John

My intent was not to be harsh on Iowegian which I certainly hope came through on my post and in my tone.

We are having a good group discussion here and I am anxious to hear about his perspective on all this.

I just find my own trust shaken and somewhat compromised by recent events.  Things I thought could not happen are happening at an alarmingly steady rate. Tin foil items from a few years back have already occurred.  I still feel the issue is not being addressed and people in positions to convey more trust are not getting how serious this could all potentially be and are not coming forward and being proactive about what is really going on.

I just wanted to have a calm rational discussion. We talk amongst ourselves but it would be most helpful to listen and see things from the other side of the fence too. If nothing else maybe Iowegian can tell his board of directors  "Hey we have people asking these serious and complex questions maybe we need to start anticipating an informative response." Start being proactive rather than hoping it is taken care of or will blow over.

Contagions like these are tough to predict everything is fine until suddenly there is a smoking crater and everyone wonders what just happened.

Raising awareness and having these adult conversations in a sane and rational manner can help bring some sanity to the insanity all around us. 

That's the issue, we need people to stand up and say no more this is the final line. We will NOT allow you to steal our depositors money. Sure a lot of banks will fail if forced to eat their bad bets. Will it be painful and disruptive yes. However other banks will open, community banks and credit unions will step in and fill the void and life will go on.

No matter how you slice it and how painful it is now it is still far better than the alternative. It can be rebuilt now. However if you toss the rule of law ,one of the cornerstones of our republic, and allow open theft and stealing that is a good way to lose your form of government and you take the  George Washington / Adolf bet of what you end up with. The odds of a George Washington runs about 1 out of 10 a Hitler type figure runs about 9 out of 10.

Again that is where the open exchanges for derivatives and financial  instruments comes into play. Like stocks or grain accounts are marked to market nightly margin calls and settlements keeps things honest. If the counter parties can't cover their risks, or figure out who owns what then it can't be considered a valid contract to begin with and must be torn up and destroyed. By removing this bogus leverage out of the system and making it be accountable to actual market pricing you remove a lot of the systemic threat and risk of contagion from the system. However that only works before it all blows up.

The fuse is lit and already inside the box so we don't know how long until the final  boom.