The Telegraph: Half of America’s banks are potentially insolvent – this is how a credit crunch begins
The twin crashes in US commercial real estate and the US bond market have collided with $9 trillion uninsured deposits in the American banking system. Such deposits can vanish in an afternoon in the cyber age.
The second and third biggest bank failures in US history have followed in quick succession. The US Treasury and Federal Reserve would like us to believe that they are “idiosyncratic”. That is a dangerous evasion.
Almost half of America’s 4,800 banks are already burning through their capital buffers. They may not have to mark all losses to market under US accounting rules but that does not make them solvent. Somebody will take those losses.
“It’s spooky. Thousands of banks are underwater,” said Professor Amit Seru, a banking expert at Stanford University. “Let’s not pretend that this is just about Silicon Valley Bank and First Republic. A lot of the US banking system is potentially insolvent.”
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WNU Editor: A sobering post to read.
13 comments:
Ain’t Joe Biden a genius? He says in February 2022 he’s going to crush Russia’s economy with sanctions. Instead it’s the American economy crushed by his inflation and bank failures. Stupid is as stupid does.
Biden. The Manchurian Candidate.
yo morons
It was Trump who got rid of the safety rails put in place after the last recession! called Dodd-Frank
Would that not be Dodd and Frank’s fault the !? Trump hating dup
"Almost half of America’s 4,800 banks are already burning through their capital buffers"
Would the Russian troll, the Democrat/Communist or the RHINO with TDS tell us what percentage of the 4,000 banks meet the threshold to stress test? All 4,000 banks cannot have 5 billion in capital. that is they could not have all met the need for the stress test "Guard Rail."
So the but Trump argument is an nonstarter. This is system wide.
https://en.wikipedia.org/wiki/List_of_largest_banks_in_the_United_States
Judging by the numbers 75% of the 4,000 banks were not obligated to stress test by the old rules or the new rules.
If one follows business shows on cable for a few weeks or a few months one would pick up on talk of bonds going negative or the yield curve going negative.
Bonds are traditionally and maybe mistakenly seen as a safe investment. They have a guaranteed rate of return. They are seen as a conservative investment, a safe investment and a non speculative investment. Stocks are seen as risky and speculative.
So what change that?
Very easy. It was the Democrats. they saw COVID as a crisis not to go to waste. They drummed up fear and support for lockdowns and 2 to 3 trillion in COVID spending above and beyond the 1 1/2 trillion to billion in regular deficit spending every year.
Inflation causes bond curves to go negative.
Government deficit spending is one of the primary causes of inflation.
Another being importing more than exporting.
I believe that Keyes is right. I believe deficit spending is good. but keys had caveats to it. Deficit spending was to get through the low ebb of a business cycle. It was not meant to be permanent. At high tide the government has to erase debt, so they can deficit spend during the next downturn. When you deficit spend every year, that tool breaks.
The government set the table. China was placed on it. Then the government yanked the table cloth out form underneath the china and proceeded to blame the people who place their tableware on the table.
8:14 is a fool or liar.
Bank failures happen after years of decisions, experts say
This claim comes in the wake of the failure of Silicon Valley Bank, which collapsed on March 10 after the bank's shares lost over $160 billion in value over a 24-hour period and depositors withdrew their money in panic, as USA TODAY reported.
According to data from the Federal Deposit Insurance Corporation, there were 15 bank failures from the time Trump took office in January 2017 to when he left office in January 2021.
The first came only one week into Trump’s term, when regulators closed Chicago’s Seaway Bank and Trust Company on Jan. 27, 2017.
Fact check: Posts wrongly tie Silicon Valley Bank and Lehman Brothers end to Joseph Gentile
But it’s “ludicrous” to try to use such data as a tool to compare different presidential administrations, said Robert Pagliarini, president and chief financial advisor of Pacifica Wealth Advisors. That's because presidents can "inherit the mistakes and problems" of the past that can lead to financial downfall in the present, he said.
“That is, bank failures are the results of mistakes that accumulate over time,” said Roberto Robatto, a finance professor at the University of Wisconsin-Madison.
CINCINNATI, OHIO – President Donald Trump takes the stage during a campaign rally at US Bank Arena in downtown Cincinnati on Aug. 1, 2019.
While the Silicon Valley Bank failure is the largest since 2008, George Washington University finance and economics professor Robert Van Order said its impact is unlikely to be as large. He added that bank failure data should be kept in perspective.
"We have 4,000 banks in the U.S.," he said. "If you think about four or eight going bankrupt, that's hardly any."
The Facebook user who made the claim said he was referring only to "large banks," but the post made no such distinction.
Our fact-check sources:
Bankers do not put MAGA minded republicans into office. They put Democrats and some RINO's into office. So for all the blah blah blah, stats here and stats there and blame this guy or that, just look who is sleeping with the Bankers.
I know who was sleeping with underaged girls in Epstein's townhouse, the guy who runs the largest bank in the country, JP Morgan.
You all are kind of off track.
When did this rush to stupidity start?
Under a proposal created by the republicans in the congress and signed by Bill Clinton to repeal GLASS-STEAGAL in 1999.
Your Blob at work.
This allowed banks to do investment/stock/bonds /derivitives trading. The banking crisises that followed all were attributable, in part, to the repeal of this law.
So when banks go broke due to lack of inflation and investment due to that lack, then inflation hits and the financial instruments the banks hold turn into junk because of the low return, so the banks net worth now plunges and the bank becomes insolvent,
Look to your friendly: DC, LA , NYC , Chicago, Dallas....RINO republican, democratic PROGRESSIVE, and thier minions in the MSM Media, Globalist elite jerks.
Known as THE BLOB or Capital District
YES, for you idiots who say it does not exist. THE BLOB!!!
For Making all this crap happen
And what happened in 2007/2008 crisis? Well old Blobbers doubled down, Fed kicked in and saved the greedy and we ended up with the crisis of the day.
So much for wisdom of Joseph Schumpeter's classic essay The Process of Creative Destruction, being followed.
Yes and as our good friend likes to say..., I am not a crack pot,.......... But I did have a classical, traditional education.
And now because of the elitist blob, made up of "the best and brightest"
Our culture is in a caricature of barbarity, our finance system is a dilapidated casino and we are on the verge of WW3 do to the Blobs machinations overseas.
So ifs you are a dem or rep, you can wave your little flag and say hurrah.
all generalities that sway nothing but brag about education
try this for answers
Recent banking crises are rooted in a system that rewards excessive risk-taking -- as First Republic's failure shows
Glass was indeed removed by Clinton with of course GOP support. then Frank/Dodd installed. Then Trump removed that and we now have....
10:29.
your counter argument sucks. if you cannot follow the historical trail to this time and place, you definitely are limited.
Have you even read Schumpeter? Do you not remember the warnings that a few honest people gave when GS was repealed? Probably not.
That is why many like you are lost, you do not remember the lessons and learnings of the past, so you repeat them.
You keep on believing in the BLOB
Meanwhile Dow Jones is up almost 2% at 9:45 am CST!
stop badmouthing and look at the history of things put in place to safeguard banks and then their removal. Stop blaming just one party and not both.
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