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    “The worst is yet to come”

    by Chris Martenson

    Sunday, September 14, 2008, 5:40 PM

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Sunday, September 14, 2008

The title is actually the assessment of banking analyst Meredith Whitney, regarding where we are in the banking crisis. In this report, I run through a scenario of what a banking crisis might look and feel like, and examine the reasons why I consider myself in full agreement with this quote.

Executive Summary

  • The damage so far: Bear Stearns, Lehman Bros.
  • The damage still to come: Washington Mutual, AIG, Merrill Lynch, Citibank, and many others
  • The risk of a major systemic banking crisis is very high at this time
  • While we wait to see what develops, cash out of the bank is a good idea.

Before I get into the gory details below, I want to begin with the conclusion.  What I mean by a “major, systemic banking crisis” is the complete shutdown of the banking system.  All banks closed, none operating, no way for you to access your funds.  Because of this possibility, you need to get out at least one month’s worth of cash to have on hand (three months is better).  Keep it in a safe place.

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