If it does not work the first time, it must work the second time. The trick is to not learn from your mistake, just keep making them. At least that’s what it seems is happening in this latest development of how the TARP Money is being put to use.

GM will once again have a partner in getting cars out of show rooms and onto American street. GMAC which is part owned by GM and Cerberus Capital Management has received $6 billion from the federal government and expects to get that money into the hands of customers as quickly as possible.

Breakdown: Credit

·          GMAC again making loans to credit scores of 621 or higher

·          Significant easing from the 700 minimum score

·          GM said it would offer low-rate financing, including 0% interest

“The infusion of capital from the Treasury Department late Monday was seen as critical for both GMAC and GM, which relies on the lender to finance car buyers and dealer inventories. GMAC is jointly owned by Cerberus Capital Management, the private equity firm, and GM.”

For good measure the government put in limitations for GMAC to reach before they would be allowed to become a bank holding company. This included the need for the company to come up with cash reserves to cover investments. When GMAC was not able to reach these goals on there own, the Treasury step in and gave the addition money needed to become a holding company. As a holding company they will now be allowed to barrow more money from the TARP funds.

That seems to be the way to build a stable business in today markets. Keep lending, because we know where that gets us.

Breakdown: Treasury way around its own rules

·          Treasury buys $5 billion preferred shares in GMAC

·          Part of the $700 billion financial rescue known as TARP,

·          Treasury lends $1 billion to GM, which, in turn, will invest $1 billion in GMAC.

·          By providing aid to GMAC, the government will help the company meet requirements for becoming a bank holding company, which would be regulated by the Federal Reserve.

“Policy makers appear to believe “that it will be less expensive to provide $6 billion of financial support than face a situation where car dealers and car purchasers don’t have the funding that they need to carry on business,” said Sean J. Egan, managing director of Egan-Jones, a credit rating firm.”

Breakdown: Lost business

·          In November GMAC raised credit standards for borrowers

·          GMAC financed 1% of GM sales

·          Compared to 45% in a normal month

·          By lowering its minimum acceptable credit score to 621, GMAC should be able recapture about a third of its former loan volume.

·          Median credit score in US is 723

·          Half the borrowers have a higher score and half have a lower score.

Breakdown: Bank Hold Company

·          To become a bank holding company needed to increase its capital to $30 billion.

·          GMAC said it would have to raise $2 billion in fresh capital

·          Company needed to convince 75% of bondholders, holding $38 billion in debt, to forgive some of the principal they were owed and accept preferred shares

Company said 58% of the bonds issued by GMAC and 37% of the bonds issued by its subsidiary, Residential Capital, had been tendered. GMAC said it had raised $21.2 billion in a debt-for-equity swap, far short of its goal. GMAC said it had raised $17.5 billion in the exchange offer and Residential Capital had raised $3.7 billion.

Breakdown: Getting the deal done

·          $1 billion the Treasury lent to G.M.

·          Cerberus would contribute $250 million

·          GM and Cerberus together provide $750 million in exchange of debt

·          Bringing total amount of new capital to $2 billion

“Still, some analysts questioned the Treasury’s decision to inject money into GMAC, saying that the company had lost nearly $8 billion in the last 15 months.”

Read Article: GMAC Makes It Easier to Get a Car Loan

Overnight bailouts might not be liked by most people, but what happens when they don’t.

Reuters reported on an article in the Wall Street Jornal,  it is estimated that the emergency bankruptcy of Lehman has cost creditors $75 billion dollars plus.

If the government had stepped in and helped Lehman plan an orderly unwinding of the company, Lehman would have been able to sell assets, and unwind derivate positions, which could of brought in more money then a fire sell under bankruptcy. 

Breakdown:

·          Lehman creditors are owed $200 billion

·          Lehman filed for bankruptcy protection in September

·          U.S. government declined to bail it out and a frantic weekend of negotiations

“The Lehman meltdown touched of a stock market panic and credit crisis and was quickly

followed by a government rescue of American International Group Inc, once the world’s largest insurer.”

Read Article: Lehman bankruptcy filing wiped out billions – WSJ

In an article on the nytimes.com, entitled: Veterans of ’90s Bailout Hope for Profit in New One, we discover that the only way to profit from the global financial meltdown is to be a government insider.  

