Sunday, August 16, 2009

Banking crisis to get much worse, according to John Lounsbury

I read an article this morning that I shared with a number of friends and decided to post it here with all the credit given to its author, John Lounsbury. The title of his article is, "Coming Soon: Banking Crisis of Historic Proportions" First, to read the article in its entirety click here, and I recommend you do this. Secondly, here are is main summary points including the first paragraph or two:

Coming Soon: Banking Crisis of Historic Proportions
August 16, 2009 John Lounsbury

"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.:"
Now for his 5 Factors.

First Factor: Banks Are Not Doing Enough Business

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

Third Factor: Defaults Are Going to Increase for Several More Quarters

Fourth Factor: The FDIC Is in Trouble

Fifth Factor: We May Be Going to Historic Lows in Bank Credit


Do yourself a big favor and read each detail from the main article. John Lounsbury makes great sense and each of us need to think of the implications for each of our portfolios. It's a very well written article.

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3 Comments:

Blogger Reza said...

Love the blog, but you are presenting only one side of the argument. How about presenting some data that predicts that we will prosper in the next few years? It's definitely out there.

7:31 PM  
Anonymous Rate Watcher said...

Very valid points, but the Fed won't let any major banks fail, so there's no need to panic. The inflation picture continues to look good despite massive amounts of new cash being created, so the Fed now has even more room to print more.

And that's what they'll keep doing, if the banking crisis gets uglier.

11:29 PM  
Blogger Charles Amico said...

Reza, I won't present something I don't believe in, as there are plenty of points on both sides. I have picked where I am and based upon what I believe is true. There is too much data showing many, many banks are in trouble as was published last week. To deny that is to bury one's head in the sand. Sorry. But thanks for commenting on my Blog. Visit again.

5:50 AM  

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