The moon was pretty nice tonight. It was nice outside. I get contemplative as I roll the trash, recycling, and yard waste to the curb. I tend to look up at the moon and stars as the big plastic container rumbles along the driveway.
Also, our way of life here in America is at risk.
The most terrifying thing I read in the coverage of the Lehman Brothers bankruptcy, Merrill Lynch firesale, and AIG collapse was this point:
Recent events have demonstrated that the Deposit Insurance Fund's reserves can drop rapidly. Last quarter the FDIC set aside more than $10 billion of loss reserves, largely because of the IndyMac Bancorp failure in July. That provision pulled reserves down 14%, to $45 billion, or just 1.01% of insured deposits. (Since IndyMac, seven institutions have failed). The ratio is 14 basis points below the minimum level at which the agency is required to restore its reserves, most likely with higher assessments on the industry.American Banker.
As banks continue to fail -- and there is no question that many more banks will fail in this meltdown -- and people start to worry that the FDIC won't be able to cover their deposits, we will be looking at a potential run on deposits, further accelerating bank failures.
McCain's not worried, though. He thinks "the fundamentals of the economy are strong":
That's what you think when you spend your time flying on private jets with your buddy Phill Gramm shuttling between your seven or nine or eleven homes.