Possible bank failures on the way

Metals traditionally have been safe investments. You could also try your luck by holding some foreign currencies, Euros, Canadian/Australian dollars, Swiss Francs, British Pounds.

If there is a serious problem with the financial system, you want to have your "cash" in a couple diverse formats, and ideally, you want to have zero debt.

I'd say the first and most important step, is to first be debt free.

 

Unfortunately, I am in debt. I think if the value of the dollar declines, I may have to work twice as hard to pay it off. I think I will retire my credit cards now and start working on that.

 

Land is a good investment if you live in an area that has good farmland. You can rent it and cover your taxes. However, interest rate hikes will lower the value of both gold and land.

Don't put all your eggs in one basket

 

I don't see any major bank failures happening. Besides if one bank fails, another will sooner or later rise up to take it's place and niche.
Weeding out of the weak links in the economy is always a good idea, right ?

And i'd like to think there are people with good ideas and lot of experience in handling these kinds of situations at the administration and management of the banks and the economy. Otherwise, we are headed somewhere bad ......

 

The Wall Street Crash of 1929 took out a ton of smaller banks - and that was with a Federal Reserve.

Currently in the UK we have what's called "The Northern Rock Crisis," where a banking institution was about to go down the tubes due to over-optimistic management investment strategies (or something like that) - the UK Govt has had to bail it out to the tune of £26 billion (approx. $52 billion).

BBC - Northern Rock Crisis
Telegraph - Northern Rock Crisis

So anyone who says 'banks won't or can't crash' is just plain wrong.

 

In the early 1980's and the end of the 1980's early 1990's plenty of savings and loans failed (in fact probably a vast majority) as did some banks.

Those that were becoming insolvent merged into other institutions. There was enormous consolidation. All funds remained protected. I wouldn't worry about it at this time.

 

The great majority of banks are fine.

You can buy a mutual fund or an Exchange trade fund that invest in gold as a direct way to buy gold.

A lot of people believe that the recent rise in Gold has been attributed to demand from India and China, now if you believe that US is heading towards downfall, it will clearly drag other countries down with them including the ones dependent on the US consumer for exports like China. Which would hurt demand for gold and hence the price of gold would fall.

 

The banks failed because the Federal Reserve could lend more money into the banks because of the gold standard.

 

The subprime mess is already causing havoc in Europe with the Northern Rock bank failure of US$49 billion and the recent Société Générale's €4.9bn trading loss that caused a world wide stock market plunge.

 

The Société Générale's €4.9bn trading loss had nothing to do with the subprime mess, he just kept making bets that the stock market will kept increase without offsetting the downside risk.

 

Jérôme Kerviel's unauthorized trades cost Société Générale €4.9 billion, but they also helped to turn the French bank's $3 billion of subprime losses into something of a sideshow.

http://www.iht.com/articles/2008/01/29/business/loss.php

 

True, but it also illustrates my point, the pain of the sub prime mess is spread around so the likely hood that one banks will fail because of the sub prime mortgage mess is very small. It would be another thing if the banks that helped underwrite the mortgage actually held them on their books.

 

With the inflated home prices in the bubble markets, a lot of banks face steep losses.

 

That is false, unless your debt is in a denominated in a foreign currency or your pay wage goes down, your debt or how much you have to work to pay it off won't change.

The only reason you know that the currency rises or falls is only because your able to track it against other currencies.

 

Every major wall st firm has written off debt associated with the subprime mortgage, you also have banks in Europe who had exposure to subprime debt, as well as banks in China. You had a hedge fund in Australia close because of its exposure to the sub prime sector and you had hedge funds in the united states that did the same. You also have had pension funds and stock brokerage firms also write off sub prime mortgage debt, the point is the list is pretty wide, but the debt that they are writing off isn't while large in total numbers not large enough to put them in bankruptcy which is what my point was. A lot of people effected yet the pain is not as bad as if only two banks held all the subprime mortgage debt.

 

Breaking News: Britain to Nationalize Northern Rock

Treasury chief Alistair Darling said Sunday that struggling bank Northern Rock PLC will be nationalized

http://biz.yahoo.com/ap/080217/britain_northern_rock.html