cent of the world's people live outside of the direct control of state societies."

~Elman R. Service (1975)
Origins of the State and Civilization: The Process of Cultural Evolution.
[exerpt available here: NON-STATE AND STATE SOCIETIES
http://faculty.smu.edu/rkemper/cf_3333/Non_State_and_State_Societies.pdf ]

Thu, 01/03/2013 - 23:01 | 3120949 Victorio
Victorio's picture

Bullshit. It is nothing more than the dynamic interaction of individuals that realte to technology, education, division of labor,art ect.  "Civilizaton" or the state of being "civilized" is mostly just a self proclimation used to justify the destruction of another groups life and culture as they are not worthy since they are not "civilized".   The creation of the "state" or mafia is not mutually inclusive with the expression of the aforementioned dynamics. I dont care what your bought and paid for indoctrinated academics or your self rightous ass thinks.       

p.s. since when is blowhard soft science vomit considered data?

Thu, 01/03/2013 - 17:38 | 3120100 Ghordius
Ghordius's picture

I'm always very fond of those theories about the return of the non-state societies

sadly I have to see it skeptically, they have a very powerful enemy: imperialism

(and of course it's newest head, corporative-financial imperialism)

if you want the return of the non-state, you'd have to get rid of that beast, first

interestingly, the internationalist socialists have this goal, too, btw

politics makes indeed strange bedfellows

Thu, 01/03/2013 - 18:00 | 3120159 IvyMike
IvyMike's picture

There is one possible City-Statism (civilization) destroyer: global thermonuclear war. It may well be inevitable.

"Every 'small' war pulls the trigger in nuclear roulette. Each of these probabilities, by itself, is small. But taken together over a year's time, they add up to a cumulative probability which is no longer small. Taken together over a century, they make nuclear war virtually INEVITABLE."

~Dr. Martin E. Hellman
Stanford University

But other than that, I don't see any return to Non-State society, such as "anarcho-primitivists" may hope. But those folks do have an extremely well-informed critique of State society (civilization.)

Thu, 01/03/2013 - 18:30 | 3120239 Ghordius
Ghordius's picture

American? Just asking
Meanwhile we have constantly and endlessly war, war, war

Syria: we don't even fucking know if 40'000 or 60'000 dead yet

There is a point when even fiat magic can't finance moar war

1. Thermonuclear
2. ???
3. Profits!

Thu, 01/03/2013 - 18:36 | 3120254 IvyMike
IvyMike's picture

Sure there's war.

"War is a staple of civilization [State society]. Its mass, rationalized, chronic presence has increased as civilization has spread and deepened."

~John Zerzan
On the Origins of War
http://www.scribd.com/doc/62268835/The-Origins-of-War-John-Zerzan

Thu, 01/03/2013 - 18:51 | 3120301 Ghordius
Ghordius's picture

EvenMoarWar?
Btw, ever tried Gore Vidal?
Suggestion: "Perpetual War for Perpetual Peace", 2002

Fri, 01/04/2013 - 03:56 | 3121301 Element
Element's picture

Hey dickhead, if you're going to troll, could you at least troll on topic?  Thanks

Fri, 01/04/2013 - 04:09 | 3121318 Ghordius
Ghordius's picture

my fault, I got sucked in and fed the poor starving creature

Fri, 01/04/2013 - 04:44 | 3121332 Element
Element's picture

:D ... it happens

Sat, 01/05/2013 - 15:01 | 3124908 MeelionDollerBogus
MeelionDollerBogus's picture

Humans are evolved for city & state society the way ants & bees are evolved to have a colony or hive.

It's critical to our survival. To remove it is to murder all humans.

Humans need infrastructure, running water, sewers, food transport.

We're past the point when all humans can be strong farmers, woodsmen, living off the land and if forced to do so with no city & no societal infrastructure 90% of humans today would be dead inside a month.

Then disease would wipe out the rest.

What foolishness to CHOOSE that.

Thu, 01/03/2013 - 19:16 | 3120365 sgt_doom
sgt_doom's picture

I find TD's definition of deposits rather suspect, especially after perusing the last bankster derivatives report from the occ:


 

http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq411.pdf

 

(It deserves a slow and careful read, especiall the parts about 97% of the derivatives being credit default swaps (CDS), while officially 40% of those swaps are in the speculative category (naked swaps, etc.).

As far as the American people, about 100% of everyone I come in contact with are clueless as to the causes of the economic meltdown (ultra-leveraged bankster run coupled with the largest insurance swindles in human history, e.g., AIG, Magnetar Capital, Ambac, MBIA, etc.) as well as still believing America is a consumer-based economy --- no way in perdition, when that 70% consuption figure derives mostly from the top 15% doing the vast majority of the consuming.

Thu, 01/03/2013 - 19:39 | 3120420 Terminus C
Terminus C's picture

I am also curious as to what constitutes a deposit in this case.  Are the bail out monies floating around in the TBTF's considered 'deposits'?  If this is truly the American people with this much money in the bank then why is the savings rate of Americans dropping?  Are these corporate deposits?

Inquiring minds want to know.  Something is fishy about this article.  I am not in dispute with the fact that most people are clueless to the whole meltdown and why it is happening but I don't think the American public has any money to put in the bank.

Thu, 01/03/2013 - 16:46 | 3119924 Dingleberry
Dingleberry's picture

uh.....the unwashed re-elected Obama and 91% of Congress.

