ECONOMIC UPDATE: Office Building Bust Will be Economic Bullet That Will Destroy Banks
Barely noted by the public and barely reported by the mainstream so-called “business news” is the coming banking crisis.
NOTE TO READERS: The following is our weekly Economic Update — Market Overview found in this week’s issue of The Trends Journal. Consider subscribing here for in-depth, independent geopolitical and socioeconomic trends and trend forecasts that you won’t find anywhere else.
Most people don’t have a clue what in the real world is going on.
Flooded with “news” about Donald Trump indictments, Women’s World Cup soccer, the latest tropical storm, etc., the socioeconomic and geopolitical trends shaping the future aren’t clickbait worthy to capture the crowd.
Need more proof? Illustrating the level of mass stupidity, “Trump indictments boost MSNBC primetime ratings”—Axios.
The housing boom that was generated with ultra-low interest rates was unlike the fully artificial one of the early 2000’s that was inflated with fictitious subprime loans: “Don’t have a job? Deep in debt? Don’t worry sign here,” was the scam the Bankster Bandits pulled on the population… and got away with it.
What are some of the “news” items that should be making center headline stage that the plantation workers of Slavelandia should be tuned into?
How about the Office Building Bust that will be a major economic bullet that will destroy banks across the country and around the world?
Crisis Ahead
Barely noted by the public and barely reported by the mainstream so-called “business news” is the coming banking crisis.
Another week, another week of bank downgrades. No surprise to Trends Journal subscribers. We have been forecasting the coming banking crisis because of the COVID War which has destroyed the commercial real estate sector, particularly office buildings, many of which are vacant and/or with low occupancy rates as remote work has become reality.
As we reported, the trend is global. From Canary Wharf in the U.K. to Toronto whose offices are half empty, the office building bust will destroy much of the banking sector.
Yesterday S&P Global cut its credit ratings of five banks while downgrading three others because of the troubled commercial real estate sector and higher funding costs.
Also, the higher the Fed raises interest rates, the lower banks’ ratings will fall since they must give depositors higher interest rates on CDs, money market accounts, and savings deposits.
And, as Wall Street on Parade has noted, “Since April 13, 2022, there has been the largest upheaval in the movement of deposits in the past four decades.”
And today, they note, the 3-month T-Bill is yielding 5.43 percent; the 6-month T-Bill is yielding 5.48 percent; the two-year Treasury Note is yielding 5.01 percent; while the 10-year Treasury Note is yielding 4.34 percent.
Stock You!
Not only are investors and gamblers pulling their money out of banks, with the S&P 500 down nearly 5 percent this month, they are also pulling it out of the stock market.
According to Refinitive Lipper, over the past 5 weeks, nearly $12 billion was yanked out of stock funds, with most of it, some $9.1 billion, pumped into money market funds. The Federal Reserve data retail money market funds grew over 25 percent this year and are now holding $1.5 trillion in cash.
TREND FORECAST: We maintain our trend forecast that when the summer season in the Northern Hemisphere ends and the vacation-state-of-mind wakes up to reality in late September/October, there will be a strong downward trend hitting the equity markets. Also, the banking crisis will worsen.
While most of the mainstream media had predicted that housing prices would sharply drop as interest rates rose higher, we disagreed. The housing boom that was generated with ultra-low interest rates was unlike the fully artificial one of the early 2000’s that was inflated with fictitious subprime loans: “Don’t have a job? Deep in debt? Don’t worry sign here,” was the scam the Bankster Bandits pulled on the population… and got away with it.
Not only did they rob from the poor to give to the rich, firms such as Blackstone, the world’s largest alternative asset manager, private equity firms, venture capitalists, and hedge funds created a new “trend” by buying up slews of foreclosed single-family homes and then renting them out to the plantation workers of Slavelandia.
And back to the Banksters cleaning up while the little people went down, the Federal Reserve jumped in to save the failing banks that created the fraud that ignited the Panic of ‘08. Unlike the homeowners whose failures are too small to matter, for the “Too-Big-to-Fail” banksters, according to the Levy Institute at Bard College, the Federal Reserve gave them $29 trillion… which bailed them out and enriched them.
Then and Now
Meanwhile, there is concern that inflation, while down, still has uptrend potential when it comes to what the plantation workers of Slavelandia can buy and own.
Today, the National Association of Realtors reported that sales of previously owned homes fell 2.2 percent in July from June. With supply tight—there are 14.6 percent fewer homes for sale than July of 2022 and half as many homes for sale in 2019, before the 2020 COVID War—and with demand high, the median price of a home sold in July was $406,700… up nearly 2 percent from last July.
With fewer homes for sale and prices still high and mortgage rates in the 6.5 percent to 7 percent range, July registered the lowest amount of home sales since 2010 at the depth of the Great Recession.
TREND FORECAST: With America’s national median household income at around $71,000, housing supply limited and high mortgage rates, the facts are clear that more people will be renting apartments than buying them.
And, when the equity markets go down sharply in the coming months, home prices will begin to decline… but not rapidly or dramatically.