Below is a graph showing the massive amount of assest’s the world’s largest banks once had and there current market value.  This is a good example of how the bubble has deflated in the last year leaving balance sheets completely destroyed.

Here is a 4 part series on how to rob a bank. In this mini documentary The Real News Network interviews William Black. Professor Black is a former bank regulator and white collar criminologist who helped uncover the Savings & Loans debacle in the 90′s.  He is also the author of “The Best Way to Rob a Bank is to Own One“.

One important point he makes is that nobody has been arrested or convicted of any wrong doing in the whole ‘mortgage fraud” disaster.

Being one of the major holders of US debt the Chinese are starting to worry about their investment.  Earlier today the Chinese premier expressed his concern over the US’ reckless approach to adding debt.  This comes days after the US Senate signs off on a $ 149 billion jobs bill.  Another scary stat out this month shows February setting a record monthly budget deficit of 220 billion.

China is Concerned Over US Debt

Senate Passes 149 billion dollar Jobs bill

February – Record Deficit month

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Many think the worst is behind us when referring to the US Banking crisis.  They received billions of dollars in bailout money from gov’t which was supposed to have been spent on TARP.  I thought banks started paying back some of the money they borrowed?  I guess this must mean they are making money again.

These are all things we need to consider when talking about the health of the US economy.  If you recall this economic crisis was said to have started with the sub-prime mortgage fallout which we think has ended or at least bottomed out.

A current article by Financemymoney.com courtesy the boombustreport.com show the coming wave of US mortgages that are scheduled for default reset.

Another point to consider is that traditional banks and investment banks are one entity.  After the Great Depression the Glass Steagall Act was passed in 1933 which stated that investment banks had to be seperate from tradiational banks so everydays customers were not at risk when banks made terrible investment deals.  This was repealed in 1999  by the Clinton administration which has largely been blamed as one of the reason of the near economic collapse in 2008.  Even after this close call the rules has not been put back into place.  Banks are essentially gambling with you money and are not worried about making bad decisions since the gov’t will bail them out with taxpayers money.

Here is a clip from Russia Today on the future of US Banks.

Crash Proof 2.0: How to Profit From the Economic Collapse

Providing Real Information

“I am becoming convinced that Great Britain is the next country that is going to be pummelled by investors,” said Kornelius Purps, Unicredit ‘s fixed income director and a leading analyst in Germany.

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The image of banks locking their doors to keep customers from making withdrawals during a bank run is what immediately came to mind when we heard that Citigroup was telling customers it has the right to prevent any withdrawals from checking accounts
for seven days.
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Wikipedia’s definition of a Bank Run

A bank run (also known as a run on the bank) occurs when a large number of bank customers withdraw their deposits because they believe the bank is, or might become, insolvent. As a bank run progresses, it generates its own momentum, in a kind of self-fulfilling prophecy (or positive feedback): as more people withdraw their deposits, the likelihood of default increases, and this encourages further withdrawals. This can destabilize the bank to the point where it faces bankruptcy.

Bank Holiday

March 5, 1933

Roosevelt declares bank holiday
When Franklin Roosevelt started his first term in the White House in 1933, he inherited a nation in the depths of the Depression. A record 13 million Americans were unemployed and businesses were drowning in red ink. Perhaps even more pressing was the head-spinning string of bank failures which had triggered a frantic run on the nationÝs savings vaults. The wave of withdrawals by panic-stricken depositors further dried up banks’ already-depleted supply of liquid assets and pushed the nation’s banking system to the brink of disaster. On March 5–the day after being sworn into office–Roosevelt stepped into the breach and declared a “bank holiday,” which, for four days forced the closure of the nation’s banks and halted all financial transactions. The “holiday” not only helped stem the frantic run on banks, but gave Roosevelt time to push the Emergency Banking Act through the legislative chain. Passed by Congress on March 9, the act handed the president a far-reaching grip over bank dealings and “foreign transactions.” The legislation also paved the path for solvent banks to resume business as early as March 10. Three short days later nearly 1,000 banks were up and running again.

Not too long ago when you wanted a safe investment you could invest your money into bank stocks and sleep fairly well at night. In the past year or so things have changed. Big banks around the world were and some still are on the edge of bankruptcy. Amongst the ashes Canadian banks arose looking strong and stable.