What did you expect? A fucking epiphany?

Thu, 01/03/2013 - 16:52 | 3119952 economics9698
economics9698's picture

"What did you expect? A fucking epiphany?"

No just the shaft up the ass. 

Thu, 01/03/2013 - 19:09 | 3120344 dow2000
dow2000's picture

Stockholm syndrome?

 

Thu, 01/03/2013 - 16:21 | 3119834 lolmao500
lolmao500's picture

And when they lose it all, they'll say they didn't know!

In other news :

http://www.thetruthaboutguns.com/2013/01/foghorn/breaking-new-york-legis...

New York Legislature to Introduce Bills Making Posession of Any AWB Firearms Illegal, Remove Grandfathering

The New York Legislature is set to consider a bill that would vastly expand the state’s current “assault weapons ban.” Here’s some of the, er, highlights:

- All firearms must either be rendered inoperative or surrendered to the police. No grandfathering, no exceptions.
- Removes the “grandfathering” exception for possession of magazines with a greater than 10 round capacity.
- Bumps up AWB-firearm possession from 3rd degree “criminal possession of a weapon” to first degree, putting simple possession of such a firearm at the same level of punishment as Rape 1 or Manslaughter 1.

Oh, and the whole thing is severable. So if one section is ever declared unconstitutional, the rest of it stays.

Thu, 01/03/2013 - 16:28 | 3119850 Jam Akin
Jam Akin's picture

Something similar going on in IL now, only much sneakier, because the bill(s) give the appearance of permitting grandfathering but with mandatory registration for many guns in yesterday's published versions.  

Thu, 01/03/2013 - 16:55 | 3119956 otto skorzeny
otto skorzeny's picture

from Truthaboutguns.com : NRA says IL senate dems don't have the votes and are going to pull the bills. The war has just begun.

Thu, 01/03/2013 - 16:56 | 3119964 lolmao500
lolmao500's picture

I wouldn't trust the NRA much, after all, they've helped pass every gun control bill.

Thu, 01/03/2013 - 17:06 | 3119988 otto skorzeny
otto skorzeny's picture

I think they had a "come to Jesus" moment when Slick Willie got the gun ban and all of those Southern Dems got their asses kicked out after that to help the Repubs take Congress. The NRA is hopefully going to take a stand on any type of ban of anything. I think I'll go feed my AK 75 drums now

Thu, 01/03/2013 - 19:26 | 3120392 Silver Bully
Silver Bully's picture

"I think they had a "come to Jesus" moment..."

Correct. There are PLENTY of Dems who are opposed to gun control or else they won't stay in office long - and they know it. Only those congress critters with a local constituency supporting gun control (like Feinstein) rub their hands in glee at the thought. Meanwhile, gun manufacturers are loving the short term effects of the bans because sales are spiking. But those bans have to get overturned or else gun sales will, uh, decline.

Meanwhile, Obama thinks he can get a gun control bill (not just assault guns, Feinstein's ban is small potatos) through Congress. He might. But everyone knows any gun control law is going to quickly face a hostile Supreme Court. There will be a lawsuit filed within an HOUR of the law's passage. Hint: precedents like the D.C. gunban getting overturned happen for a reason. Precedent matters. Unless the Dems have some kind of black mail on a certain chief justice, any gun ban faces a near-certain take down at the hands of the Supremes. Feinstein's relatively toothless ban (the gun registration database she advocates is the main cause for concern, not so much the ban itself) is an example: every U.S. politician alive knows how difficult it will be to craft a gun control law (let alone pass it).

Thu, 01/03/2013 - 21:13 | 3120676 itstippy
itstippy's picture

"... every U.S. politician alive knows how difficult it will be to craft a gun control law (let alone pass it)."

That's why Congress on both sides, Democrat and Republican, would love a nation-wide slugfest debate on gun control.  Back and forth, cater to your constituancy, blather on and on (with emotion).  Wave flags.  Wave copies of the Constituation.  Wave frightening photos of "black" guns around.  It's the perfect issue.  Better than abortion even, which is also excellent.

Both sides want to debate ANY issue but the budget.  It's the one thing they need to focus on, but there's no "winning" position to take with their constituancies.  No matter what they do on the budget they're going to get collectively tarred and feathered eventually; it's that big of a mess.

Thu, 01/03/2013 - 17:02 | 3119986 Rustysilver
Rustysilver's picture

CT legislation is talking the same $hit.

Thu, 01/03/2013 - 16:38 | 3119882 HD
HD's picture

Bans will make everyone safer. Here's another weapon of mass destruction...

"...attacks in just seven months in 2010 that killed nearly 20 people and wounded more than 50."

http://www.dailymail.co.uk/news/article-2248054/China-stabbing-22-childr...

 A store just for homicidal maniacs that needs to be shut down:

http://www.bedbathandbeyond.com/nodePage.asp?RN=110

Thu, 01/03/2013 - 17:11 | 3120008 John Doeman
John Doeman's picture

Let's be honest. The best weapon of mass destruction is the economy.

It is the ultimate WMD. 

 

Thu, 01/03/2013 - 17:35 | 3120087 jayman21
jayman21's picture

Let's be honest. The best weapon of mass destruction is the economy.

 

Let's be honest. The best weapon of mass destruction is the Private Federal Reserve Corporation.

