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Where as all the money gone during the credit crunch?

Governments have put billions of borrowed money into their economies, to replace the money the financial systems have lost. So who now has the lost money, which we as taxpayes have to pay back. Remember all money that is officially destroyed is accounted for.

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2 Responses to “Where as all the money gone during the credit crunch?”

  1. chidhumo said :

    i keep mine indoors. i also know that banks need it to beat the recession

  2. Michael T said :

    The IMF estimates that the US banking system will lose $2.7 trillion on bad mortgages and another $1.2 trillion in bad credit card debt and bad auto loans before the crisis will be over. That is more money than all the US banks made in profit since the US became a nation.

    The only reason that US banks are still afloat is that interest rates have been reduced to near zero allowing them to make enough money on the remaining assets to cover the bad loans, $450 billion in FDIC loans, $850 billion outstanding at the Fed discount window, $700 billion in TARP funds, and another $1.2 trillion in other programs from the Fed.

    Even banks that are considered stronger like Goldman Sachs would probably currently become insolvent if they didn’t get the government assistance including reduced interest rates, $20 billion from AIG, $17 billion in FDIC near zero interest rate loans, and access to the $850 billion Fed discount window. All of this is being provided when it is not really a commercial bank.

    If the banks do no recover a significant part of the losses in higher profits in the next 3-4 years before interest rates rise and the programs are cut back, many will become insolvent (higher interest rates will cause the banks to again not be able to cover the debt).

    So in reality, there isn’t any money left. It is all being used to cover the bad loans.


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