On CNBC it was stated that banks stopped loaning to each other because if one of them goes out of business the loan is not FDIC insured.

I smell the smell of a engineered collapse..

Jim Willie is a gold bug, but not a kook. At least, no kookier than usual for this site.

It could be part of a disinformation campaign, by the banks, to continue to scare Americans into supporting the bailout bill. Who stands to gain the most if the bill passes?

Leanan-- do you think it wise to post this sort of thing? Is it not irresponsible?

Look, Leanan, your carelessness is already having an effect. The Dow is down 231.14, -2.13%, after early trading.

Keep it up and the system will crash tomorrow.

Ohhh... feel the power!!!

Those damned bloggers on the Internet. Gore's fault, too, for having invented the www in the first place. :-)

My brother has a definition of the difference between "being prepared" versus "hoarding".

If you stock up when there is plenty that nobody else wants, that's "being prepared".

If you stock up when everybody needs the stuff too, that's "hoarding".

I'm stocking up on gold, silver, and cash. Only half done with my plan....I hope I'm not too late. At least I'll be WAY ahead of 90% of the populace if things shut down tomorrow.

Cash?
Package labeled Pork Chops in the freezer?
Bag labeled DDT in the tool shed?
Buried under the rose bush?
Money belt?

You left out some information and your address

:)

the first $4900 wouldn't be available until Wednesday (oct 1) and the remainder until the following Monday (oct 6).

DownSouth

I would pay attention to this point made by Jim Willie in the article mentioned above...

The October Hat Trick Letter contains some multi-sided evidence of USFed open license to use subsidiary accounts toward the aid of liquidity strains.

Your accounts may be used for the bank's own liquidity purposes.
I have read the same in other articles.

Ya gonna believe Willie or your lying eyes?

I sold a property on Lake Norman in the Peninsula club
recently.

http://www.thepeninsulaclub.com/Club/Scripts/Home/home.asp

The check from closing was deposited in a BOA account in Huntersville NC, The branch refused too allow funds to post for 30 days. Here in Cleveland Ohio, there is a office for BOfA but not a branch (Cleveland is 1 of 12) of the federal reserve bank locations....thats why BOfA has an office but no branch here. I called the world headqaurters of BOfA in Charlotte and informed them "You can't count on your books as cash on hand, that which you deny my access too" And informed them of the nature of the check and its nearly instantanious verification made easy with the routing number at the bottom of the check. The money suddenly became available and posted on line within 1/2 hour!

Bank of America has been changing a lot of their rules recently. Everything from fingerprinting people to charging fees for cashing checks.

My sister had something similar happen to her.

I think what I said here explains a lot of whats going on. Its not a traditional bank run but people withdrawing large amounts of money to cover debts. I'm also copying the text.
It also explains the stock market action. Basically a whole lot of people are now paying debt out of their savings.

http://europe.theoildrum.com/node/4584#comment-416479

I suspect your wrong about the cause of this run on the banks and also why you can't see it.

The run on the banks is caused by people draining their savings to pay mortgage debt and CC debt.
I suspect a lot of it is from small time real estate speculators still holding on to properties and draining cash every month.

Also I suspect people are furiously cashing out their 401k's for the same reason. This drain of money from 401 k's will force private pension plans to sell assets to meet liquidation demands.
This is on top of the natural roll over as the baby boomers retires. Needless to say a lot of liquidity is being drained from the stock market right now because just about everyone is either borrowing or cashing out their 401k plans at the moment.

Its going to get a lot worse before it gets better.

I don't think a temporary bank shutdown on a national basis would involve ATMs. That's the reason banks might need some lead time to prepare.

If they close the banks but keep the ATMs going (perhaps with lower daily withdrawal limits), it's likely in my view that panic would subside in a few days. You would have access to cash, just not your entire balance at once.

In meantime, of course, broad measures (mostly involving helicopters) would be announced and explained to the public.