 

Fixed it.

Thu, 01/03/2013 - 17:37 | 3120096 otto skorzeny
otto skorzeny's picture

would a cutlery block full of knives be considered a high-capacity mag?

Thu, 01/03/2013 - 20:41 | 3120589 HD
HD's picture

Indeed it would.

Only terrorists need knives. I want the government to cut my meat for me.

Thu, 01/03/2013 - 21:18 | 3120724 itstippy
itstippy's picture

Someone even tried to take a "meat axe" to the defense budget!  Thank goodness Congress stopped them.

Thu, 01/03/2013 - 16:38 | 3119893 pods
pods's picture

Smell the freedom coming out of the Rotten Apple.  I am not surprised by anything that NY pulls, having grown up there and seen the progress of the state.

No handheld phone calls, no smoking, no guns, no balls.

And every single time the residents just bend their ass over and take it.

Sidebar:

This past hunting season I got in an argument with my dad. He said his brother voted against the O due to his thinking he was going to ban guns. So I told him that the other default choice (Romney) actually did ban guns.  He retorted that it was for assault weapons, and that you don't have a need for them, so why not ban them.  

So I told him that he has no problem with the state banning guns, just that he be able to keep his preferred ones.

That is a microcosm of the whole world. Nobody gives a shit about rights, or liberty.  Just that they get theirs.

pods

 

Thu, 01/03/2013 - 16:40 | 3119899 Dr. Richard Head
Dr. Richard Head's picture

The same beltway Republicans that defend Bonner for bowing down to the "fiscal cliff".  He was backed into a corner dontcha know.

Thu, 01/03/2013 - 17:34 | 3120044 Dr. Engali
Dr. Engali's picture

I have that same conversation with people all the time. They support guns...just not those type of guns. The comment I hear the most is "When our founding fathers wrote the constitution they didn't know these type of guns would be invented. They meant guns for hunting" To wit I will tell them that they might want to do a little reading as to the actual reasons why the founding fathers strongly supported gun ownership,and it wasn't for hunting. Some of these conversations will come up with big time hunters. That's what really blows my mind. The problem is that people are ignorant and have a false belief that it can't happen here.

Thu, 01/03/2013 - 17:24 | 3120049 Mrmojorisin515
Mrmojorisin515's picture

Save us The human, existence Is failing, resistance Essential, the future Written off, the odds are Astronomically against us Only moron and genius Would fight a losing battle Against the super ego When giving in is so damn comforting And so we go, on with our lives We know the truth, but prefer lies Lies are simple, simple is bliss Why go against tradition when we can Admit defeat, live in decline Be the victim of our own design The status quo, built on suspect Why would anyone stick out their neck? Fellow members of Club "We've Got Ours" I'd like to introduce you to our host He's got his, and I've got mine Meet the decline

Thu, 01/03/2013 - 16:45 | 3119921 Stoploss
Stoploss's picture

CT shooters father was scheduled to testify in the libor scandal.

OH shooters father also scheduled to testify in libor scandal.

One CT vic family spending like drunken sailors at a whore house. (quite unbecoming of a grieving family i would guess). Same guy who couldn't wipe the smile off his face during an interview.

 

Yet none of the surviving familiy members of the shooters face any negativity?  Sure about that??

Smells like bullshit. Because it is bullshit..

Thu, 01/03/2013 - 16:48 | 3119932 ejmoosa
ejmoosa's picture

...because if you allow 'grandfathering"  some wise grandkid will one day question why some are allowed to have something why others do not.

 

This is a Rubicon Line.  It must not be crossed.

Thu, 01/03/2013 - 17:18 | 3120034 seek
seek's picture

Thanks god I live in AZ. Even though the polls are 50/50 on whether we need more gun control here, we eliminated all state-level control a few years ago.

The only think left is that the AZ law reflects federal law (if it's legal at fed level, it's legal in AZ.) It's inconceivable that we'd see possession or grandfather elimination here.

Thu, 01/03/2013 - 16:23 | 3119839 Landotfree
Landotfree's picture

Funny I don't trust the American people.   

Thu, 01/03/2013 - 16:23 | 3119841 TheSilverJournal
TheSilverJournal's picture

Why wouldn't they? After all, this is America. People have been lulled to sleep from decades of safety through being able to pay for everything by growing the ponzi and getting the rest of the world to suck up our fiat. We don't reeally have to pay for stuff here, everything will all just be okay.

 

Thu, 01/03/2013 - 16:30 | 3119842 Dr. Engali
Dr. Engali's picture

Just another testament to the stupidity of the American public. They continue to feed the beast through their ignorance and they get a little poorer each day, regardless of how many digits they think they own.

Thu, 01/03/2013 - 16:24 | 3119845 unplugged
unplugged's picture

And also wrong about "Americans mistrust the govt".  America loves govt, wihch is why it keeps getting voted in to be bigger & biggerer.  Most Americans are cattle being set up for slaughter.

Thu, 01/03/2013 - 16:25 | 3119847 G_T_A_44
G_T_A_44's picture

FDIC $11BN (with $500BN LOC @ Treasury) insuring $8+TT in deposits? Ooops.

