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15 Reasons Why The U.S. Economic Crisis Is Really An Economic Consolidation By The Elite Banking Powers

Is the United States experiencing an “economic crisis” or an “economic consolidation”?  Did the financial problems of the last several years “happen on their own”, or are they part of a broader plan to consolidate financial power in the United States?  Before you dismiss that possibility, just remember what happened back during the Great Depression.  During that era, the big financial powers cut off the flow of credit, hoarded cash and reduced the money supply.  Suddenly nobody had any money and the economy tanked.  The big financial powers were then able to swoop back in and buy up valuable assets and real estate for pennies on the dollar.  So are there signs that such a financial consolidation is happening again?

Well, yes, there are.

The U.S. government is making sure that the big banks are getting all the cash they need to make sure that they don’t fail during these rocky economic times, but the U.S. government is letting small banks fail in droves.  In fact, in many instances the U.S. government is actually directing these small banks to sell themselves to the big sharks. 

So is this part of a planned consolidation of the U.S. banking industry?  Just consider the following 15 points…. 

#1) The FDIC is planning to open a massive satellite office near Chicago that will house up to 500 temporary staffers and contractors to manage receiverships and liquidate assets from what they are expecting will be a gigantic wave of failed Midwest banks.

#2) But if the economic crisis is over, then why would the FDIC need such a huge additional office just to handle bank failures?  Well, because the economic crisis is not over.  The FDIC recently announced that the number of banks on its “problem list” climbed to 702 at the end of 2009.  That is a sobering figure considering that only 552 banks were on the problem list at the end of September and only 252 banks that were on the problem list at the end of 2008.

#3) Waves of small and mid-size banks are going to continue to fail because the U.S. housing market continues to come apart at the seams.  The U.S. government just announced that in January sales of new homes plunged to the lowest level on record.  The reality is that the U.S. housing market simply is not recovering.

#4) In fact, a lot more houses may be on the U.S. housing market very shortly.  The number of mortgages in the United States more than 90 days overdue has climbed to 5.1 percent.  As the housing market continues to get increasingly worse, it will put even more pressure on small to mid-size banks. 

#5) More than 24% of all homes with mortgages in the United States were underwater as of the end of 2009.  Large numbers of American homeowners are deciding to walk away from these homes rather than to keep making payments on loans that are for far more than the homes themselves are worth.

#6) If all that wasn’t bad enough, now a huge “second wave” of adjustable rate mortgages is scheduled to reset beginning in 2010.  We all saw what kind of damage the “first wave” of adjustable rate mortgages did.  How many banks are going to be able to survive the devastation of the second wave? 

#7) In fact, one stunning new study forecasts that five million houses and condos will go through foreclosure within the next couple of years.  If that actually happens it will be absolutely catastrophic for the banking industry.

#8) But it is not just residential real estate that is a problem.  Many financial analysts now believe that the next “shoe to drop” in the ongoing economic crisis will be commercial real estate. U.S. commercial property values are down approximately 40 percent since 2007 and currently 18 percent of all office space in the United States is now sitting vacant.

#9) So are the financial powers doing anything to help?  In 2008 and 2009 they did, but now it appears that they plan to dramatically tighten credit.  In fact, Federal Reserve Chairman Ben Bernanke recently warned Congress that the Federal Reserve does not plan to “print money” to help Congress finance the exploding U.S. national debt.  So either Congress will have to spend less money or borrow it at higher interest rates from someone else.  Either of those alternatives will be bad for U.S. economic growth.

#10) In addition, the Federal Reserve is in discussions with money market mutual funds on agreements to help drain as much as 1 trillion dollars from the financial system.  But when you withdraw money from a financial system it slows down an economy.  Why would the Federal Reserve want to do this now when the economy is struggling so much?

#11) There are also persistent rumors that the Federal Reserve is plotting a series of interest rate hikes.  Federal Reserve Chairman Ben Bernanke says that the Federal Reserve may raise the discount rate “before long” as part of the “normalization” of Fed lending.  By raising that rate, Bernanke says that the central bank “will be able to put significant upward pressure on all short-term interest rates”.  But higher interest rates will mean that it will cost more for everyone to borrow money.  This will also slow down the U.S. economy.

#12) Recent data suggests that there has been a very significant decline in the “real” M3 money supply, and every time that this has happened in the past it has resulted in a drop in economic activity.  In fact, this dramatic contraction in the money supply has many economic analysts now warning that it is not a matter of “if” we will have a “double-dip” recession, but of “when” it will occur.

#13) There are also signs that big U.S. banks are now hoarding cash.  In fact, the biggest banks in the U.S. cut their collective small business lending balance by another 1 billion dollars in November 2009.  That drop was the seventh monthly decline in a row.

