WE’RE IN A QUANDARY

The government is trying to figure out how to get the toxic paper off bank’s financial statements; the banks are trying to figure out how to sell their bad paper without becoming insolvent; the American people are trying to figure out how a plan can be implemented that doesn’t hit their pocketbook; and Congress is trying to solve the problem quickly so they can go campaign over the weekend. It’s really a mess. The only people who are going to benefit from this mess are those who made shady deals early on and got out of this business a year ago...the rest of us will have to pay in some form or another.

All of this can be traced back to housing. Shady lending practices and government corruption veiled in ‘affordable housing’ programs are among the things that got us here.

It appears to me that the correction is going to come, no matter what we do. The losses will have to be taken at some point by the banks, and many of the weaker banks will simply go under & get bought by bigger, stronger banks like JP Morgan Chase, USBank, and others. We’ll see massive consolidation going forward …only the big fish will survive.

To my knowledge, though, consolidations don’t solve the lending liquidity issue. This problem stems from the faulty paper…this paper has to go on somebody’s books…so get ready, we're gonna pay!

FMC