Fortis Going, Brits Talk Of Nationalizing Another Large Bank?

After being tipped to this from TWS, I decided to do some News Googling - links below:

I've received phone calls in the last hour from two economists I respect, one of them Larry Lindsey, the other in a position where he'd prefer not to be named. Both have government experience, neither is alarmist by nature, and they say this:

The huge European bank Fortis is apparently about to fail. The ripple effect on the American banking system could be disastrous, with bank runs, liquidity crises, and stock sell offs possible Monday. Wachovia may well fail next week. As Larry put it, this really will be 1933 soon if we don't move rapidly to stabilize the banking system.

And here's the bad news: the current bailout bill, whatever its merits and likelihood of passage, does nothing to address this.

Congress should pass by Monday simple legislation doing two things:

1. Giving the FDIC authority to provide unlimited deposit insurance through the FDIC for transaction accounts in banks.

2. Authorizing the Secretary of the Treasury to provide unlimited protection of principal in money market funds through the Treasury's exchange stabilization fund.

Maybe my acquaintances (and I) are too worried; maybe this legislation wouldn't quite be the right solution. But I wanted to sound what may be, unfortunately, a needed alarm.

William Kristol is editor of THE WEEKLY STANDARD.

This below from EuroNews, while Forbes has the latest on negotiations. See link.

Investors in the Fortis banking and insurance group face an anxious weekend as the Belgian-Dutch bank holds talks on its future with the Belgian government, market regulators and the Central Bank.

Friday saw Fortis shares plummet more than 20 percent, the 15th straight day of losses for the group.

Fortis is hoping to sell off parts of its business by Monday to show investors it can raise cash and restore confidence.

The United Kingdom faces yet more financial turmoil as the Bradford and Bingley, the eighth largest mortgage lender, has effectively closed for new business after cutting 300 jobs on Thursday.

The B&B has seen 90 percent of its share value erased since the start of the year.

The British Banking Association has tried to reassure the bank’s 2.5 million savers that their deposits are safe.

Banking sources say that with no private bank ready to mount a rescue bid the bank may have to be nationalised.

Comments

[seekeronos]

I wonder if there will be some major bank runs on Monday.

This could be the event that takes America off the world map and reduces us, de facto, to a third world status.

Dr. Paul and Peter Schiff saw this coming years ago, and the kleptocrats kept on slopping themselves at the public trough.

The next revolution will not be very pretty at all.

[seekeronos]

Bank of East Asia rumours create two-day bank run:

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4828378.ece

[seekeronos]

Jim Cramer (the Mad Money guy) wants FDIC to increase insurance from $100k/account to $2.5M

http://www.thestreet.com/story/10439353/1/cramers-mad-money-recap-fdic-needs-to-stop-the-bank-runs.html?puc=googlen&cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA

[WAHOO WILLIE]

2.5 million? Does Cramer know who the insurers actually are? 1/4 million maybe. The DoLittle's promise to have a solution by tomorrow night but that doesnt mean much. Repugnicans seem to be worried about socialism......Duh, can we say "sunset clause" and return the damned profits to the treasury. They've agreed on four salient points but as usual can't quit playing partisans long enough to figure out the minor details.

[seekeronos]

Perspective concerning large-deposit holders on the WaMu SNAFU:

http://www.portfolio.com/views/blogs/market-movers/2008/09/26/worrying-about-large-deposit-bank-runs

[seekeronos]

I'd say that Cramer's (I won't make a judgment as to his motives) concern for Main St. fallout as a result of D.C.'s non-passage of the bill has some points.

Non-action from D.C. would be tantamount toward inducing a collapse of the economy, 20%+ unemployment, perhaps 50% to 2000% inflation, and civil unrest on top of it all.

But we would ride through it I think, in a shorter amount of time than it would take for the other extreme (as exempliflied by the Japanese government's actions during their real estate bubble and subsequent economic deflation that spanned the better part of nearly 15 years of almost zero net economic growth).

