The Bailout is agreed to and if, and only if, it can get past the Republicans and BlueDog Democrats, it will go into effect..
Here are some possibilities….
Expect your bank to fail– temporarily — one weekend at the least, at the most for 4 weeks…
Expect your automatic deposits to get lost as banks open and close at whim. One should seriously stop automatic deposits.
Expect your on line bill paying to get messed up. Have account numbers readily available on a master list. Thanks Steve.
Do not have any money over $100,000 in a non insured FDIC account.
If possible, have access to cash spread around in 3 or more accounts, allowing for some access as the wave of bank closures begins…
Keep some cash handy in case no access is available….
Don’t pay any bills early … (lol) Your creditors may be gone before you are… (a little dark humor always brightens the day).
First, expect the $700 billion not to be enough. Assuming the plan actually gets off the ground and the Treasury is able to organize some kind of workable asset sale, what will happen to the US economy once the banks have been ‘saved’? Will house prices automatically start to stabilize? Will jobs be created as if by magic? Will Americans suddenly find they have disposable income on hand to get their consumer-weighted economy whirring away again? Of course not.
Second, expect that this is it. The government, after this, can no longer invest anything to boost the economy or buy out another failure….
Third, America does not have $700bn of taxpayers’ money. The government is in debt to the tune of $9.8 trillion. The entire sum will be borrowed from foreign governments and other purchasers of US Treasury bonds – which creates further problems.
Further problem 4: investors from other countries are going to see this as the biggest example yet of America’s lack of financial discipline. They may then very well decide they should not invest so heavily here and diversify their portfolios to invest less in US Treasuries, dollars and US equities and more in European bonds and the euro.’
Further problem 5: This, of course, will drive the already weakened dollar down even further, which will drive up the dollar-denominated price of oil and other commodities, adding inflationary pressure into the bargain.
Further problem 6: Expect that most of the big decisions in the Presidential winner’s term will have already been made by the Bush administration before inauguration day in January. ‘The whole four years will likely be bogged down in very dull financial regulation and legislation relating to this bill. Barack Obama can forget about spending increases and John McCain won’t have any room for tax cuts.
Further problem 7: The next President will also face the prospect of a global depression to manage, and with it the possibility of strained relations with foreign governments.
Further problem 8: China, as top buyer of its manufactured goods, faces an abrupt slowdown as Americans tighten their belts. This of course will mean that China and other nations will be less able to purchase huge wads of US Treasuries even if they wanted to, further restricting America’s access to funds.
Signs from “it is getting worse…”
Expect Wachovia to fail very soon and become bought by Citibank or Wells Fargo.
Expect Bank of America, JP Morgan, and whichever bank buys Wachovia, to own over 30% of America’s assets… Those three would be so large that they would dominate the industry, with unrivaled power to set prices for their loans and services.
Expect some small and midsized banks, already under pressure, to have little choice but to seek suitors.
Expect global hard times at least for a period of three years, with a large world wide war being engaged just to finally pull us out of our economic slump….or kill us all on 12/21/12……. Ka-boom…lol.