This a question that needs to be asked. How safe is our banking system? We know they are insured for the first $100,000. But can we really trust the banks and the government? They've been lying and cheating us for so long how can we trust them. On the hand a panic would be the worst thing that could happen. If the government and big business don't come together to solve the crisis panic will eventually set in.
Even as the Bush administration moved to rescue the nation’s two largest mortgage finance companies, confidence in the banking sector spiraled downward Monday.
In Southern California, lines snaked around branches of IndyMac Bancorp, the large lender that was seized by federal regulators on Friday, as customers hurried to withdraw their money. As the anxiety spread through the financial markets, two other big banks, one in Ohio and another in Washington State, were compelled to assert that they were sound.
Rumors lead to panic. The greatest rumor mongers are the speculators. And its the speculator that have gotten us into this mess:
Bank stocks swooned again Monday as rumors flew around trading desks about which bank would be the next to be taken out.
But wait a minute Weren't we reassured on Sunday that the Securities and Exchange Commission was going to try to put a stop to rumormongering on Wall Street?
Turn up the laugh track, please.
Rumors are as much a part of trading culture as spitting is a part of Major League Baseball. And like insider trading, intent is difficult to prove. One trader's rumor is another trader's conventional wisdom, and it doesn't take long for sentiment to grab hold, particularly when the slightest inkling of news is picked up and repeated ad nauseum on cable television.
Even as federal regulators issued assurances that depositors’ savings were safe, Wall Street analysts circulated lists of lenders that might be vulnerable. Shares of regional banks plunged in one of the sharpest declines since the 1980s.
[...]Regulators and investors are bracing for a small number of banks to fail over the next 12 to 18 months. Analysts predict that 50 to 150 banks might stumble. In the first quarter this year, the F.D.I.C. listed 90 banks as troubled, which is far lower than the levels during the savings and loan crisis of the 1980s. Still, Ms. Bair said that number would increase. IndyMac, for example, was not on that first quarter list at the F.D.I.C. but was still seized by regulators.
And it is the speculators that helping to drive up food prices:
The massive inflow of speculative funds into commodity markets is playing a big part in driving prices of oil and food higher, harming the world's economic growth and the lives of the most vulnerable, an annual government report said Tuesday.
This is the first time that the industry ministry's white paper on international economy and trade has provided a detailed analysis of soaring oil and food prices, officials said.
[...] "Therefore, it is believed that the inflow of speculative money, comprising pension funds and hedge funds, is also having a big influence," it said.
In the wake of the U.S. subprime lending crisis, the report said global investors seeking safer returns are pouring money heavily into commodities as a hedge against flagging stocks and the U.S. dollar.
The paper said that the futures price of corn in Chicago was $6 per bushel as of May this year, only about half of which was explainable by the supply and demand balance.