Beware of upcoming runaway inflation.

by Jeff Davis

Banks are going down in flames all around us, sort of like some kind of financial meteor shower. A recent [1] news article reports: “Regulators shut down a big bank in California on Friday, along with two banks in Georgia and one each in Florida, Minnesota and Washington. That brought to 15 the number of bank failures so far in 2010 atop the 140 shuttered last year in the punishing economic climate.”

Shortly after the subprime mortgage crisis began wrecking the US economy, Rush Limbaugh noted that five million subprime loans had been made to illegal aliens. Because the subprime loans didn’t require down-payments, the banks had to absorb all the losses from each loan that went bad. Since the banks are ultimately backed up by the FDIC, that means either runaway inflation or more national debt is needed to recover the losses when these banks fail. If you figure about 15 million bad minority subprime loans total, with a loss of $100k per house, that would be $1.5 trillion dollars in damage to the economy thanks to the minority subprime loan disaster. This is a HUGE financial catastrophe which rightfully needs to be hung on irresponsible minority borrowers and liberals everywhere.

The [2] article notes “The failure of Los Angeles-based First Regional Bank, with nearly $2.2 billion in assets and $1.9 billion in deposits, is expected to cost the federal deposit insurance fund $825.5 million. The Federal Deposit Insurance Corp. took over the bank as well as the others: First National Bank of Georgia, based in Carrollton, Ga., with $832.6 million in assets and $757.9 million in deposits and Community Bank and Trust of Cornelia, Ga., with $1.2 billion in assets and $1.1 billion in deposits; Florida Community Bank of Immokalee, Fla., with $875.5 million in assets and $795.5 million in deposits… First Regional Bank’s collapse followed the shutdown of several large California banks in the last months of 2009. California was one of the states hardest hit by the real estate market meltdown, (all those subprime loans to illegal aliens) and many banks there have suffered under the weight of soured mortgage loans. Last year saw the failure of 17 banks in the state.”

These banks and their assets will eventually be bought up by one of the larger financial sharks and their branches will be re-opened with another sign on the door, but as more and more of the little ones go belly up that process is going to become harder and harder, and eventually the FDIC won’t find any more takers. Even biggies like First Union, Bank of America, US Bank and Wells Fargo can only gorge on so much financial carrion before it poisons them, and even they can only absorb so much bad debt before they’re going to have to scream for the FDIC to pull some money out of thin air to save them.

And what happens all those trillions of dollars of Monopoly money that Obama and Bernanke have printed up hit the streets? Inflation has been slowly creeping up–check your local Albertsons if you don’t believe it–but it hasn’t gotten too bad yet. Obama just announced $3.8 trillion in spending for his next budget. You can’t keep creating new trillions out of thin air without causing runaway inflation. Soon we’ll see OPEC switch from pricing oil in dollars per barrel to euros, and then we’ll be on the road to Zimbabwe with our own bungling Marxist African ruler.