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News Link • Economy - Economics USA

The End of the Age of Credit

The options are dead(ly) simple. We will find out over the next few months that our banks are screamingly underfunded, and that not bailing them out will lead to bank runs and panics. How bad the situation already is becomes obvious through for instance Reuters' James Saft, who writes that in the next three years, Global banks face $5 trillion rollover Banks around the world must refinance more than $5 trillion of debts in the coming three years[..] For banks in the UK, according to the Bank of England Financial Stability Report, the refinancings amount to about $1.2 trillion by the end of 2012. If banks in Britain raise funds at the same pace they have been this year, they will only collect half of their needs in time. [..] U.S. banks have issued $230 billion of debts in the first five months of the year, about 60 percent of the rate they need to achieve over the three year period. Euro zone banks have issued $133 billion, or about 70 percent of their needed run rate. One easy to see consequence is that, all things being equal, the cost for banks to issue debt should rise, as should competition among banks for consumer deposits. [..] The track record of the past three years tells us one thing is likely: the banks will get their money, courtesy of government support if needed. Unless there is a profound sovereign debt crisis, we can count on governments taking the needed steps to see that the banking system does not fall over for lack of funding. So, if liquidity or support schemes need to be extended or invented anew, they will be.[..]

1 Comments in Response to

Comment by David McElroy
Entered on:

 Yeah! Because the banksters have played fast and loose with their fractional banking ponzi scheme, and fear angry mobs making a run on the banks, we taxpayers should give them more funds in order to collect our own funds due at the teller windows. Does this really make any sense? The robbers need more money to stay solvent, and to keep their guns out of our faces at the bank, we are required to give the robbers more money?

 Either we should pardon Bernie Madoff or jail a lot of banksters, starting with "Helicopter Ben" Bernanke! It is time for a revolution this July 4th! We can never recover within this crooked Federal Reserve Bank system.

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