More signs of stress in the system being held back by Government actions and Tax Payers

I said back in March 2009 that there would be a major Banking collapse September or October of 2009. Well here it is. The other issue I spoke about was that Governments may attempt to halt the effects by intervention and infusions of cash. These actions are transferring the pressure from one part of the system to the other. Well, here is another example of this find of government behaviour which is mutating the natural order of the free market economic philosophy. Until recently, free market economics worked around the idea of natural order for success within Capitalism. As in the term Natural Selection (only the strongest survive) -and one man's poison becomes another man's food.

The Colonial Bank Group with 355 banks collapsed on 14th August 2009, what a quiet affair that was. The world was given a quite miner version of the fact that this is the 6th Largest banking collapse in banking history. The FDIC (Federal Deposit Insurance Corporation) stepped in and took over as administrator, selling off many of Colonial's Assets to an industry rival BB&T Corps.

These actions by the US government as well as the UK and others, are putting even greater pressure on the system of government and these economies or tax payers in addition to the recession. Are we going to see more quietly closed national and international banks and Financial Groups over the coming crises? We are seeing numerous banking groups quietly cutting themselves up, whilst kept afloat by national governments around the world. We see global businesses like the CIT Group, who are the 5th largest bankruptcy in history. CIT have just filed Chapter 11 Commercial bankruptcy allowing them to dismantle their group, using Chapter 11, Title 11, United States Code which allows a period of Zombie trading abilities. This means, whilst the company has failed they can continue trading under amputated restructuring Codes as well as having a newly nominated trustee acting as business controller.

From having a situation where these Global Financial Corporations, who have exposed the risks involved in their behaviour and the nature of these types of Global Finance Businesses. We are now seeing the government(FDIC etal) back a chosen few of this Global Group. This group are now taking over the markets they once competed in. These takeovers and buyouts, with tax payer cash and the effects of the crisis, as well as government institutional support, are mutating the free market system. This group are now closing the markets, from the possibility of these financial services being delivered by local suppliers based locally. Well, we have seen how these super structures have behaved, when they believed they were untouchable. They must now feel like Gods. With their aversion to over-leverage and risk insured from failure by the support given by their Governments. With the growing lose of competitors in their trading environments, the markets are now clearing for their control over the remaining market shares.

Colonial bank on brink of collapse

Wall Street Journal





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