 

http://www.globaltrendanalytics.com/2013/01/storm-clouds-persist.html

Thu, 01/03/2013 - 16:37 | 3119889 Dr. Sandi
Dr. Sandi's picture

Now wait a minute. I got the distinct impression in the posting a few days ago that a lot of this Mom & Pop money wasn't really their money. Instead, it was Fed transfers to the banks that was dressed up to look like it came from Mom & Pop.

Now we're being told that it really IS Mom & Pop and that they're the problem.

So which side of the toast are we supposed to eat first?

Thu, 01/03/2013 - 16:45 | 3119919 HD
HD's picture

My understanding is that the money IS Mom and Pops but while it's sitting in bank accounts the TBTF banks can (and do) use it to gamble...all backstopped by FDIC.

Fri, 01/04/2013 - 08:32 | 3121479 Dr. Sandi
Dr. Sandi's picture

I'm not buying this article. That money isn't from real people. They don't have it and they aren't parking it in the banks.

There are Fed fingerprints all over the money that's supposedly coming in from retail savers.

Thu, 01/03/2013 - 16:25 | 3119851 valkir
valkir's picture

Banks?They dont accept my eagles when i need cash.

Thu, 01/03/2013 - 16:32 | 3119871 negative rates
negative rates's picture

Wrong bank.

Thu, 01/03/2013 - 16:38 | 3119890 DoChenRollingBearing
DoChenRollingBearing's picture

Bank with us!  The Central Bank of DoChenRollingBearing is happy to accept gold.

Thu, 01/03/2013 - 17:00 | 3119969 Ghordius
Ghordius's picture

here some 6'000 banks, 100'000 cash for gold shops and endless juwelers and private people happy to biz with you

Thu, 01/03/2013 - 17:02 | 3119984 willwork4food
willwork4food's picture

The bank of WW4F (FDIC) accepts silver and guns.

Thu, 01/03/2013 - 16:26 | 3119853 monopoly
monopoly's picture

Excellent post. So, so true.

Thu, 01/03/2013 - 16:27 | 3119858 dick cheneys ghost
dick cheneys ghost's picture

CNBC has done their job well. Getting the sheeple to trust the banks and thus not trust gold..........or silver.............

 

bravo

Thu, 01/03/2013 - 16:29 | 3119862 Skyprince
Skyprince's picture

Hand grenade at the ready, pin pulled, but where to throw it?

 

Thu, 01/03/2013 - 16:34 | 3119881 Unprepared
Unprepared's picture

Bruno Mars' girlfriend?

Thu, 01/03/2013 - 16:30 | 3119863 busted by the b...
busted by the bailout's picture

Why not trust them?  With FDIC and Uncle Ben and his free money tree, what's to worry about?

 

Thu, 01/03/2013 - 16:32 | 3119872 AgAu_man
AgAu_man's picture

I trust CHASE... to 'ding' me regularly with monthly fees on personal and business accounts that aren't supposed to have them, and my branch manager to fix it after I call him.  It's like a game, it seems.

I trust HSBC... to keep providing cool features for its Global Premiere (>$100k) Clients.  Better stuff than BofA, 'Chaste', WF, etc.  Not so hot for regular clients. 

So, it looks like different banks treat different people differently, depending on the number of zeros to their name. 

US banks used to be good for global clients. Now they are the worst! No matter how honestly you've earned your money, or how much taxes you've paid.  It's all got to do with Uncle Sam and his old-age senility.

Thu, 01/03/2013 - 16:32 | 3119874 Shameful
Shameful's picture

One the one hand sure the banks will outlast the gov as they are to big to fail, on the other hand the money could be Corzined at any point tough call for liquid cash.

Thu, 01/03/2013 - 16:39 | 3119894 DoChenRollingBearing
DoChenRollingBearing's picture

It is smart to have REAL CA$H at home as well as electrons in your checking account.  Enough, say, for three months living expenses...

Thu, 01/03/2013 - 16:45 | 3119914 Shameful
Shameful's picture

Call me skeptical, but if the credit transactions cease than I don't see the economy lasting long.  Most likely would be accompanied by rationing anyway, so would need ones ration card (electronic?).  If a mirror of what happened in Argentina happened there would be widespread food riots within days, I'm guessing three.  In which case Federal reserve notes might not me the most useful thing to have.  Not against have some cash in the home, but I don't expect the system to close down banking and continue on for long.

Thu, 01/03/2013 - 17:11 | 3120012 chubbar
chubbar's picture

I'm in pretty much agreement with you but I'll add that most stores won't know how to operate other than on a cash basis assuming the electronic system is down. I would add that since most folks only use CC and ATM/Debit cards, someone with cash could do quite well for themselves in the interim between the electronic/banking system going down and stores closing because inventory is gone and/or no customers and/or rioting. I'd only worry about having enough gas/food money for the most part, not paying mortgages, etc.

Thu, 01/03/2013 - 16:49 | 3119879 Mercury
Mercury's picture

Instead it is expressed by how much trust the general population - the public - has put on deposit, literally, in the form of money, in either checking or, worse, savings (because under ZIRP there is no interest income, and having a savings account merely locks up one's withdrawal options) accounts with various financial institutions, or as The Atlantic calls them black boxes.

Let's not get carried away here... it's probably more of an expression of public trust in the FDIC ($250k per person per bank) and/or a lack thereof in financial securities/markets.

The biggest risk to the banks isn't trust decay but the vicious cycle that would be sparked by an inflationary spike-->funds withdrawal-->spending-->more inflation-->more withdrawals.

