NOTE:  US GOVERNMENT GUARANTEE OF MONEY MARKET FUNDS

                         EXPIRES ON FRIDAY, SEPT. 18, 2009

• Our Stock Market Crash: Monday, October 6 to Friday, October 10, 2008.
• Worst Week in Wall Street History; Dow down 18% to 8451 from 10,325.
• The 1929 Stock Market Crash was Thursday, Oct. 24 to Tuesday, Oct. 29. (See Galbraith,

                                               The Great Crash, Chap. V)

• Thus we consider this year 2009 to be most closely analagous to 1930

• U.S. Bank Failures so far this year (2009): 115  (CIT bank was the most recent, 11/2/09))

                        and Credit Union failures: 3 (as of 3/19/09)

• The U.S. has approximately 8300 banks
• Currently "416 banks are at high risk of failure". (NYT 9/28/09, A20)
• The FDIC has increased the fees it charges all banks as of Feb. 28, 2009. 
• According to the NYT (2/28/2009) this "will be particularly painful for small community banks,

                                              which generally pay a higher assessment rate."

• 1,882 banks received a failing stress test grade on June 30 (NYT, 8/23/09, B6)
• "Even the best run banks are having trouble escaping the effects of the sluggish

                                     economy and high unemployment."  according to Gretchen Morgensen.

• LAST YEAR APPROXIMATELY TWO TRILLION DOLLARS WAS

                    TAKEN OUT OF THE STOCK MARKET.  (CNBC, Nov. 14, 2008, Maria Bartelomo)

• WAS THE STOCK MARKET CRASH CAUSED BY HEDGE FUND WITHDRAWALS

                               OR BY THE WITHDRAWAL OF ONE TRILLION DOLLARS FROM AMERICAN

                               MORTGAGE INVESTMENTS BY THE CHINESE CENTRAL BANK?  (as suggested by NYT, 09/05/08)

• As reported in a NY Times editorial, Mar.15, 2009: According to the New York State Insurance

                     Superintendent of the $62 trillion dollars of credit default swaps outstanding in 2008, some 80%

                     were "speculative". (Credit Default Swaps are insurance policies on securities.)

• Remember: Commercial Banks sell Loans while Investment Banks sell Securities.
• Under the Glass-Steagall Act of 1932 these two types of bank were not allowed to be merged.
• Under the Gramm-Leach-Bliley Act (also known as the Financial Services Modernization Act)

                                       of 1999 the Glass-Steagall Act was rescinded. 

• The merger of Bank of America with Merrill Lynch could not have happened under Glass-Steagall.
• We believe that Glass-Steagall should be re-implemented (and Gramm-Leach-Bliley rescinded).

 

 

 

 

(page last updated 11/5/09; send comments/questions/suggestions regarding this page to: carl@gd2.org.)