[In fact, ATM's might turn out to be amazingly useful in times like these to preserve the banking system. Cash is available, just not in massive quantities. Cash rationing.]

The "commonsense" Sarah Palin, by herself, cannot bail us out. And I don't relish the thought of her as President. It would be an unmitigated disaster. That said, when we look at the entire political spectrum, the Sarah Palins of the world do play an important role.

I do not lament the fact that in the United States we have people like Sarah Palin. What I do lament is that we have no counterbalance, no radical populist left. Where are our modern-day Huey Longs? They've been banished from the political landscape by constant pounding from a national news media that demonizes left-wing populism, but sees nothing wrong with the right-wing populist rhetoric of Sarah Palin.

I don't disagree with you except as to the percentages. I am guessing much more than 19% is paid for with American monopoly money. My point is Japan and China cannot easily threaten to dump the dollar even though at some point they will have to do so. (To paraphrase Ben Stein's father "That which cannot go on forever, won't").

Since we are on a peak oil site, I have to say that while I find our payment of monopoly money to corrupt, non-democratic regimes in the oil producing states (except for Canada for course) for a precious, finite resource at the same time that we are the world's most wasteful oil gluttons to be morally reprehensible, from an economic standpoint we are getting a fabulous deal even if the China gets the low-paying electronic and textile jobs.

With regard to trading real goods in exchange for real goods, that is probably a good idea for sustainability of the human race as a whole. Unfortunately for China and Japan, they don't export oil and we can rebuild our ipod, GAP clothing and Pinto factories fairly quickly if they decide not to take our monopoly money in the future.

The US gov't. deficit for 2008-09 is projected to be close to 600 Billion, and if revenues decrease in the manner I think they will, that figure could come close to a Trillion. Neither figure includes the costs of any "bailout." Then there is coporate and consumer debt to add to the gov't. number. All told, $1 Trillion is a good guess for what the US will need to be loaned over the course of 2008-09. One Trillion divided by 365 gives $2,739,726,027.40/day in borrowing. Include the costs of the "bailout" plus the 100 Billion in bribes to get it passed to the one Trillion for 1.8 Trillion would require $4,931,506,849.30/day. Then we need to finance the payments for the debt already accumulated, so figure about $5 Billion per day in overseas loans, more than double the daily amount of the 2007-08 fiscal year.

Such an amount is insane. But Depravity Central will likely vote for just that: Insanity.

If America stops buying, many countries cannot sell. They really want us to keep buying, as they get some value from the dollars received.

Ring around the rosie
A pocket full of poseys
Ashes, Ashes
We all fall down

Well, the rhyme refers to The Plague, but it might as well refer to the situation you describe.

If I were manufacturing goods in China or elsewhere, I would demand payment in my national currency. The same goes if I'm an oil exporter. Yes, this would create inflation in my currency as its demand would grow. But at the same time the dollar gets cheaper, which allows me to buy US agricultural goods, weapons, land, businesses, or whatever in greater quantities than before. And since the US now needs my national currency to buy my products, the USA would need to accumulate a reserve of my national currency. At some future point, a tenuous balance would be arrived at and the exchange rate would become somewhat stabilized. (The Bretton Woods agreement established the International Monetary Fund to perform this essential international service, which was discontinued by Nixon in favor of Kissenger's Dollar Hegemony plan.) IMO, the dollar has a long way to fall to reach whatever value it still has.

As implied, the deviation from the Bretton Woods system is at the root of the potential destabilization of global trade. Hopefully, it won't take a global depression and world war to return to such a system, perhaps using some newly created non-national currency--The Global--as the primary reserve currency.

For better or worse, we must have an easily portable medium of exchange to facilitate commerce. The denarius worked until it was debased, as did sterling then the dollar. The gold bugs will demand a return to their standard, which I see as implausible. Now that the dollar crisis is fully formed, we have many countries calling for reform of the international monetary system. Now that the US lacks leverage over those countries, perhaps a sane agreemnet reinstituting something like the Bretton Woods System will be arrived at.