Whybanksfail does not believe that any of our readers did not know this starting at birth, but its un-comprehensible to us to see just how bad it has gotten. Today’s profiteers are not even worried about protecting themselves from the public outcry. It’s almost as if they still believe that they are entitled to this money, the way the bankers believed that they where entitled to there bonuses.

“A tight-knit group of former senior government officials who were central players in the savings and loan bailout of the 1990s are seeking to capitalize on the latest economic meltdown, enjoying a surge in new business in their work now as private lawyers, investors and lobbyists.”

Breakdown: Some of the Players

John L. Douglas           Current Role: Partner Paul Hastings

                                    Former Role:  Lawyer – Resolution Trust Corporation (RTC)

L. William Seidman       Current Role: Advisers To Henry M. Paulson Jr. and transition team for President-elect Barack Obama, Also separately directing investors or banks on how to best profit from this advice

                                    Former Role: first chairman of the RTC

David B. Iannarone      Current Role: managing partner at a firm that handles defaulted commercial real estate loans

                                    Former Role:  R.T.C. lawyer

Gary J. Silversmith        Current Role: involved in enterprises seeking to profit from bank bailouts

                                    Former Role:  R.T.C. officials

Robert L. Clarke           Current Role: Partner Bracewell & Giuliani

                                    Former Role:  Controller of the currency – Bush Administration

                                                          Resolution Trust board member

Eugene Ludwig            Current Role: Promontory Financial Group

                                    Former Role:  Comptroller of the currency – Clinton Administration

Thomas P. Vartanian,   Current Role: Partner in the Washington office of Fried Frank

                                    Former Role: Former general counsel to the Federal Savings and Loan Insurance Corporation

John J. Oros,                Current Role: Partner in J. C. Flowers

                                    Former Role: Chairman of a financial industry council

Peter Monroe               Current Role: Wilherst Oxford – Venter Capital

                                    Former Role:  president of the RTC Oversight board from 1990-1993

Society would be far better off if its university educated people who wanted to build new ideas, inventions, concepts and art, then just constantly develop a culture of greed, destruction and then profiteering from inherit cycle of the system.

In an article on bloomberg.com entitled: Japan Should Scrap U.S. Debt; Dollar May Plummet, Mikuni Says Bloomberg explores what the Japanese Credit agency has said about the US Dollar compared to that of the Japanese Yen.

Breakdown: Mikuni Predictions

·          Dollar may lose 40% of its value, Reach 50 to 60 yen from the current 90.40 today

·          Japan needs to takes “drastic measures” to help bail out the U.S. economy

·          Treasury yields, near record lows, may fall further without debt relief, making it difficult for the U.S. to borrow elsewhere.

·          U.S. budget deficit may swell to at least $1 trillion this fiscal year

·          Policy makers flood the country with $8.5 trillion through 23 programs

·          Japan is the world’s second-biggest foreign holder of Treasuries after China.

For the US to get out of the economic trouble it faces, it will need to create more jobs. The only way to accomplish that is to send on infrastructure, allowing for a long term recovery.

“The U.S. also needs to launch public works projects as the Federal Reserve’s interest rate cut to a range of zero to 0.25 percent on Dec. 16. won’t stimulate consumer spending because households are paying down debt, he said.”

Breakdown: Obama’s Job Creation

·          Obama wants to create 3 million jobs over the next two years,

·          More than the 2.5 million jobs originally planned

·          Obama takes office on Jan. 20.

“Japan should also invest in US roads and bridges to support personal spending and secure demand for its goods as a global recession crimps trade, Mikuni said.”

The only way out is for Japan to help the Americans by combining debt waivers with infrastructure spending.

Breakdown: Japan Exposure

·          Japan’s exports fell 26.7% in November compared to 2007

·          Japan has $976.9 billion in foreign-exchange reserves

·          World’s second-largest after China

·          Foreign assets held by Japanese government and private sector total $7 trillion

·          Yen up 23% to dollar this year, the most since 1987,

The credit crisis has prompted investors to flee riskier assets and repay loans in the Japanese currency.

“Japan’s economic model has been dependent on external demand since the Meiji Period” that began in 1868, Mikuni said. “The model where the U.S. relies on overseas borrowing to fuel its property market is over. A strong yen will spur Japanese domestic spending and reduce import prices, thereby increasing purchasing power.”

AlterNet.org has a very interesting article talking about how retirement was design to only really work for one generation, and the realty is that people will more then likely be working for the rest of there life’s.  