Thu, 01/03/2013 - 16:52 | 3119950 Tyler Durden
Tyler Durden's picture

The whole point of this article, once again, is that deposits are merely funding the banks' investments in financial securities/capital markets! There is no getting away from capital markets when deposits become discretionary investment capital of the banks' prop trading desks... sorry flow trading, because as JPM's CIO group so well proved, the Volcker rule is clearly being followed everywhere.

Finally when the banks blow up the FDIC will completely powerless to bail out some $9 trillion in gross deposits (of which X trillion are below the insurance threshold).

Thu, 01/03/2013 - 18:06 | 3120001 Mercury
Mercury's picture

I guess ignorance/trust are two sides of the same coin here. 

Retail "playing it safe" capital preservation = risk asset inflation ammo once your cash credits your FDIC insured bank account - I get it - and it only takes one to bring the whole house of cards down.

A devious run-around the failed "Let's get Americans back into the market" policies: erase the sidelines.

 

Thu, 01/03/2013 - 17:37 | 3120093 Transitory
Transitory's picture

Unfortunately, when chart 1 is broken down to it's component parts (loans), it shows real estate weighing heavily, to the tune of 3.5 trillion. So, yes, the ratio has changed, but largely due to "real estate dun blowed up". Real estate loans have remained largely flat since 2008. Would you expect them to continue linear?

Investment/manufacturing has gone bottom left to top right, though has a much smaller weight. Consumer credit up but with a sickening adjustment, purely accounting, otherwise flat.

But yes, those deposits will be used somewhere, I get that. The specifics need to be made clear, though, as real estate skews the chart.

 

 

Thu, 01/03/2013 - 20:52 | 3120646 Cathartes Aura
Cathartes Aura's picture

 

The whole point of this article, once again, is that deposits are merely funding the banks' investments in financial securities/capital markets!

indeed!  which makes all those here who still bank in the TBTF's whilst mocking "teh sheeples" just a tad. . .

yeah.


Stockholm Syndrome, h/t CogDiss above.

Thu, 01/03/2013 - 17:01 | 3119979 tip e. canoe
tip e. canoe's picture

"vicious cycle that would be sparked by an inflationary spike-->funds withdrawal-->spending-->more inflation-->more withdrawals"

not when spending is largely electronic and the banks (and/or their spawn Visa/MC) make a cut off of every transaction.   velocity benefits the banks.

Thu, 01/03/2013 - 16:35 | 3119884 unclebill
Fri, 01/04/2013 - 00:10 | 3121099 Lendo
Lendo's picture

Dolan pls

Thu, 01/03/2013 - 16:38 | 3119891 Investor Wizard
Investor Wizard's picture

I am going to start my own bank and see if I can get some of that free Uncle Ben money to not make loans.

Thu, 01/03/2013 - 16:40 | 3119895 Al Huxley
Al Huxley's picture

This essentially explains why the FED can get away with spouting such utter bullshit as 'several members feel that QE should be wound down before the end of 2013' (and then who's funding the fucking deficit?) - because the public by-and-large, although they claim to be angry at the system, don't understand it, and still basically trust it.  They basically assume that they may be taxed and fee'd to death, but they won't be outright cheated.  And so we all get outright cheated.  There's a massive underestimation of the criminality in the system today.

Thu, 01/03/2013 - 16:52 | 3119910 LawsofPhysics
LawsofPhysics's picture

Yes, and some may still trust it even after the supply lines break.  For the intelligent and innovative few with possession and control of real resources this will be a time of great opportunity.  The rest will die broke in prison or FEMA camps.  That which cannot be sustained, won't be.  Some things never change and it has been a while since the herd was culled anyway.

Thu, 01/03/2013 - 18:18 | 3120207 AgAu_man
AgAu_man's picture

Indeed!  Math, Physics, and... Human Nature: All so predictable.  Part of the reason the Elite can always be 'laughing all the way to the bank', while making money from the indebted Plebeian masses.

Thu, 01/03/2013 - 20:01 | 3120477 Almost Solvent
Almost Solvent's picture

Look out with that Cull the Herd argument. 

 

Idiots around here like Pants McPants will tell you that you should start with yourself.

Thu, 01/03/2013 - 16:41 | 3119902 Seasmoke
Seasmoke's picture

I don't even trust myself and I am supposed to trust Jamie and Lloyd.

Thu, 01/03/2013 - 16:43 | 3119905 devo
devo's picture

Bullish for mattresses.

Thu, 01/03/2013 - 16:44 | 3119911 buzzsaw99
buzzsaw99's picture

$9T is only like $30K per person in the usa. I suppose everyone should buy clunky old gold with which to conduct their day to day business?

Thu, 01/03/2013 - 16:46 | 3119926 Al Huxley
Al Huxley's picture

No, certainly not - better to leave the money safely in the trust of BofA Citi or JPM, so as to have the convenience of ATMs.

Thu, 01/03/2013 - 16:51 | 3119938 buzzsaw99
buzzsaw99's picture

I suppose you have no use for clownbux? Al Runs down to the coin shop every time he needs cash, now that's convenient! lulz lulz lulz

Thu, 01/03/2013 - 16:57 | 3119966 Al Huxley
Al Huxley's picture

No, I've accepted your dichotomy that I must have either all of my assets in physical metals, or all of them at a TBTF institution, and have gone with the institutional convenience of TBTF.  Because I'm sure they'll look after me, and anyway I'll be quick enough to be at the front of the line in the event of  a bank run.

