I'm pretty confident we will see a "Too big to fail" financial institution go down in 2010

The Federal Reserve will be powerless to stop it, the US. Treasury will be powerless to stop it.

I'm thinking this based on three observations.

1) Commercial Mortgages- I've been driving around town and I'm seeing a lot of empty real estate in the strip malls. Those strip malls are generally financed with their own mortgages. The less people paying rent equal the less people paying mortgages. I expect that there will be a giant blow-up in this sector in 2010. Wall Street bundled these like they bundled all the other debt so I expect more liquidity crisis in the banks as their investments cease to pay interest and principle payments.

2) ARMs. Before I was let go, I was an auditor and was trained to investigate fraud. The one thing I know about fraud is the really bad and stupid stuff happen at the end of a fraud. It is the nature of the beast. So the ARMs that are re-setting in 2009 and 2010 are going to explode in a new wave of foreclosures. Add to that the foreclosures of people who up to recently had high credit ratings and you are dealing with a second Tsunami.

3) Unsecured debt. As new jobs fail to materilize I expect this situation to continue to worsen. The first thing you stop paying is your credit cards.

I also suspect there is a whole lot of financial statement fraud being conducted by some of these banks. To meet capital requirements and to meet Wall St. expectations. In the fraud triangle (Opportunity, Justification, and Need) I would have the big firms at an off the charts risk rating. Too much incentive to be fraudulent and little oversight to prevent it from occurring. The turn around to meet Wall Street expectations seemed a little too quick to me. Cash is king and I expect some of these institutions might have cash flow problems in the next year. Either that or an honest auditor may uncover it and bring an entire institution down. I don't see how you can maintain a profit when the people that owe you money are filing for bankruptcy of not paying you.

It will be interesting to see what happens next.

...the monied interests will affect a mass sell-off, take their money and retire to someplace without an extradition treaty leaving Obama and the congress holding the (now empty) bag just in time for the mid-term elections.

But I could just be paranoid.

It has no intrinsic value. They need the US. Government. It is their sword. Without the threat of United States Military intervention many of their assets around the world would disapear to a population that just takes them.

They also are a little overexposed in the United States.

They need an FDR to save them from themselves again.

Obama ain't no FDR, and never will be. And I say that with sadness, because he had so much potential.

The reason why I can feel safe that my assets are safe in my house is because I have locks and there are police to call if there is a burglar.

If there are no police to call...well once someone gets through my locked door they can take whatever they want.

They are in some serious trouble. They may not know it yet, but their entire lives depend on selling people that they need to buy a house for them and work their entire lives to pay the mortgage of the house. When that starts to evaporate they could go to renting, however renters tend to not care as much about damaging their property.

They can rely on the police and military, however they are mostly recruited from the same class. Eventually the police and military turn on you.

Society is becoming increasingly secular so the threat of a God is falling apart.

They've gotten too greedy for their own good and it is really going to start to bite them in the ass.

They can go hide in another country, however there is really nothing to stop the other country from taking their assets after they wear out their welcome and it really is easy to do that to someone who isn't from your country.

capitalized banks. I can't remember them all but BofA was one of them. As far as the commercial RE market goes, it depends on where you are. I see many empty stores around me, but I also see a lot of new construction. Somebody just built a new rather large shopping center about 3 mi. from me and they are doing very well. My neighbor works at one of the stores, and the parking lot is always full.

There are many others ...matresses, severaal clothing like TJ Max and a few smaller boutiques, sporting goods, mobile phones, health food, about 10 eateries, a 2 banks. I probably missed some of the smaller specialty stores.

Or are these businesses that vacated another strip mall in town. I'm guessing it is a mixture.

Or are these businesses that vacated another strip mall in town. I'm guessing it is a mixture.

And what's this about you losing your job?

I'm so sorry.

That could land me in a whole bunch of trouble.

The job thing, well, I have a roof and I have food. Not entirely optimistic about 2010 prospects, I differ with our leaders. I think unemployment is a leading indicator in a consumer economy and the unemployment rates tell me the worse is yet to come.

Definitely don't want to get you in trouble.

I also feel we've not seen the worst. Honestly, I'm starting to wonder if 10% unemployment might end up being the new norm in this country.

It's bizarre to see what happen to Detroit for the past thirty years sweep across the country.

When we started to allow our manufacturing capacity to be outsourced we doomed ourselves.

For the past 30 years the lifestyle has been maintained on debt. At some point people doubt your ability to pay.

The only way this will be rectified is a revocation of all free trade agreements.

The amount of land you can buy for virtually no money is staggering. You can buy a house for $2500.

There is no large grocery store in the city.

The unemployment rate is staggering.

Lots of people looking for work and food.

This notion of urban farming is really interesting.