CHESSNOID

Our biggest banks are definitely struggling. For a while I wrestled with the idea of buying some of their stocks because they looked like a bargain when they were in the teens. Luckily for me, I avoided my urge and listened to my own advice based on observations of the current US economy and bank experts like Meredith Whitney. Those same bank stocks are looking to become penny stocks. They are not quite there yet, but not very far away which will force the government to step in very soon.

NY Times:

The decline, which had been building for days, underscored the growing anxiety on Wall Street about what the government would do next. The Obama administration has provided few details about its plans to shore up troubled lenders, sowing confusion in the markets and inside the banks about its intentions.

Bank of America and Citigroup, both of which have received tens of billions of dollars in government aid, bore the brunt of the selling on Friday. Bank of America sank 14 cents, to $3.79, while Citigroup fell 56 cents, to $1.95, although both rallied in after-hours trading. The decline capped the stock market’s worst week since November, when Citigroup confronted a crisis of confidence that eventually compelled it to reach for a second financial lifeline from Washington. The Dow Jones industrial average fell 100.28 points, to 7,365.67 Friday.

We have spent close to 7-8 trillion dollars bailing out companies in the past year, which would have been put to better use pumping it into the FDIC. These banks should have already failed and we could have avoided wasteful spending such as $20 billion on CEOs bonuses when they have run these banks into the ground. It looks like we are going to own these banks, but it would have been more efficient to use the system that is already in place to handle these situations.

Ron Paul and Peter Schiff on the economy

We basically own these banks right now. We will get it through the TARP Fraud Bailout or through FDIC absorption. Nationalizing banks is a form of socialism, so chances are the government will find a better word for it like “temporary government restructuring”.