While we at Whybanksfail don’t exactly agree with their argument, we feel they may have some valid points and think that a read of their article: Pension Funds Collapse: The End of Retirement? Might do everyone some good.

We believe that social security and the development of retirement pension funds was a great idea, and would be a strong solution to the problem, of retirement. However governments, companies and unions, used these assets as personal bank accounts. They found out that paying back the money taken turned out to be to much, so they simply sold out the people who would have otherwise benefited from them.  

“2008 was supposed to be a watershed year for retirement: it was the first year that the baby-boomers turned 62, and the retirement frenzy was to begin”

But as it turned out, 2008 was the breaking point for retirement, with most peoples 401(k)s down between 30% – 70%. 

“The deliberate destruction of the pension and its replacement by the 401(k) was, of course, a giant step towards attacking retirement; but now that the economic crisis has emerged, we’re beginning to see just how ruinous the effects are.”

Breakdown: Value of 401(k)

•  End of September value of stocks in 401(k) accounts had fallen by nearly $2 trillion 
•  Much more has been lost since then
• Almost one-third of 401(k) participants in their 60s had 80% in stocks
• Pension funds have been similarly destroyed

Another continued sign of weakness, housing numbers are in for November, and it does not look good.  In an article on ft.com, we look at the breakdown of what’s going on with housing.

It seems that American are just not ready to jump back into housing, and as long as they worry about paychecks and availability of credit, it seems that the predictions of it getting worse before it can get better seem to be dead on.

The question is: Will Americans view their homes as investment vehicles, as they have in the past, or go back to the concept that this is a place to live. In the last decade or so we have been told that our homes, and the 401k we love so much, would be the tools we need to build a retirement. With both taking loss which have all but wiped out most Americans retirement funds. How will people look at these in the near and long term?

But for now we can look at the numbers.

Breakdown: Existing homes

·          Existing homes fell 8.6% in November

·          Buyers retreat in-spite falling prices

·          Home re-sales fell to an annual rate of 4.49m in November,

·          Down 10.6% from a year ago

·          Median price fell 13.2% to $181,000

·          Sharpest decline since record-keeping began in 1968

Breakdown: By Region

·          Northeast re-sales fell 12%

·          South re-sales fell 10.9%

·          Midwest re-sales fell 7.4%

·          West re-sales fell 4.7%

Breakdown: Possible Effects

·          Faster contraction in consumer spending

·          Falling home values would lead to higher loan defaults

·          Including those recently modified distressed mortgages

Breakdown: Other Homes

·          Sales of multi-family homes dropped 13%

·          Existing homes available for sale up 0.1% in November to 4.2 million

·          Sales of new homes fell 2.9% from previous month

·          Analysts expected a drop of 4.2%

·          Housing starts fell by 18.9 % in November

·          Permits fell by15.6% in November

Breakdown: New Homes

·          New homes sales are down 35.3% on the year

·          Annual sales pace of 407,000 was the lowest rate since January 1991

·          New homes median price $220,400 in November,

·          Up from $214,600 in October

·          Inventories of new homes for sale fell 7% in November to 374,000

·          Lowest number since February 2004

Read Article: US existing home sales plunge 8.6%

The first government to go under, due to the widening global financial crises is Belgium.

In an article on the ft.com website, a more European centric news organization, an article talking about the failure of the Belgium coalition government appread on Tuesday Dec 23.

“Belgium’s King Albert II formally accepted the resignation of the coalition government led by Yves Leterme, prime minister – but ordered it to stay on in a caretaker capacity to deal with “day-to-day” business.”

Breakdown: Fortis

Belgium government sold Fortis for €14.5bn ($20.2bn) to BNP Paribas

Shares in the French bank fell to a six-year low on Monday

“The state took ownership of Fortis’s Belgian banking and insurance operations as a temporary step to facilitate a quick sale in October. The government had hoped to close the deal this month but the Brussels appeals court has frozen the transaction until February. It was this decision that government officials allegedly tried to influence.”

Read Article: Financial crisis fells Belgian leadership

It looks like the Japanese automakers might have been drinking the same Cool-Aid that Detroit was enjoy the last decade or so.

In an article on NYTimes.com, we explore the global economic downturn and how these conditions have affected the market for new automobiles.

As developments occur we will now need to turn our focus on car companies all around the world, and see what reactions other governments will have when their local companies start to ask for bailouts: based on the fact that their companies cannot compete against the Americans nationalized corporations.