Thu, 01/03/2013 - 17:04 | 3119991 buzzsaw99
buzzsaw99's picture

Yeah, and I've accepted yours that all those people with that $9T clownbux on deposit have no other assets, it's all cash baby! muah muah muah!

Thu, 01/03/2013 - 16:50 | 3119942 SheepDog-One
SheepDog-One's picture

Why would the only choice be 'TBTF bank' or 'gold'? Use a local credit union to conduct your day to day business.

Thu, 01/03/2013 - 16:52 | 3119948 buzzsaw99
buzzsaw99's picture

I use both a bank and cu. I don't use the big banks though because they are maggots.

Thu, 01/03/2013 - 20:57 | 3120657 Cathartes Aura
Cathartes Aura's picture

there ARE alternatives, but apparently the incentives to stay with a TBTF are too tantalizing. . .

Thu, 01/03/2013 - 17:24 | 3120048 Northeaster
Northeaster's picture

"$9T is only like $30K per person in the usa."

Right, but the majority of Americans are living paycheck-to-paycheck and don't have $30k sitting there. Personally, I'm split with my bank and my mattress, so the average is skewed. "If" something happened, I'd be impaired, but not wiped out, then again in an "if" scenario, bank doors would be shuttered anyways. 

Thu, 01/03/2013 - 17:41 | 3120107 Shizzmoney
Shizzmoney's picture

I'm about 80/20 on my mattress/bank ratio (although I don't got much).

I think the whole point people who trust these big banks think that when there is uncertainty, they should be putting money IN, when in fact, they should be taking it OUT.

Thu, 01/03/2013 - 16:44 | 3119913 Al Huxley
Al Huxley's picture

I would in fact wager that the FED and the gov't is itself underestimating the gullibility of the majority.  Why limit themselves to 'Some are of the opinion that QE should be stopped in 2013'.  Why not just come out with something like 'there is no longer a deficit, and the FED's balance sheet is now back to pre-2007 levels, all is well, the economy has recovered, and unemployment is 3%'.  Fuck it, go big - who's going to challenge the figures?  And if they do, just throw the fuckers in jails.

Thu, 01/03/2013 - 16:46 | 3119923 SheepDog-One
SheepDog-One's picture

HA HA exactly nailing the point!

Thu, 01/03/2013 - 16:45 | 3119916 SheepDog-One
SheepDog-One's picture

Americans who trust the TBTF banks then deserve to get raped by them over and over again, and I dont want to hear them whining about getting smacked with 21% interest and how their upside-down mortgage is so unfair and all....eat it.

Thu, 01/03/2013 - 16:51 | 3119917 Dr. Engali
Dr. Engali's picture

All that money earning them nothing...... Brilliant..... they can lever that up to 90 trillion , then rehypothcate it for another 100 trillion,write some credit default swaps for another 50 trillion , etc... etc... etc.... And we are worried about a 1.5 trillion dollar deficit.

Thu, 01/03/2013 - 16:57 | 3119963 SheepDog-One
SheepDog-One's picture

An FOMC bell off in the distance tolls scaling back of QE...pressure for rates rising....shit might be changing pretty soon it only takes 1 of them see the keg floating and run for the exit.

Thu, 01/03/2013 - 18:24 | 3120223 AgAu_man
AgAu_man's picture

Yup, you got it.  This was the "first shoe to drop", for those with astute observation powers and the wit to Think-Plan-Do accordingly.  The "2nd shoe to drop" is only months away, my AWACS Early Warning Radar tells me.

Thu, 01/03/2013 - 16:47 | 3119931 lolmao500
lolmao500's picture

And with the latest FED comments, Bondzilla might have awaken.

Thu, 01/03/2013 - 16:54 | 3119957 SheepDog-One
SheepDog-One's picture

Well, something sure needs to snap things out of their Hopium induced comas.

Thu, 01/03/2013 - 16:48 | 3119934 ReptilianSlaveMaster
ReptilianSlaveMaster's picture

Trust the banks, they will make you richer than that Richie Rich fellow

Thu, 01/03/2013 - 18:11 | 3120192 A. Magnus
A. Magnus's picture

Richer than a cartoon character? You can do better than that...how about making me as rich as John Corzine?

Thu, 01/03/2013 - 18:30 | 3120232 AgAu_man
AgAu_man's picture

LOL.  Good one RSM, you 'GHW Bush' look-alike. Nice case of subtle irony, using Richie Rich as an imaginary character.

Thu, 01/03/2013 - 16:52 | 3119945 NEOSERF
NEOSERF's picture

It is less trust vs. the alternative which is if they fail, your money isn't going to be worth much under your mattress either.  Nor will gold or silver until a market mechanism comes back that adequately measures the value of gold...ie. if your family is starving and have a gold coin, you will trade it for a can of Spam.  Granted gold/silver will come back on the grid as valuable quicker than paper money but by then it is pretty much a reset anyway.

Sat, 01/05/2013 - 07:13 | 3124911 MeelionDollerBogus
MeelionDollerBogus's picture

"Nor will gold or silver until a market mechanism comes back that adequately measures the value of gold."

The mechanism is here now.

