ECONOMIC UPDATE: Prepare for the Coming Banking Crisis
There will be a banking crisis that will rattle the equity markets
Since last week, the only real news on the market front is what the Fed will say Wednesday about the future path of interest rates.
Indeed, cheap money is The Street’s main concern. The cheaper the money, the easier it is to borrow and gamble.
What is barely making the news and is quickly brushed aside is the coming banking crisis.
Today, CNBC reported that Klaros Group found that 282 banks “with high levels of commercial real estate exposure and large unrealized losses from the rate surge face great risks.”
Yes, high risks which equals our Banks Go Bust Top Trend for 2024.
The Klaros study was “based on regulatory filings known as call reports, screened for two factors: Banks where commercial real estate loans made up over 300% of capital, and firms where unrealized losses on bonds and loans pushed capital levels below 4%.”
CNBC noted:
“Klaros declined to name the institutions in its analysis out of fear of inciting deposit runs.
“But there’s only one company with more than $100 billion in assets found in this analysis, and, given the factors of the study, it’s not hard to determine: New York Community Bank, the real estate lender that avoided disaster earlier this month with a $1.1 billion capital injection from private equity investors led by ex-Treasury Secretary Steven Mnuchin.
“Most of the banks deemed to be potentially challenged are community lenders with less than $10 billion in assets. Just 16 companies are in the next size bracket that includes regional banks—between $10 billion and $100 billion in assets—though they collectively hold more assets than the 265 community banks combined.”
Again, we had forecast this would happen some three years ago, when politicians launched the COVID War and forced people to work from home with the result being an Office Building Bust. Now, the facts are becoming harder for The Street to hide.
CNBC quoted the cofounder of Klaros, Brian Graham, who said: “If there were just 10 banks that were in trouble, they would have all been taken down and dealt with. When you’ve got hundreds of banks facing these challenges, the regulators have to walk a bit of a tightrope.”
Indeed, according to the report, the “282 U.S. banks with nearly $900 billion total assets are at risk of needing capital because of high levels of commercial real estate and losses tied to interest rate.”
TREND FORECAST: With the office occupancy rate in the 10 largest cities in America at just 50.6 percent, according to Kastle Systems, and the office vacancy rate—meaning totally empty buildings—at 20 percent, there will be a banking crisis that will rattle the equity markets in the near future.
Admitting to the danger ahead, Fed Head Jerome Powell made that clear when he said a few weeks ago that “This is a problem we’ll be working on for years more, I’m sure. There will be bank failures.”
And when the banks fail, we forecast that behind the scenes, the Fed will do all it can to bail them out as they did with last year’s banking crisis.
Today, Wall Street on Parade reported that:
“According to data from the Federal Deposit Insurance Corporation … the liquidity crisis among banks in the spring of last year was far more dramatic than has been acknowledged by banking regulators.
“According to the data, during the worst financial crisis since the Great Depression (at the end of the fourth quarter of 2008 when Wall Street was in a state of collapse), banks had borrowed a total of $790 billion in advances from Federal Home Loan Banks (FHLBs). But during the bank panic in the spring of last year, those FHLB advances topped the Q4 2008 number, registering $804 billion as of March 31, 2023.”
Danger Ahead
As we have been forecasting since the Ukraine War began on 24 February 2022, a major economic wild card will be oil prices. We witnessed the inflation spike when the United States and its allies put sanctions on Russian oil and how economies, industry, and the people suffered from the high prices.
We are now in a place where a bad situation is about to become worse.
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Oil prices bounced up last week after U.S. stockpiles shrank for the first time in almost two months. Oil on hand in the U.S. fell by 1.54 million barrels in the week ending 8 March, according to government data.
The reduction was far less than the 5.5 million industry insiders had forecast but still large enough to buoy investors’ confidence that a price rally was forming.
Making a bad situation worse, Ukraine attacked major Russian oil refineries. Again, we had long forecast this would happen since Kyiv will do all it can to attack inside of Russia—a nuclear power plant, major false flag event—to keep getting more U.S. and EU money and munitions.
Last week’s price gain was sudden. It came soon after the International Energy Agency said the global market is well-supplied through this year, according to Reuters. (See “Oil Prices Down as Economies Go Down,” 12 Mar 2023). Also, OPEC members were failing to stick to their promised supply reductions, cartel officials said.
TREND FORECAST: With the U.S. pumping oil at a record clip, OPEC+ has seen some of its power to rig prices diminish. However, we maintain our forecast that both the Ukraine War and Israel War will continue to escalate and the greater the intensity of the wars the greater the upward pressure on oil prices.
Again, should Iran be dragged into a military conflict with Israel and/or the United States, Brent crude will spike to above $130 per barrel which will in turn crash the artificially propped up equity markets and the global economy.
Ukraine War = WWIII
The Russian news agency TASS reported today that France will send a military squad of 2,000 troops to Ukraine.
“The current leadership of the country does not care about the deaths of ordinary French people or about the concerns of the generals. According to information coming to the Russian SVR, a contingent to be sent to Ukraine is already being prepared. Initially, it will include around 2,000 troops,” said Russian Foreign Intelligence Service Director Sergey Naryshkin.
As we have greatly detailed in The Trends Journal, French President Emmanuel Macron has been ramping up the Ukraine War by pushing NATO to send forces to fight the Russians and would “do what is needed” to prevent a Russian victory.
Again, we note that openly sending French troops to fight the Ukraine War will officially bring France to war against Russia… which in addition to escalating World War III will dramatically drive up oil prices and push the world into Dragflation: declining economic growth and rising inflation.
The upcoming Banking "Crisis" will not so much be a "Crisis" but a consolidation of power.
Watch my Sub "Consolidation of Fascism"... my next Article.
There will be a Cyber attack...
https://fritzfreud.substack.com/p/ai-cyber-attack-2024-how-it-will
Around the Olympic Games... maybe even an "Outbreak" event with Ebola GoF most likely and possibly a dirty bomb or "incident" at ZNPP... all at the same time.
https://fritzfreud.substack.com/p/did-the-usa-supply-ukraine-with-nuclear
The Banks will then bring in Biometric ID fueled by AI
And then there will be the AI war
https://fritzfreud.substack.com/p/klaus-schwab-darpa-harvard-elon-musk
I warn about this precise scenario for years.
https://fritzfreud.substack.com/p/optimus-maximus-preparing-for-the
There will be nowhere to run.
There will be nowhere to hide.
Unless we make a General strike now
https://fritzfreud.substack.com/p/generalstrike-why-we-all-must-support
And topple our Governments now.
Nationalize the Banks.
Arrest and hang every WEF Member
And restructure Society to our needs.
https://fritzfreud.substack.com/p/a-month-of-revenge-blueprint-for
A Revolution is needed now like the world has never seen it before.