Breakdown: Toyota

• Toyota expected 150 billion yen ($1.7 billion) loss, in its group operating revenue
• First operating loss since 1938
• The year after the company was founded
• Huge reversal from the 2.3 trillion yen, or $28 billion, in operating profit Toyota earned last fiscal year
• Toyota has $18.5 billion in cash, and relatively little debt
• Toyota lowered worldwide vehicle sales form8.9 million to 7.54 million vehicles
• North America to sell 2.17 million, down from 2.96 million last year
• Toyota’s group which includes Daihatsu and Hino, still expected a net profit in same period of 50 billion yen, or $560 million

Breakdown: Japanese companies and Declines

• Toyota sales drop 33.9%
• Honda Motor sales drop 31.6%,
• GM’s sales drop 41%
• Japan exports dropped 26.7% in November,
• Largest drop since statistics started being kept in 1980,  

Read Article: Toyota Expects Its First Loss in 70 Years

One of the first thoughts that came to mind when the big financial institutions first started to fail back in the summer of 2008, was when all the names that we are become accustom to hear in for the last century become things of the past, what the new names will be. Who will be the person the truly becomes the next iconic name, like JP-Morgan, Merril, Goldman.

Well if Warren Buffett has anything to do with it will be him. But this time the name of the bank he builds might not share his namesake.

In a deal announced today, M&T Bank, who second larges shareholder is Berkshire is buying Provident Bankshares Corp, which operates regional banks in the Mid-Atlantic.

Breakdown:

·          M&T Bank Offered $401 Million Provident

·          All stock deal, valued at $401 million,

·          Adding additional 143 branch offices

·          $6.4 billion in assets,

·          M&T offering 0.171625 of its stock, or $10.50, for each share,

·          37% more than the 20-day average

·          Provident Bankshares Corp is Baltimore-based

·          M&T Bank is Buffalo, New York-based

Breakdown: Fed’s Money

·          M&T Bank to sell $600 million in preferred shares to the U.S. Treasury

·          Part of a recapitalization program for banks

Breakdown: Transaction

·          $352 million for Provident’s common stock

·          $49 million for preferred equity

·          The deal is expected to be completed late in the second quarter of 2009

·          Adding $4.6 billion deposits and $4.3 billion in loans, M&T

·          Acquisition price is based on M&T’s shares Dec. 16 closing at $61.18

Read Article: M&T Bank Buys Provident Bankshares for $401 Million

In a article posted on Whybanksfail, on December 16, 2008: Auto Worker Vs Banker – two failed – who makes more an hour, we discussed the difference between the working wage of an industry like  banker and a manufacture. Well its bonus season, and as we all know, this is the time that bankers really make there money.

So what will the end of the year look like for the bankers? Well not all that bad as it turns out.

Wall Street is expected to cut bonuses by 50%. Its great that they got all that federal money to keep them afloat if only long enough for the bonuses to get paid.

“As a result of the extraordinary growth at Merrill during my tenure as C.E.O., the board saw fit to increase my compensation each year.” — E. Stanley O’Neal, CEO Merrill Lynch, March 2008

Breakdown: Payout

·          Merrill paid out $5 to $6 billion in bonuses 2006.

·          A 20-something analyst base $130,000 got $250,000.

·          A 30-something trader base $180,000 got $5 million.

·          Merrill’s record earnings in 2006 — $7.5 billion

·          Since 2006 the company has lost three times that amount, largely CDO’s

“Critics say bonuses never should have been so big in the first place, because they were based on ephemeral earnings. These people contend that Wall Street’s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino — and let them collect their winnings while the roulette wheel was still spinning. “

“For Wall Street, much of this decade represented a new Gilded Age. Salaries were merely play money — a pittance compared to bonuses. Bonus season became an annual celebration of the riches to be had in the markets.“

In New York area $1 out of every $4 that companies paid employees last year went to someone in the financial industry.

These crazy salaries have hurt us financially and socially, graduates of top university opted out of careers in medicine, engineering or teaching to work on Wall Street. “In college dorms, tales of 30-year-olds pulling down $5 million a year were legion.”

Breakdown: A buck

·          On Wall Street, the first goal was to make “a buck” — a million dollars.

·          More than 100 people in Merrill’s bond unit alone broke the million-dollar mark in 2006.