#14) In fact, in 2009 U.S. banks posted their sharpest decline in lending since 1942.  This is the same kind of thing that happened at the beginning of the Great Depression.

#15) Meanwhile, the biggest U.S. banks are gobbling up a larger and larger share of the U.S. banking market.  At the end of 2007, the Big Four U.S. banks – Citigroup, JPMorgan Chase, Bank of America and Wells Fargo – held 32 percent of all deposits in FDIC-insured institutions. As of June 30th of last year it was 39 percent.

So do you see what is going on?

The real estate crash of the last several years has left hundreds of small to mid-size banks across the United States extremely vulnerable.

These small to mid-size banks desperately need the U.S. economy to get cranking again.

But now the big financial powers are reducing their lending, hoarding cash and shrinking the money supply.

All of those things reduce economic activity.

Many businesses will fail because they cannot get loans.

The real estate market will continue to suffer because banks are raising their standards and are lending less money.

Small to mid-size banks that are already on the edge of disaster are almost virtually certain to collapse when the “second wave” of the housing crisis starts hitting.

But when they do collapse the U.S. government is directing them to sell themselves to the big sharks.

So whether it is “planned” or not, what we are witnessing is a consolidation of the banking industry in the United States.

And that is not a good thing.

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  • Uncle B

    The great con is on: the fix is in! Yankee Doodle’s *** is grass!

  • http://SEOplanNOW.com Seo Joe

    “cut their collective small business lending balance”

    I don’t know any small business that have been able to get a loan in the last 5 years.

  • Pat

    Being from California, an ex real estate agent by choice I left 20 years ago and an ex loan officer. Who worked for Lincoln savings in the REO dept, when that fiasco happened I warned everyone I could think of that the bubble would burst, over 10 years ago. They laughed. Well my home is paid for, never refinanced even when I was eating hot dogs and beans.

    We have seen orchestrated the largest taking of wealth in the history of the world. Fueled by greed of the average American who believes it is his right to have every toy imaginable. Backed by bankers who agreed that greed was a good thing and a regulatory system completely out of touch with reality.

    Now we have a president hell bent on destroying the country and everyone drank the Kool Aid. What is next? Socialism or Marxism. NASA now saying that their number one priority is to make the Muslim world feel good about themselves? This directed by the leader of the “free” world? Amazing folks isn’t it.

    • Craig

      Pat,
      You say that the President is hell bent on destroying the country, although you don’t say how, and strongly suggest that it is by establishing socialism or Marxism. Yet, in the paragraph before you rip on the bankers for greed. You mention a regulatory system that is “completely out of touch with reality.” Well, that’s because the regulations have been weakened or cut away, by those very same greedy people. That type of action is NOT socialism or Marxism, unless you have some sort of vision of socialism other than WORKER control of where they work. What you have laid out about greed and having “every toy imaginable” is a characteristic of free market, or neoliberal, capitalism. What I find funny is that you are against THAT type of capitalism in one paragraph, but in the next breath, i.e., the next paragraph, you say the POTUS is destroying the country because he is trying to do away with the type of billionaire playground that our government has become. It seem you have the themes confused in your post. You are right about the real estate, but it happened because no one was allowed to watch, and those in government who did watch were really just ex-private industry people regulating themselves. That is not how government ought to run. But when we hate government and rail against it w/o nuance, we contribute to the further mistrust and the further deregulation (b/c that’s what we wanted, right?) and thus to the use of our government for private, individual gains that go progressively to the few. Yet, to turn around and call that socialism or Marxism is not only to misunderstand both of those phenomena, it fosters the anger and mistrust of all government (i.e., language you hear all the time, such as “never re-elect!”). Those attitudes actually hurt our ability to put controls on those who are supposed to protect us.

      I have no idea what you are talking about with NASA. What is amazing is how narrow and isolated you want us to become should we follow your remarks. Let’s move beyond the xenophobia.

  • Adam Holck

    The negative scenario for American investors in stocks and particularly things like gold, platinum, and to a much lesser extent, physical silver, would be one where the United States, in an effort to postpone or suspend its relative economic decline, engineers a downturn that inflicts considerable suffering on its citizens, but utterly demolishes emerging economies such as China, which represents the biggest displacement threat to the United States. The political discourse seems to suggest that the best way for America to save itself is to submerge itself and drown dependent economies before they are advanced enough to swim on their own.

    In my opinion, it is too late for this, though. The enormous and unprecedented redistribution of wealth and power to the East has already occurred. In fact, I’ve been waiting for this to happen since I was 15. It was sure as physics. 9/11 was sure as physics. I predicted 9/11 and how it would even happen in 98′. I had shared this scenario with a few friends in addition to one other that I am shocked is to this day totally overlooked by the Feds. When 9/11 happened these “friends” were asking me how I knew….I was uncomfortable. Will we go to war with China? No. Will we go to war with Russia or Iran? No. They know this is not necessary when it is more likely that we will kill ourselves off in the multitude of ways at our disposal. It’s freedom, right?

