Free Markets, Free People

Watching the Kangaroo

This morning on the Opie and Anthony show, Aussie comedian Jim Jeffries was a guest, and he told an amusing story.  It seems that he and some fellow comedians were travelling from Perth to Kalgoorlie for some sort comic event.  Things went well for a bit, until, about three hours outside of Perth, they ran into an emu. The poor emu didn’t die immediately, and, tragically, had to be dispatched with a large rock.  Their car, however, did die, due to radiator damage.

They were stuck in the Australian desert with no transportation.  Fortunately, in Australia, they do keep cell towers along the major roads, so Jeff and the boys were able to call a fellow they knew back in Perth, to ask if he could come help them out, and if he did, they’d try to see if they could get him some mike time at the comedy show.

He agreed, and told them he’d be on his way in about an  hour.

So, four hours later, Jeff saw his car, coming down the road a couple of miles away.  He also saw, anbling slowly towards the road, a large Red Kangaroo.  As he watched, the car get closer, he also watched the kangaroo come closer and closer to the road.  And in what must have been sort of a horrified fascination, he watched the convergence until BOOM!  The car and kangaroo collided.

Fortunately for them, their friend’s car was still driveable after the accident, although the ‘roo was a total write off.

But, the story really encapsulated the way I’ve been feeling watching the economy over the last several months.  You can see the elements coming together for some sort of horrible wreck, but there’s not really anything you can do to stop it.

And it looks like the kangaroo is coming closer.

Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department…

Last week, the FDIC proposed raising fees on banks in order to build up its deposit insurance fund, which had just $19 billion at the end of 2008. That idea provoked protests from banks, which said such a burden would worsen their already shaken condition. The Dodd bill, if it becomes law, would represent an alternative source of funding…

The FDIC would be able to borrow as much as $500 billion until the end of 2010 if the FDIC, Fed, Treasury secretary and White House agree such money is warranted. The bill would allow it to borrow $100 billion absent that approval. Currently, its line of credit with the Treasury is $30 billion.

Let’s examine the implications of this.  TheFDIC fund is now depleted, and needs to be recharged.  Not with $30 billion, but with $500 billion. Banks howled at premiums being increased, saying it could damage their business even further.  So now Sec. Geithner, Chmn. Bernanke, and Chmn. Bair are asking for the federal government to open their credit line, which is currently restricted to $30 billion.

Does this mean that the SecTreas, FDIC, and Federal Reserve all believe the FDIC may need to come up with half a trillion dollars to pay back depositors for bank failures?  If so, that’s…disturbing.

What do they know about the health of banks that we do not in order to come up with that number?  What will the general public do if they figure out the implications of this?  How will the markets respond?

Hop.  Hop.  Hop.

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10 Responses to Watching the Kangaroo

  • Well, I suppose that it’s possible that they want $500B because it’s TAO’s admin and they don’t think in small terms when it comes to spending money.

    On the other hand, it does seem like a good idea to consider taking out whatever savings one might have and heading for the nearest coin store to see how many Krugerands, Gold Eagles, and Gold Maple Leaf coins are available.  For collecting, you know.

  • I was trying to think of an analogy for the stupidity on display in D.C.  But, I can’t.  It is amazing the incompetence on display.  I think is, from day one, they had done NOTHING, most of these problems would be taking care of themselves by now.

  • Well, it the progressive form of wealth distribution.  No one will have any wealth at all.

    Yay, they win.  :)

  • I’m thinking that Whitehouse.gov should start redirecting to Failblog.com

    I read this yesterday and was NOT happy. What’s the options? Leave our money in the bank with this news? Or take it out in a potential run on the bank?

    OY.

    But thank god Lightworker is focused on important issues….like Limbaugh

  • Is the FDIC preparing for Citicorp going Tango Uniform?  Given C stock going to the level of deer nuts (I.E. under a buck.  Get it?  Me sooo funnee….) this seems prudent.  BofA, JPM  and WFC are likely not that far behind.

    Hold on, it’s gonna be a rough ride.

  • It’s almost like Obama’s Commerce crowd inadvertently wants to start a run on the banks.

    • Inadvertently?  Maybe they’re creating a crisis they can completely ‘capitalize’ (pun intended) on.  No choice but to nationalize the banks now you see!  Didn’t want to, but we had to! 

      • looker,

        Interesting that you mention bank nationalization.  Yahoo! News headline linked to a Time magazine article about that very thing just this morning.

        Ain’t it strange how lefties who hyperventilated over the possibility that the NSA might listen in on their telephone calls to Aunt Sally in Schenectady have NO problem turning over their bank accounts, health records, retirements, etc, to Uncle Sugar?

  • The same people who are going to save us can’t even get the translation for the Russian word “reset” correct for a very public State Deparment meet and greet “joke”.