The chart below lists the write down the major global banks took in 2009. The top four all all Canadian banks. A couple more like Royal Bank of Canada and CIBC are also listed a but further down.

Many people may think the Canadian banks are too conservative and take small risks. Those people would be correct. Profits for the big 5 Canadian Banks (TD, RBC, CIBC, BMO and Scotiabank) are smaller than what you would expect from most majors banks mostly because their exposure to risk is much less. This great ability to manage risk is done in a country that does not have a required reserve ratio on deposits. Kinda strange since the US banks have a 10% reserve ratio and nearly collapsed a year ago.

If not for the stock price and security alone you may want to look at the Big 5 dividend history.

Here are some excerpts from a few of the sites regarding their dividend history.

Scotiabank

Scotiabank’s practice has been to relate dividends to the trend earnings, while ensuring that capital levels are sufficient for both growth and depositor protection. This practice, coupled with the Bank’s strong earnings growth, has led to dividend increases in 37 of the last 39 years – one of the most consistent records for dividend growth among major Canadian corporations.

BMO

Dividends are generally increased in line with long-term trends in earnings per share growth, while sufficient profits are retained to support anticipated business growth, fund strategic investments and provide continued support for depositors. BMO’s policy is to maintain a dividend payout ratio of 45% to 55%, over time.

CIBC

CIBC has not missed a regular dividend since its first dividend payment in 1868.

Remaining two banks. RBC TD

To honor this post I present the great Canadian Silver Maple Leaf 1 oz coin.

Interesting post on moneyourmoney.info suggesting people move their money from the large banks to the local ones.  Sites like this are popping up all around the web promoting small local businesses as a better option than large multi-national corporations.  A local bank is never too big to fail nor can they get away with paying their employees large bonuses.  Ideas like this promote a more stable and healthy economy.

People all over the country are choosing to move their money out of bigger banks and into smaller, community-oriented financial institutions that generally avoided the reckless investments and schemes that helped cause the financial crisis. Fueled by the personal initiatives of thousands, it’s a grassroots effort that has the potential to shift power in the financial system away from Wall Street and to Main Street. Check out the video, read up on what inspired the idea, connect with others through Facebook and Twitter and then use thetools and links provided to find a community bank or credit union in your area.Move Your Money

Below is a piece of an article I found on noagendanews.com that discusses how the US Federal Reserve financed roughly 80% of US debt in 2009.  This number is so high mainly because the US debt has grown substantially in 2009 and fewer countries are willing to service this debt for obvious reasons.  But the real question is “Where does the Federal Reserve get the money from?”.  The answer is “They make it out of thin air!”.  Think about that for a while…

Provided the Fed actually reveals their true accounting practices it will be interesting to see where this money came from when bill HR 1207 is passed this year.

Here’s the problem that the U.S. Fed’s “exit” poses in simple English: Our fiscal 2009 deficit totaled nearly 12% of GDP and required over $1.5 trillion of new debt to finance it. The Chinese bought a little ($100 billion) of that, other sovereign wealth funds bought some more, but as shown in Chart 2, foreign investors as a group bought only 20% of the total – perhaps $300 billion or so. The balance over the past 12 months was substantially purchased by the Federal Reserve. Of course they purchased more 30-year Agency mortgages than Treasuries, but PIMCO and others sold them those mortgages and bought – you guessed it – Treasuries with the proceeds. The conclusion of this fairytale is that the government got to run up a 1.5 trillion dollar deficit, didn’t have to sell much of it to private investors, and lived happily ever – ever – well, not ever after, but certainly in 2009. Now, however, the Fed tells us that they’re “fed up,” or that they think the economy is strong enough for them to gracefully “exit,” or that they’re confident that private investors are capable of absorbing the balance. Not likely.

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A recent podcast by money manager Andrew Horowitz’s contains an interview with G. Edward Griffin how wrote the book The Creature From Jekyll Island: A Second Look At the Federal Reserve.  They briefly discuss how the Federal Reserve was created and how it controls our economy today.  They cover some very insightful topics especially how the whole system is a circle of money much like a ponzi scheme.  The interview is a few minutes into the podcast in case you would like to skip ahead.

TDI Podcast 140: Bernanke and The Fed Control America