Posts Tagged ‘the Long Depression’

Coming Soon: Banking Crisis of Historic Proportions

Coming Soon: Banking Crisis of Historic Proportions

Courtesy of John Lounsbury writing at Seeking Alpha

With everyone (well, almost everyone – I am one of the lonely skeptics) convinced that we have stepped back from the "edge of the abyss", the title of this article may be viewed as laughable. When you connect the dots, as I will in this article, you will at least stop laughing, and, maybe, realize that we still have a big problem.

We have a confluence of five factors that have the potential to create damage to banking not seen in 80 years, and that includes the Great Depression. We’ll hit these factors one at a time.

First Factor: Banks Are Not Doing Enough Business

Commercial bank credit growth has dropped to 2%, according to Jesse’s Cafe Americain (here). The recent history of credit growth is shown in the following graph.

bank credit

Now, it is a good thing that banks are conserving capital, since they need to increase capital to offset bad loans.

the perfect storm (financial storm)But, if asset valuations deteriorate (and that is quite possible), the banks need to increase earnings to "earn their way" out of their problem. Interest paid by the Fed for reserves on deposit there (by the commercial banks) are not producing nearly the same level of income as new credit issued commercially under our fractional reserve banking system with much higher interest .

If credit issuance does not increase year over year, banks can not improve their financial condition unless the quality of their existing loan portfolio improves.

As discussed in the third factor, below, just the opposite is anticipated for loan portfolios.

So the first factor in this perfect storm is that the banks are not doing enough business.

Second Factor: Banks Are Failing at a Rate Not Anticipated Two Months Ago

In his article, Jesse mentions reports by Bloomberg that 150 banks are in trouble. Some of these will be larger than many of the 77 (mostly community) banks that have gone under FDIC receivership so far in 2009.

Banks mentioned being in trouble by Bloomberg (here) include Wisconsin’s Marshall & Ilsley Corp. (MI), Georgia’s Synovus Financial Corp. (SNV), Michigan’s Flagstar Bancorp (…
continue reading


Tags: , , , , , , , ,




 
 
 

Phil's Favorites

As a warming climate changes Kodiak bears' diets, impacts could ripple through ecosystems

 

As a warming climate changes Kodiak bears' diets, impacts could ripple through ecosystems

Courtesy of William DeacyOregon State University

A brown bear snags a sockeye salmon in Alaska. In warm years, red elderberries ripen early and Kodiak bears leave streams full of salmon to eat them. Jonathan Armstrong, CC BY-ND

After several years of studying brown bear ecology on Alaska’s Kodiak Island, I grew used to walking up streams into scenes of carnage. Where bears had killed and eaten spawning sockeye salmon, streambeds were littered with fish heads, jaws and whole carcasses, and plants on t...



more from Ilene

Zero Hedge

Euro Tumbles On Report ECB Is "Concerned And Divided" Over End To QE

Courtesy of ZeroHedge. View original post here.

Talk 'em up, then slam 'em down.

The familiar pattern of "clear and transparent" central bank communication was on full display moments ago, when following months of build up to an ECB taper announcement, the ECB used its favorite mouthpiece, Reuters, to "trial balloon" that an ECB decision over whether to announce a firm end-date to the central bank's bond buying could be "put off until December" as a result of disagreement among the ECB council stemming from "concern over Euro strength" which is leading to "uncertainty and di...



more from Tyler

ValueWalk

Why Do Russia And China Care About North Korea?

By Polina Tikhonova. Originally published at ValueWalk.

China and Russia are launching naval drills near North Korea as tensions on the Korean peninsula reach their highest peak in decades. China and Russia — often referred to by analysts as “key” powers in resolving the North Korea crisis — launched their naval exercises not far from the nation’s waters.

Roman Harak / Wikimedia Commons

Neither Moscow nor Beijing links the Russia-China drills to the escalating tensions...



more from ValueWalk

Chart School

Semiconductors Breakout

Courtesy of Declan.

It was somewhat disappointing not to see the Nasdaq and Nasdaq 100 make the break from resistance. However, the Semiconductor index did manage a breakout of 1,150. There was some weakness into the close but the fact the bearish engulfing pattern has been negated means the bearish overhang created by this pattern has been consumed.


The Russell 2000 made respectable gains as it works towards July highs. I would expect a reversal off 1,450 resistance but if such losses can hold above 1,430 then it will set up a bullish handle f...

more from Chart School

Insider Scoop

Benzinga's Top Upgrades, Downgrades For September 18, 2017

Courtesy of Benzinga.

Top Upgrades
  • RBC Capital upgraded Applied Materials, Inc. (NASDAQ: AMAT) from Sector Perform to Outperform. Applied Materials shares gained 0.19 percent to close at $47.14 on Friday.
  • UBS upgraded Caterpillar Inc. (NYSE: CAT) from Neutral to Buy. Caterpillar shares rose 1.51 percent to $123.20 in pre-market trading.
  • William Blair upgraded Arrowhead Pharmaceuticals Inc (NASDAQ: ARWR) from Market Perform to Outperform. Arrowhead Pharmaceuticals share...


http://www.insidercow.com/ more from Insider

Digital Currencies

Comparing Bitcoin, Ether, & Other Cryptos

Courtesy of Zero Hedge

Unless you’ve been hiding under a rock, you’re probably aware that we’re in the middle of a cryptocurrency explosion. In one year, the value of all currencies increased a staggering 1,466% – and newer coins like Ethereum have even joined Bitcoin in gaining some mainstream acceptance.

And while people like Jamie Dimon of J.P. Morgan and famed value investor Howard Marks have been extremely critical of cryptocurrencies as of late, many other investors are continuing to ride the wave. As Visual Capitalist's Jeff Desjardins has noted in the past, ...



more from Bitcoin

OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Biotech

Can low doses of chemicals affect your health? A new report weighs the evidence

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

Can low doses of chemicals affect your health? A new report weighs the evidence

Courtesy of Rachel ShafferUniversity of Washington

Assessing the data. LightField Studios/shutterstock.com

Toxicology’s founding father, Paracelsus, is famous for proclaiming that “...



more from Biotech

Members' Corner

Why we need to act on climate change now (updated)

 

Why we need to act on climate change now (updated 9-13-17)

Interview with Jan Dash PhD, by Ilene Carrie, Editor at Phil’s Stock World

Updated in the wake of Hurricanes Harvey and Irma on September 13 , 2017.

Jan Dash PhD is a physicist, an expert at quantitative finance and risk management, and a consultant at Bloomberg LP. In his thought-provoking book, Quantitative Finance and Risk Management, A Physicist's Approach, he devotes a chapter&nbs...



more from Our Members

Mapping The Market

The App Economy Will Be Worth $6 Trillion in Five Years

Courtesy of Jean-Luc

This would be excellent news for AAPL and GOOG to a lesser extent although not inconsequential:

The App Economy Will Be Worth $6 Trillion in Five Years 

In five years, the app economy will be worth $6.3 trillion, up from $1.3 trillion last year, according to a report released today by app measurement company App Annie. What explains the growth? More people are spending more time and -- crucially -- more money in apps. While on average people aren't downloading many more apps, App Annie expects global app usership to nearly double to 6.3 billion people in the next five years while the time spent in apps will more than double. And, it expects the...



more from M.T.M.

Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



more from Promotions

Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



more from Kimble C.S.

All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David



FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>