23 bank failures this year and other sources indicate we've got 700 in trouble and to expect 150 failures next year. Within that list will be the 3 biggies named above. This is why they're using the words "meltdown," "financial collapse," and "depression." I would add another: catastrophe.The FDIC indicated that their reserves for bank failures fell this past quarter from $45B to $36B, or 20%, and this quarter is already starting off with more failures than the 3rd quarter. How long before the FDIC goes bust? Anyone heard any talk about this? And the FDIC noted that the increase to 171 troubled banks referred to above only takes the total assets of troubled banks from about $75B to $135B. Obviously, that amount doesn't include any of the big banks above.

Interestingly, the bank controlled by Carlos Slim Helu, the Mexican billionaire who competes with Warren Buffett as the world's richest man, paid $134 million to buy 26 million Mexico-traded shares of Citigroup over the past five trading days. A spokesman for his Grupo Financiero Inbursa SA had no comment on the trades. Interestingly, Citigroup owns Grupo Financiero Banamex, the second-largest Mexican lender.What the bailout doesn't do, is solve the problems. If you read the articles carefully, you will see they're only talking about $350B in assets they're concerned about. Well, those "assets" is the 2-5 cents "down" on the dollar (trillions) that they've got leveraged out there in undisclosed "off balance sheet" transactions. That is the untold story, where the government is misleading the public... that Citigroup has tens of trillions of derivatives out there. And so do the other banks.

Did you notice the following in the news? They're rioting in Iceland. If you'll recall, Iceland's 3 major banks were taken over 5-6 weeks ago. Thousands of Icelanders demonstrated on Saturday demanding the resignation of Prime Minister Geir Haarde and central bank governor David Oddsson. Iceland's banks, which invested around the world, collapsed last month, wiping out depositors. The government, which promised to insure the deposits, doesn't have anything close to enough money. The currency has fallen about two-thirds against the dollar and the euro. And the people finally realized what's happened to them.What's the difference between America and Iceland? Our government can still borrow. But... you have to wonder how our creditors feel watching the Federal Reserve come-up with another $800 billion to buy mortgages yesterday. And you have to wonder how they feel seeing Uncle Sam add $7 trillion to its balance sheet in one year. ($7T... tiny compared to $516T in derivatives.) Sooner or later, those financing our deficit will blink. When that happens... welcome to Iceland. Could we see rioting before next year is over? With the assets in banks wiped out? Not because Congress won't vote for a bailout, but because the problem is too big to solve. Not only could we see rioting, but I fear it's likely. Congress and the Fed simply can't handle this one--it's too big.
And so again, it reminds me of the Marxist statement: "Socialism rides in on the Trojan Horse of crisis." Unfortunately, I fear we've just elected a President that would use marshall law to declare such a state of emergency as suspend many consitutional rights. Could all this happen within a year? Have the dollar lose two-thirds of its value? And people's savings wiped-out? What would that do to the prices of food? gasoline? chaos? It was almost funny if it wasn't so sad and true. The news report commented about how Bush wasn't going to congress for the money, but instead the Fed was putting up another $800B out of its "vast resources," like as though the U.S. Government doesn't have taxing power or capacity to produce such sums of money itself? $7 Trillion so far? At the beginning of the year America's cumulative 221-year deficit stood at $8.5 Trillion. And so where does the Fed get such "vast resources"? How can the Fed be bigger than the U.S. Government? Have more resources? It's called the printing press-- today's thin air, and its getting thinner all the time. The Fed can create it with a keystroke.