Some stack more food & water than gold & silver. Some stack more guns 'n' ammo.

Various imbalances will be rectified with trade. Some with no coin changing hands.

Anyone desperate enough to swap a gold coin for a can of spam is dumb enough to have no gold.

Thu, 01/03/2013 - 17:05 | 3119951 TomGa
TomGa's picture

Hmmm....  Have you ever tried electronic Bill-Pay or making payroll with cash stuffed in a mattess?  Not so convenient.  Besides, how many mom & pop depositers actually understand fractional reserve banking, know how their "money" on deposit is being risked, or even know that the FDIC is essentially flat broke regardless of their guarantees? 

Thu, 01/03/2013 - 16:55 | 3119960 pragmatic hobo
pragmatic hobo's picture

this article makes no sense ... assuming 15M households in the USA, $9.2T comes out to over $60K per household in excess cash savings. We know the majority of US household do not have this kind of excess cash in their bank account. So for most part the cash deposits come from the very wealthy, who usually can afford to hire financial advisors to put their cash to work. If so why would these advisors, who likely get to skim the profit, advise these wealthy clients to put the money in zero interest bank deposits?

Thu, 01/03/2013 - 16:57 | 3119965 Reptil
Reptil's picture

Well... nature doesn't favour the stupid.

Thu, 01/03/2013 - 16:57 | 3119967 caimen garou
caimen garou's picture

bankers are in the same catagory as used car salesmen,lawyers,and most doctors! always get second third and forth opinons.

Thu, 01/03/2013 - 17:02 | 3119985 SheepDog-One
SheepDog-One's picture

Nice study I just found on 'psychopaths professions'

1. CEO's

2. Lawyer

3. Clergy

Well, that's what makes up Wall St and US govt entirely.

Thu, 01/03/2013 - 17:07 | 3119998 TheSilverJournal
TheSilverJournal's picture

"Money, which in a fractional reserve system is created by the fed and by private commercial banks (sometime it is surprising how much confusion there is about the money creation process: we will address this in a later article) when they create loans."

Commercial banks don't create fiat. Commercial banks lend out money that has been deposited in their bank, so nothing is created. The depositor believes thier fiat is at the bank and can be withdrawn any time, which is the fraud, but that money is not created...it is just simply not there.

Thu, 01/03/2013 - 17:21 | 3120041 Catullus
Catullus's picture

It's absolutely created. They don't loan out reserves. They just imagineer that money into your account. That's absolutely creating money.

Thu, 01/03/2013 - 17:25 | 3120053 TheSilverJournal
TheSilverJournal's picture

They tell you it's there, but it's not there. That is not creating, it is lying.

Thu, 01/03/2013 - 17:30 | 3120071 Tyler Durden
Tyler Durden's picture

"The actual process of money creation takes place primarily in banks" - Federal Reserve

Thu, 01/03/2013 - 17:32 | 3120078 TheSilverJournal
TheSilverJournal's picture

I will listen to common sense instead of the Federal Reserve. When something is not there, it is not created. Period.

Thu, 01/03/2013 - 21:15 | 3120716 arby63
arby63's picture

When something is created is it there afterwards then?

Fri, 01/04/2013 - 23:07 | 3121985 TheSilverJournal
TheSilverJournal's picture

When something is created, it is always there because it exists (I guess the merits of what it means for fiat to exist can be argued). Regardless, the Federal Reserve is the ONLY entity that creates fiat. When a loan is received, it is this fiat created at the Federal Reserve that the borrower receives. So the banks don't create anything when giving loans, they loan actual fiat created by the Federal Reserve.

That loan is taken from a pool of fiat that depositors are told they can withdraw on demand. Of course, they can't withdraw on demand because most of the deposits have been loaned out. This process is not creating fiat. What this process is doing is lying to depositors by saying their deposits are available for withdrawal at any time, when in fact the withdrawal is circumanstantial.

Through this fraud, a multiplier effect is created because depositors are told their fiat is available for withdrawals but instead the deposits have been loaned out, literally making everyone believe that one fiat unit can be in ten places at one time. (which is what most consider "creating money")

I repeat, the depositor's money is not there. The depositor's are led to believe their money is sitting at the bank, but only a small percentage is available for withdrawal. This is not creating when it is in fact not there and does not exist.

 

Thu, 01/03/2013 - 17:34 | 3120084 Catullus
Catullus's picture

What are you talking about? They create a ledger entry in your account. Good enough. It's checkbook money. Try to buy a house with it, you'll be amazed what you find out. You get a house!

Thu, 01/03/2013 - 17:40 | 3120101 TheSilverJournal
TheSilverJournal's picture

Yes, some depositors can withdraw their fiat because some of the fiat is actually there. The rest that's not there is fraud. When enough lose trust in the fraud, it's called a bank run.

Thu, 01/03/2013 - 17:18 | 3120032 monad
monad's picture

Who tells you how much 'the public' has in these criminal institutions? And you believe them...

Thu, 01/03/2013 - 17:26 | 3120056 Benjamin Glutton
Benjamin Glutton's picture

making use of the only system available(practical) does not mean Americans Trust Big Banks...

 

Fuck you Bernanke and the Banks you rode in on.

Thu, 01/03/2013 - 17:28 | 3120065 MrTouchdown
MrTouchdown's picture

This story's graph

Compare it to

The Hilsenrath story's graph

 

Something tells me the "deposits" shown in this story's graph have nothing to do with the confidence citizens have in the banks.

