Tuesday, September 16, 2008

There IS a Risk of a Bank Run...,

Thank goodness for browser histories. Otherwise this phenomenal link and video would have been lost in the slipstream. I could not find it by searching this afternoon. Roubini calls this the perfect storm of the century. We have not seen anything like this since the Great Depression. In spite of doing everything under the sun, the situation is not getting any better.
Americans are justified to be worried, says Nouriel Roubini, of NYU's Stern School and RGE Monitor, who notes there is already a "slow-motion run on retail banks" occurring nationwide.

That "run" could accelerate as people realize the FDIC fund has about $50 billion to "insure" about $1 trillion in assets at the nation's financial institutions, says Roubini. "They're going to run out of money" unless Congress acts soon to recapitalize the FDIC.

In addition, the recent spike in number of banks on the FDIC's "troubled list" is only through June, meaning even that inflated number understates the problem.

The intent here isn't to add to people's anxieties, but Roubini is one of the few market watchers to correctly predict the severity of this ongoing credit crisis. If nothing else, he says people with accounts exceeding $100,000 in value should spread their money - and the risk - among different firms.
There is no systemic approach to dealing with this problem. Plugging holes one after another and no end in sight.