Goldman Sachs paid more than $20 million apiece to more than 50 people in 2006

Read article: On Wall Street, Bonuses, Not Profits, Were Real

A fresh breath from a member of our forums, kevin_in_denver, tells us how we should think about turning to local credit unions.

His post, Credit Unions are safe, sound and local!, highlights some of the benefits of credit unions.  

From the post:

With everything that’s been going so wrong in the economy, it’s nice to let people know someone is doing something right! Credit unions have never asked for – or needed – a bailout and are not part of the current economic problem. Credit unions have always adhered to conservative lending practices, not the risky loan programs and subprime mess that everyone had heard so much about. 

Many people don’t realize that the credit union deposits are federally insured to at least $250,000 by the NCUA (National Credit Union Association) just like the FDIC for banks. As not-for-profit cooperatives with their member-owners’ interests in mind, credit unions hold on to mortgage loans instead of selling them to a secondary market for a quick dollar. And unlike banks, credit unions are locally owned – members’ money stays local, and gets reinvested in the local community.

People should know that there are still some very sound and responsible financial institutions out there!

The euro which came about in 1999 hit its highest level against the dollar, which is also at a 13 year low against the yen. The Feds cut of interest rates to near zero has caused a dumping of the dollar.

“The greenback extended its drop against a gauge of currencies of six U.S. trading partners, falling 11 percent from a 2 1/2-year high reached Nov. 21. Investors including hedge funds reversed bets that the dollar will appreciate to minimize losses as the end of the year approached, traders said.”

Breakdown: Euro/Dollar

·          Dollar fell 3% to $1.4437 per euro,

·          Weakest since Sept. 29

·          Biggest intraday drop since the Euro’s inception.

Breakdown: Yen/Dollar

·          Dollar decreased 1.4% to 87.80 yen from 89.05 reaching 87.14,

·          Lowest since July 1995.

·          US currency depreciated 21% against the yen this year, the most since 1987,

·          Euro increased 1.1% to 126.06 yen from 124.71.

Breakdown: Pound/Euro

·          Pound weakened 93 pence per euro for the first time

·          People receiving jobless benefits rose by 75,700 to 1.07 million.

·          Bank of England voted 9-0 to cut the nation’s benchmark on Dec. 4 to 2%,

·          Sterling slid 3.5% to 93.27 pence per euro

·          The pound dropped 0.7 percent to $1.5480

Breakdown: Lowered Interest Rate

·          Fed lowered its rates to a range of zero to 0.25%, from 1%

·          Below the Bank of Japan’s 0.3% percent rate.

Read Article: Dollar Falls Most Against Euro Since 1999 Debut on Fed’s Rate

This is a post we found from our forums in the thread, Gold Prices?  Gold Default?  Dollar Collapse?.  

We followed a link to a site, and found on a comment, the following article (copied from Daily Paul’s post, A Fictional Story on Economic Collapse):

FRIDAY…NO DATE GIVEN

It was an extraordinary day, the events of the past several months finally giving way to shear panic in the markets, the governments and around the world. The news carries the story that an emergency meeting is called by the heads of China, Japan, Britain, the Middle Eastern States summoning President Obama, Treasury Secretary Geithner and several economic advisors of the Obama Administration to Tokyo. The holders of U.S. Treasury debt have indicated that they are no longer willing to absorb U.S. Debt. The Federal Reserve takes the step to directly infuse credit and money into the system, side-stepping the monetizing of the debt by lending directly to the government and the banks at a level that boggles the mind.

MONDAY…NO DATE GIVEN

Opening Bell, Wall Street is hit by a massive tsunami of foreign investors to sell all U.S. Government securities at market. The massive panic in the Bond Market spreads quickly to stocks and the DOW plunges to 3,850. The dollar falls nearly 70% against all foreign currencies, gold soars to nearly $1,250 per ounce; silver hits $42 per ounce and settles at $36. Later that day, prices across the board begin to rapidly increase, with loaves of bread selling for $4.70 and hamburger at $6.50 per pound. By the end of the day, a gallon of gas is selling for $5.24 on the West Coast.

TUESDAY…NO DATE GIVEN

The SEC orders all Markets to open two hours late. The Markets open on another selling panic until the Dollar once again sinks another 30% against foreign currencies, and then a panic buying begins as investors seek to buy anything they feel has some value. The Dow closes at nearly 25,534 while the Bond Market collapses. Gold prices shoot through the roof, closing at $4,560 per ounce and silver closing at $95 per ounce. Working people have spent the day off work, seeking instead to sit in line at gas stations and eager to pay $16.50 per gallon. All the late-comers at the grocery stores felt lucky to be able to buy a loaf of bread for $15 and a pound of hamburger for $24 per pound. For the most part the grocery store shelves are empty.

