Why banks will fail in 2011... nationalization beckons!

Apparently its too difficult to predict a banking crisis so let's see if anyone takes notice of this blog in a few years.

Key facts:

• USA banks wrote most of the CDS against European credit risk - i.e they pay when Europe defaults

• BoA transferred $50 trillion(!) notional derivatives into their holding company this month essentially now backing dertivatives by the US tax payer protected retail accounts via the FDIC. Clever move -wonder how much the tax payer is receiving for this guarantee? Zero! Bet the BoA execs will earn more than the median US wage though...a lot more!

• French/German/Austrian banks have become technically insolvent if they counted the true value of their Greek debt on their books instead of accounting gimmicks endorsed by politicians who lie to the public

• Runs on French banks have already started with large corporate customers moving their cash away and highlighting that they can get better USD financing with their credit rating than they can from their own banks!

Not that it would be worth reporting in the main stream media but 80(!) smaller banks have already failed in the USA in 2011 with a slightly smaller number failing in 2010 as well. Do you hear about this on Fox News/Sky/ABC/BBC? I wonder why?

Which ones are going to fail? Well here's my punt at the first few...

• BNP Paribas
• SocGen
• UniCredit
• Bank of America (incl. Merril Lynch and Countrywide)
• Spanish CaJa's
• Morgan Stanley

Who knows who is next...but one by one they will crumble due to their inter-connected derivatives, leverage ratios and debt burdens. Once the Greek debt write downs begin all bets are off. If even one bank calls additional collateral due to higher credit risk then its all over. Thanks to the greed of politicians, we're all a bit screwed in the West. What ever happened to civil leaders who had civic duty. Money wasn't  important - the success of their society was the driver. Its all just words now.

Welcome to the complete collapse of banking. I'm sure the bonuses were worth it! Its going to be pandemonium. The Euro is likely to collapse in all but name without issuance of Eurobonds at each country's relative exchange rate (pre Euro).

When will more people learn that the banking system is an outrageous lie allowing a few to gain wealth over the many. It shouldn't be that way but that's what its turned into. Complex mumbo jumbo which has kicked "risk" down the road and made tax payers pay upfront fees that guarantee wealth to a minority! What a clever system if you're a sociopath. Look up kleptocracy, it has taken over democracy.

The only question is when this is going to happen. Timing is tricky but if I were to guess-itmate I'd say we will have smaller failures in 2012 with epic failures in 2014 and complete crisis in 2016.

Update 2013: The ECB and FED have instituted massive swap lines with each other in order to keep banks alive. They have allowed banks to pass worthless collateral to the taxpayer for 100 cents on the dollar and they have pushed money to banks by buying most bonds issued by western governments. Banks are simply trading with this money instead of lending it for real economic growth. IMO, They are only delaying the inevitable