    In 2004 I began investing. I was good. There was one vision at the core of my strategy. A global economy that required basic needs. Just use Maslows Hierarchy but first understand that you’re idea of “developing” is from a context unique to capitalism. I have visited remote tribes that feed themselves just fine and have love and even self actualization so what is advanced I might first ask? So what if banks fail. These cultures don’t have banks. They have a simple economic philosophy called, “Sharing.” It works well as long as televisions are not a part of this way of life. TV rots cultures that for centuries have been self sufficient and happy in a blink of an eye.

    Back to lower minded matters… I’ve since seen an 827% increase in my investments in 204 that people thought I was retarded for buying. My strategy was and still is to avoid strategies, and if I did have one to always look for a way out. If I could find one it wasn’t sound to begin with.

    The greatest opportunities are unknown or disguised. We do not know we do not even know – really anything. If a strategy is to be developed it means we are already operating within something that exists and things exist only to be coveted or picked to shreds. Look ahead….and then step into the dark places for the juicy stuff.

    Everything and everyone has a probable, almost certain future and it looks just like yesterday – just a more, better, or different version of the same thing at play. There is what I call social physics that, while not always reliable due to the fact that everything we think, read, or hear is filtered through our mood and belief systems, whether we would like to think of ourselves as free thinkers or not, are very real troublemakers in us all. This filter result in oversights and foolish mistakes. Human mistakes.

    It would be a mistake for me to say we can “drown” dependent economies before they can swim on their own. I’m talking like a very proud American. Stay away from pride when making choices.

    Bringing down dependent economies would have been possible 40 years ago if we had read the “Art of War” perhaps. But not likely. Instead, we spent billions on war and conflicts, many in complete secrecy to all but a few engaged on the ground and in Washington, over strategic goods and positions. We went into these operations with a sort of consideration of the relations as well but with no real connection to the people there. Not enough to make any substantial difference in our affairs or their experience of us.

    Empathy – relatedness, to the experienced politician, is an intellect bound platitude. When you spend your entire life trying to embody what you have judged, assessed, and evaluated your voter as, it makes it very difficult to slam on the breaks when you realize you’re lost, and then to explain to those passengers, the people that choose to get on board with you and go in your direction, that you started making things up about 650 miles back when you took that turn you weren’t sure about, even though at least a few people along for the ride probably did – had you asked.

    My prediction? Don’t need one. What I’m doing? I’m investing in my physical and mental health more than ever. I am big on silver and invest a lot in physical. I also invest in my own businesses. I trimmed the fat from nearly 30 to 6 stocks last summer. They are fine. I left my bank and joined a Credit Bureau. I opened a Canadian Bank Acct. I would highly recommend everyone look into the latter.

    Silver is the greatest investment of this generation and it has nothing to do with jewelry or as a hedge. I don’t hoard it. It will explode as soon as the ETF scams go bust. It’s greatest application will be in nano tech, medical and home anti-septic/disinfectant uses and solar. Gold is for crows. Finally, I am investing in peace of mind……NOT some dulled out insensitivity. reinventing old bonds and reconnecting with family, friends, and forging new alliances with people committed to action and integrity. AD Holck

  • PAUL LEO FASO

    Read Irwin Schiff’s “THE BIGGEST CON” – google -biggest con+irwin schiff+_pdf

    After your done you will know why he went to prison. By revealing the criminal nature of inside game of the entire Federal Reserve Bank and the horrid tax code they use to extort earnings from average Americans and deflect taxes for the corporate whores, you will also know why we are broke.

    Over 30 years ago, Irwin Schiff blew the whistle on this monumental fraud and theft, they should have pardoned and released him with a monument built in Washington for his patriotism.

    For the only way to save the nation from more of this financial sodomy – go to the plan;

    http://www.zerohedge.com/print/365866

  • waffenss

    finance came into this world stillborn but mankinds greed managed to keep the zombie going with ever fear it may fall over since it is already dead

    those that seriously are interested in changing finance for the better start digging a hole and bury it

  • http://autoinsurancereviewsite.com Harv

    I used to think that we were the greatest nation in the world. I don’t believe that any more but we have the biggest guns and as usual the nation with the biggest guns come out on top. The bankers finance the guns and the gunners keep the banksters in power, so to speak. All you have to do is study a little history to see where things are headed, however, fewer and fewer Americans can even read. Sad situation.

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  • Harrison Terran

    unfortunately the lack of jobs have really become a cancer in the US.
    Our politicians need to face the problem by turning to specialists in the
    economic crisis just like for example lots of counties turned to the Orlando
    Bisegna Index to solve problems with budgets and even with unemployment