WEDNESDAY…NO DATE GIVEN

Markets are given a national holiday, and nation-wide Banks begin to call in loans and mortgages, the largest insurance companies announce that they will no longer be able to honor any request to cash in policies “until future notice.” Food riots break out in New York, LA, San Francisco, Chicago, St. Louis and New Orleans. In Cleveland and Chicago enraged mobs of housewives kill three Kroger store managers and maim 7 grocery workers before SWAT teams are able to clear the buildings. In other cities, dazed shoppers are glad to find bread at $75 a loaf, but few can afford hamburger at $119 per pound. Coin dealers in all major metropolitan areas close their doors, sneaking out the back to avoid the long line of customers now blocks long looking for any silver or gold. In LA, two gas clerks are burned alive when irate customers trap them in their kiosk, shoving gas tank hoses into the payment slots, filling the kiosk with High Octane Gas at $82.899 per gallon, and throw a match to the trapped clerks. The dollar drops again, now by nearly 95% against all foreign currencies, banking raise interest rates to 72% per day to their creditworthy borrowers, who are lined up for the bargain rates. Early in the day, more banks begin to call all mortgages. By 4:00PM, President Obama calls a banking holiday. Wall Street is booming, with the DOW hitting the all time historic high of 168,650. Trading in the gold market goes into a frenzy mode as gold reaches the $20,000 per ounce mark and then settles at $22,800 per ounce. Two gold traders suffer heart attacks on the trading floor, but are trampled to death by the frantic traders before medics could reach them. Managers of three of the nation’s largest pension funds commit suicide, one Live as he was being interviewed on CNN. Silver begins to increase in price faster than gold and hundreds of millions rush to spend their remaining fiat dollars and save what value they can, by the end of the day silver prices close at $651 per ounce. FEMA, under the direct orders of President Obama, take control over all transportation, all businesses and requires a complete shut down for the next 7 days. The National Guard is ordered to patrol the major cities, in some areas a de facto Martial Law is declared, but to little effect.

THURSDAY…NO DATE GIVEN

With grocery stores and other businesses closed, people panic. Flea markets and black markets spring up everywhere, even in mall parking lots. Bread, if you are lucky to find it, is selling on the black market for $600 per loaf or a dime of pre-1965 silver coin. A very few daring farmers who bring fresh meat are asking $955 a pound for hamburger, $1500 a pound for rib-eye steak, and $50 for a single fresh egg. In LA, Korean truck farmers commandeer a U.S. Army armored personnel carrier and use it to protect their produce as they sell their goods throughout Orange County. President Obama appoints former President Clinton and former President Carter as joint heads of a commission to investigate price gouging, as though it mattered any more. Army units withdraw from Beverly Hills and cordon off the entire area, leaving it to burn from the riots of the formerly wealthy rapidly go insane as shortages crept into their high-end grocery stores and boutiques. The interstates leading from New York, Philadelphia, Boston, Chicago and other major metropolitan areas are gridlocked as multiple millions of refugees flee the cities only to find that there is no gas for their escape. Tent cities spring up at Interstate exchanges, patrolled by armed militias. The Army, with its hands full in the major cities, makes no effort to control suburbia or rural areas. In the Southwest, border crossings are hopelessly clogged as millions of illegal aliens rush south toward their homelands. Stock and commodity traders have been forced to remain in their offices, unable to leave their buildings because of the mobs gathered around them with torches and all manner of weapons. Gold is not trading at $182,400 per ounce, silver climbing to $7,600 per ounce. Traders panic as shots are fired in the gold pit at the Chicago Exchange, but calm returns as they all realize it was nothing more than the last few short-sellers committing suicide. Interest rates on the dollar once again climb to 2,880% per day, but only in overseas markets. U.S. Banks remain closed. Brazil, Nigeria, Mexico and other debt-laden countries paid off their entire foreign debt to the U.S. Banks. The Dollar again drops, closing 96% lower against foreign currencies, but even foreign currencies are taking a beating as the panic spreads globally. Britain, Canada, and most of the EU declares banking holidays along with draconian measures to keep order, rioting has already toppled the Austrian government, and Germany teeters on political collapse. Stock markets across the world hit record highs, but oil, retail business stocks sink.