And then, there's this:

http://www.augustreview.com/news_commentary/global_banking/let_the_bank_runs_begin!_2008091599/

[Lala]

They are fighting over ACORN and Pelosi took away their Blackberries. That's what I hear.

[Worst President Ever]

I didn't know Tin Hats had that big of a reception range.

[seekeronos]

"--- I didn't know Tin Hats had that big of a reception range. ---"

You'd be surprised how well these babies can work. With a few minor mods, I can operate my laptops hands free.

http://zapatopi.net/afdb/

[Lala]

Dems Want to Reward Scandal-Tarnished "Community Organizing" Group in Economic Rescue Bill
House GOP Fights to Remove ACORN Slush Fund from Economic Rescue Bill; Poison-Pill Proposal Would Ask Taxpayers to Bankroll Group Accused of Voter Fraud Nationwide

http://republicanleader.house.gov/News/DocumentSingle.aspx?DocumentID=103884

[Lala]

Staffers' Blackberries Confiscated as the Tough Negotiations Begin at Congress

September 27, 2008 5:30 PM

http://blogs.abcnews.com/politicalpunch/2008/09/staffers-for-th.html

[PatD]

The worst may come to pass on Monday. Even if it does the US will not be relegated to "3rd world" status simply because whatever happens to us will spread everywhere else before too long. The US economy is still the 800# gorilla in the neighborhood. So cheer up, we will still be relatively well off(in aggregate at least, some individual variances may be tough to take).

[MarkJ]

"Staffers' Blackberries Confiscated as the Tough Negotiations Begin at Congress"

Well, this is just the next step: their "dingleberries" were confiscated a long time ago.

[Mikee]

Mark J: That word you use - dingleberries - I do not think it means what you think it means.

A dingleberry has been defined traditionally (since I was 6 years old, 43 years ago) as the combinations of toilet paper and turd which remain dangling off one's ass-crack after an inefficient wipe, at least according to the kids in my parochial school. The nuns would have killed us had we ever used that word in front of them, or even behind them but within their rather amazing range of hearing.

Perhaps you meant cojones?

[Disbeliever]

Frankly I find all this hysteria hard to believe. Basically, it's like that Norman Rockwell painting that shows the pious mother and son praying in a diner, with some of the other customers looking askance at them. We are playing the role of the pious family, and Barney Frank, Harry Reid and Nancy Pelosi are playing the roles of the screaming hysterical monkeys, shaking us down for money for ACORN and La Raza, and telling us that if we don't pay up, our world will collapse.

[seekeronos]

"--- Mark J: That word you use - dingleberries - I do not think it means what you think it means. ---"

Indeed, Mikee, I had much the same thought: the mental image of Sen. Nanncy Pelosi confiscating "dingleberries" is at the same time deeply disturbing, yet awfully hilarious.

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"--- Even if it does the US will not be relegated to "3rd world" status simply because whatever happens to us will spread everywhere else before too long. The US economy is still the 800# gorilla in the neighborhood. ---"

All things being equal, PatD, our collapse wouldn't necessarily be overnight. In aggregate, I think we'd slip several notches, and then depending upon how bad the initial damage was, and also upon our response to that initial damage (either hyperaggressive bouts of regulation and slipping into a command/planned economy - a sure recipe for further failure -- or by finally choosing to let the market correct itself) would determine our final outcome over the decades to follow.

I think however, that neither the Dems (socialists who love planning economies) nor the GOP (increasingly becoming "socialists lite") will have the guts to allow the market to go through the symptoms and shocks it needs to recuperate, and will further put the brakes on recovery with burdensome programmes.

As for the 800# gorilla, we may still have some clout, but there is also the 20 tonne dragon to the east who is waking up from his 200 year slumber to resume (what may be his rightful) place as the centre of the economic world.

[mary]

Wow, is everything able to be manipulated nowadays?