Thu, 01/03/2013 - 17:32 | 3120081 Tyler Durden
Tyler Durden's picture

This issue was discussed in the preceding post of this series.

Thu, 01/03/2013 - 17:32 | 3120077 ebworthen
ebworthen's picture

Dumb sheeple.

Can't count the number of people that complain about Wall Street, Washington, and the ponzi known as the U.S.S.A. only to whip out their Chase "freedom" or Wells Fargo debit and credit cards to buy something.

Thu, 01/03/2013 - 17:38 | 3120098 Shizzmoney
Shizzmoney's picture

In poker, we call these people, "suckers".

We shouldn't tap the aquarium, however.  Let the bad fish boil.

Fri, 01/04/2013 - 04:37 | 3121327 Element
Element's picture

And let's not forget that they aren't going to be impressed with certain people and organisations charged with fiscal and monetary oversight when the banks go legs-up and the FDIC is a complete no-show. Not that ever expected different, but clearly depositors do.

Thu, 01/03/2013 - 18:04 | 3120166 bondman1
bondman1's picture

Only the rich will be exposed now that TAG has sunset. Most folks won't care when that 1.5 trillion in unsecured deposits vaporizes as part of a Fed margin call after the next bank liquidity crisis hits. After all,only the millionaires and billionaires get hurt and the Fed can kick back that 1.5T to the US Treasury! No need to cut speding then! If Jaime and Jon could pull this off couldn't Ben and Marty G. ?

Thu, 01/03/2013 - 18:42 | 3120282 GubbermintWorker
GubbermintWorker's picture

I trust my bank implicitly....the Bank of Mother Earth.

 

That's where all my deposits are :-)

Thu, 01/03/2013 - 18:52 | 3120286 AgAu_man
AgAu_man's picture

So, in the interest of (hopefully) moving the yardsticks, rather than just 'venting'... How are we to turn this into "actionable intelligence", my ZH pals?

1. Mix of Cash (in home vault) and PM Bullion and/or Coins (in home vault or somewhere in the wild outdoors)?

2. Foreign bank account(s)?  You'll have to declare it, but at least they can't freeze or confiscate it!

3. Foreign Brokerage account?  Assuming they haven't banned it -- yet.  You'll have to declare it, but at least they can't freeze or confiscate it!

4. Start your own bank, if you have, say, > $20M?

5. Yes, I know, Mr. Sovereign Man and International Man, "Get a 2nd passport".

6. ??? if I want more than a Prepper/Survivalist lifestyle?

Thu, 01/03/2013 - 19:04 | 3120334 GubbermintWorker
GubbermintWorker's picture

Credit Unions or small local or regional bank.

Thu, 01/03/2013 - 20:22 | 3120534 loveyajimbo
loveyajimbo's picture

Those same Americans, paradoxically, elected an historic liar, coward and failure in the last election.  The rest of us would rather donate our cash to "Polyp" Pelosi or "Roid" Reid before putting it into a mega-corrupt shithouse major bank.

Thu, 01/03/2013 - 21:27 | 3120753 Ghostdog
Ghostdog's picture

I can vouch for this first hand.

I run a manged futures fund and an RIA and on the RIA side, although we had one losing year, since 2007 (at it wasnt 2008, actually 2010) when we go head to head with Wells or Citi or merril we lose 90% of the time to them and they get the client. Even approaching clients that are with Merrill, I had one perspective client say to me. He was worried about his money being lost with us because we are a small firm (even though TDA is our custodian) although he admitted he lost 44% of his money in 2008... Eventually he came over. After the debt ceiling deal in 2011.

but other people too who open up Roth's or IRA's from an inheritance told me.. "I think 5/3rd Bank makes a lot of sense"... LOL...

Its the big building, brand and guy with a plaque in the background that people gravitate like so many shiny objects that attracts a crow..

2000, 2007 and then next time (2013/2014) they may get the message but it will probably be too late that time. My experience has been it takes 3 times to get hit in the face with a 2x4 before the average person realizes they have other options.

A side note: Not coincidentilly, we have never had any issues with managed futures clients and as a matter of fact, they openly express their disdain for the big banks.

 

Fri, 01/04/2013 - 08:05 | 3121456 DollarDive
DollarDive's picture

MF Global is still fresh - Lehman is still fresh ; No offense - I'm sure you guys have a great RIA, but when the SHTF - TBTF will be left standing.  Those with a direct pipeline to the FED will be standing.  It would be hard for anyone to commmit their life saving or even 1/2 to any firm dealing in the futures market today - One blowup similiar to MF and you're toast.  Never mind another 2008 event.  RIA's were a great idea, but they'll never prosper in this environment.  Client with "real" money will stay with the TBTF firms.

Fri, 01/04/2013 - 10:15 | 3121707 Ghostdog
Ghostdog's picture

No you are missing the point. The Futures side is fine and never have any issues with getting clientele, its the RIA side, that is hard to get when you go up against the banks. It is mainly a value add for the managed futures clients but was trying to illustrate a point that it is very true that people still trust these guys even though they were taken to the cleaners by them. I think the difference is that the futures investor "tends" to be more astute (or gunslinger-like) while the securitues investor likes shiny objects. Most people that invest in securities never even heard of MF.

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