FRIDAY…NO DATE GIVEN

With the entire nation in shock, as the remaining millions try to escape the urban areas, the declaration of Martial Law by President Obama goes unheeded, even the military is experiencing massive desertions and in some areas open rebellion against some military units who are remaining faithful to the government. In Washington, D.C. heavily armed police and Army forces wage a pitched battle on Capitol Hill trying to defend Congress against a well-armed mob, mixed with its share of military and law enforcement deserters changing their allegiance to the newly formed Provincial Constitutional Government of the Independent States of America. Several Congressmen, including Barney Frank, Nancy Pelosi, Hillary Clinton, Charles Rangle, along with others that had voted for bailout after bailout were tried, found guilty of High Treason and summarily hung on the National Mall. Two days prior, Dr. Ron Paul, along with others who objected to the massive government intervention were safely hastened away to safe-houses.

Federal Reserve Banks across the country are sacked, the various heads of the Banks executed, in many cases, without trail. Various government economists around the country were left hanging from trees and street lights. Bundles of fiat money confiscated from various banks are torched and the massive wealth in art objects, gold, and silver were confiscated In the Name of the People.

In Austin, Texas, the State Legislature announces that, acting on the Treaty of 1848, they declare their Independence and are now to be known as the Texas Republic. Alaska, Montana, Idaho, Washington, Oregon, Oklahoma, Vermont and New Hampshire quickly follow suit and Secede from the United States. It is announced that each Governor of the Secession States will meet in Austin Texas to ratify Articles of Confederation of the Independent States of America. All Independent States jointly announce that they will welcome all Patriotic Constitutionalist into their ranks and will welcome other States which wish to join their Confederacy.

President Obama, along with Treasury Secretary Geithner, FED Chairman Bernanke broad cast an emergency message calling for calm and announce that the government will issue a new dollar backed by gold, repeal the Federal Reserve Act and dissolve the Federal Reserve Banks, but it is too late for any actions taken by the government.

Remember, this is a fictional story.  Not to be misinterpreted with anything real.

Goldman Sachs, long the standard on Wall Street, has been the target of many news articles, of late. Most due to its first ever quarterly loss as a publicly traded company.

Any article on cnn.com/money talks about what the numbers look like for Goldman, but we at Whybanksfail, thought that we would provide a comparison of Goldman to that of the United Auto-workers salary,

Goldman employees cost on average: $174/hour
UAW members cost on average: $ 73/hour

Detroit Bailout: $ 14 billion – Asking so far
Goldman TARP: $ 10 billion

Breakdown: Goldman Salary

·          First quarterly loss as a public company

·          Goldman slashed nearly 2,500 jobs in the fourth quarter

·          Decrease in average yearly payout per employee around 45%

·          Slightly more than $363,500,

·          Down sharply from $661,490 a year earlier.

·          2008 $10.93 billion for compensation and benefits,

·          Down 46% from $20.19 billion in 2007,

·          Figure excludes $275 million in severance costs.

·          Goldman had 30,067 employees as of Nov. 28.

·          The company reduced jobs by 8% in the fourth quarter from 32,569 as of Aug. 29.

Breakdown: UAW Salary

·          $73-an-hour figure comes from the car companies themselves

·          The calculations show that for every hour a unionized worker puts in the Big Three spend about $73 on compensation.

Breakdown: UAW Salary Three categories

·          First category, cash payments, Amounts $40 an hour

·          Second category, fringe benefits, amounts to $15

·          True hourly compensation of Detroit’s unionized work force: $55 an hour

·          Third category cost of benefits for retirees. Amounts to $15

Read Article: Goldman Sachs Average Employee Payout Down 45% This Year
Read Article: $73 an Hour: Adding It Up

An insightful blog, The Path to the Pegasus Letter, writes about how China is handling the global financial crisis in their article, China continues to lead the way.

The article looks at 5 advantages China currently has due to their economic policies.

Those advantages are:

1. Don’t allow a financial meltdown based on idiocy and ignorance
2. Don’t enact policies which are counter-productive and decrease global competitiveness
3. Don’t be stupid and loan money into a sinking ship
4. Don’t be ignorant to reality but be aware of what happens in order to act swiftly and limit the impact of headwinds
5. Be flexible and intelligent

Read more from the original article, China continues to lead the way.