Was the failure of Indymac orchestrated? I’ve heard the rumor here and there around the Internet, and one CNBC commentator is saying it out loud and in public. I have to admit, it’s an interesting string of cooincidences.
However, I think the most interesting thing he had to say is this:
The political class is shifting left. We’re likely to get Obama and Nancy and Harry running the most advanced economy in the world next year. The investor class doesn’t like what it sees coming. That’s why it is scaling back. Capital is going on strike, and we won’t come back to the table until we see that we have a chance to a fair deal.
I bet all the folks who are voting for Obama didn’t expect that change, did you? Me, I’m just curious to see where the capital flees to. I’m betting Asia.
Another thing to watch carefully is…other banks. Right now, the Fed’s plate is full with IndyMac plus the Fannie and Freddie Follies. A CNBC commentator reports the following:
Chris Thornberg at Beacon Economics says, “IndyMac was the first major institution that wasn’t too big to fail.” He says as the Feds are busy worrying about “the big boys”—Fannie and Freddie—hundreds, maybe thousands, of smaller, regional banks will now realize they have no savior.
Of course, the FDIC insures deposits up to $100,000, but what happens if it’s a wave of failures–how many banks have to fail before that well runs dry? Those of us who aren’t “captial”–we just have money in the bank–had better be ready to move quickly as well.