Last September, shortly after the FDIC Chairwoman's press conference announcing 117 banks were on the FDIC Watch list, I wrote about whether or not we should feel comfortable with our money in the bank - especially as we become more and more a cashless society, using debit cards and credit cards for even the smallest purchases. That article had lots of details that I'm not going to repeat here, but it's worth a re-read if you're interested in this sort of thing.
That post got lots of traffic, I got lots of emails, and it also appeared in several publications. And, today, when I read the news that last Friday, five more banks were closed across the country (bringing the total to 45 closures so far this year), I thought I'd look into this issue a bit more. And here's what I've found.
1. The Coming Depression has links to sources relaying the following info: Panasonic is ordering its employees back to Japan by September 2009, and US Embassies are being told to gather enough local currency to cover their operations for a full year.
2. The FDIC has an online list of banks which have failed since October 1, 2000. By my count from this list, as of today, this totals:
Oct to Dec 2000 - 2
2001 - 4
2003 - 3
2004 - 4
2005 - 0
2006 - 0
2007 - 3
Jan - June 28 - 45
That's right. Forty-five banks so far this year, and we're only half-done with 2009.
3. Back in March, the Senate Banking Committee Chairman was moving to get the FDIC a line of credit totalling $500 billion for its DIF. DIF, meaning the Depositors' Insurance Fund, which covers depositors when banks go belly up - insuring accounts up to a certain amount ($100K, $250K in some instances). If the FDIC doesn't have the money to cover its insurance protection promise, that's a cause for concern and obviously it didn't appear to be on solid ground back in March.
4. This week, we come into the end of the second quarter of June, and banks will have to file quarterly reports with the feds. The FDIC is getting an emergency "assessment" from banks to boost its DIF based upon numbers showing in these quarterly reports. Banks have until September to pay the FDIC this assessment.
5. What's the most stable currency in the world? Yep, someone studies that - in fact, they have turned it into a reputable business. EWI, or Elliot Wave International, is the largest market forecasting company in the world and it issues its determinations of the most stable currencies worldwide, using eight (8) factors. So far, EWI is finding these as the top four:
New Zealand Dollar
5. Of course, there's lots and lots of talk (and TV commercials) about gold as the safest currency. I think I saw G. Gordon Liddy as the spokesman for one of these gold vendors recently ....
6. And, then there's the recognition that a dollar is only a method of exchange. If things were to get so bad that banks didn't have cash to hand out, would it mean that your sawbucks were worth more because cash could not be had (depends upon the government printing press, now doesn't it) or would it mean that your buck was worth less because there were so many dollars on the books?
For many people, the answer to this is to stockpile goods that in a crisis would be practical for exchange. Everything from food items, to batteries, to ammo.
So, bottom line, should you pull your money out? I don't have a clear answer on that one, but I'll keep looking. Meanwhile, what does your gut tell you to do?