RSS Feed
Twitter
Facebook
Email
HomeTom Brown’s Dire Outlook for Banking
Posted by Larry Doyle on June 11th, 2012 11:04 AM |
Most market participants are understandably focused on immediate developments in the Euro-zone and the implications of the shell game being played over there for our domestic economy and markets.
From my perspective, the perpetual kicking of the can down the road in Europe and the variations thereof here in the U.S. portend little more than an ongoing slow-motion train wreck for our global economy.
While central bankers try desperately to keep the train on the tracks, the easy money flowing into the system does not come without very real costs. Ask savers and individuals trying to live on a fixed income what a 0% Fed Funds rate does for them. Who else is being negatively impacted? The banking industry at large.
Really, how is that? (more…)
Banking: Wall Street vs Main Street by R. Wilmers
Posted by Larry Doyle on April 18th, 2012 6:50 AM |
This commentary is a little lengthy, but for those with even a passing interest in banking, our markets, our economy, and ultimately our nation it is a MUST READ. Think those in Washington really know what they are doing? Think all regulation is good regulation and that one size can truly fit all? The divide from Wall Street to Main Street is widening. To get a perspective on both sides of the street, read this fabulous review by M&T Bank’s Robert Wilmers. I recommend you save this, as we will refer back to it while we continue to navigate our economic landscape. LD
Reflections on the State of Banking and the Leadership Crisis
As relatively good a year 2011 was for M&T itself, it was far from an easy one. Indeed, it is difficult, for one who has spent more than a generation in the field, to recall a time when banking as a profession has been publicly held in such persistently low esteem. A 2011 Gallup survey found that only a quarter of the American public expressed confidence in the integrity of bankers. (more…)
Time to Reinstitute Glass-Steagall
Posted by Larry Doyle on December 3rd, 2009 3:16 PM |
A car needs gas to run. An engine needs steam. A factory needs power. The fact is without a steady source of energy nothing can operate. Welcome to the Uncle Sam economy circa 2009.
You may be thinking, wait a second LD . . . the Federal Reserve is flushing the system with liquidity. Money is easy and it is propping the markets. While availability of credit may be tight, the demand for credit is also weak. So what am I talking about?
Thanks to RM for providing the FDIC Third Quarter 2009 Banking Profile (a link to the full document is provided at the end of this commentary). For those who care to rip apart the inner workings of our banking system, this report is the owner’s manual. The report highlights the following:
> Industry Posts Net Profit of $2.8 Billion
> Increased Revenues, Lower Securities Losses Offset Higher Loan-Loss Provisions
> Net Interest Margins Improve at Most Institutions
> Troubled Loans Continue to Rise, But Rate of Growth Slows
> Loan balances Decline by 2.8% in the Quarter
Based on this overview, it would appear that the banking industry is slowly recovering. In aggregate, perhaps that may be the case. But what doesn’t this report tell us? (more…)
Treasury Seeks Unprecedented Power
Posted by Larry Doyle on March 24th, 2009 8:47 AM |
I have written at length about the problems within the banking, insurance, hedge fund, and consumer finance industries over the last 6 months. While the bulk of the media focus has been on the banking industry – and primarily the large money center banks – the erosion in asset values at these other financial companies has been accelerating.
This past Sunday evening on my weekly radio show, NQR’s Sense on Cents with Larry Doyle, I spoke extensively about the massive financial shortfall within the insurance industry. In addition, relatively early on I warned that the hedge fund industry had likely been severely mismarking many investments. From a piece I wrote on November 12, 2008:
Give it time, because hedge funds do not have to report to anybody as to what their positions are and where they have them marked. There is no doubt they have positions that are grossly mismarked and have many positions that are totally illiquid. For many investors in these funds, these are truly “roach motels.” Hedge funds will sell what is most liquid when they can to meet redemption requests. We should expect a significant number of hedge fund liquidations, consolidations, and out and out disasters.
The same can be said for a number of private equity shops. Consumer finance companies with large holdings of a variety of consumer assets are fighting for their lives as delinquencies and defaults on these assets ratchet higher. (more…)
We Need a Bigger Boat
Posted by Larry Doyle on March 23rd, 2009 6:05 AM |
"We need a BIGGER boat!"
The movie Jaws struck fear into the souls of beachgoers in the mid-70s. If our current economy were only a scary movie. A classic scene in Jaws occurred when the salty mariner Quint eyed the shark and informed his sidekicks, “we need a bigger boat.”
In similar fashion, the size of the losses embedded in our banking, insurance, automotive, and states and municipalities will similarly require “a bigger boat!!”
Capital needs in the banking industry are projected from at least $500 billion to $1.5 trillion. Bloomberg reports former Fed chair Greenspan Says Banks Need $750 Billion More Capital. Nouriel Roubini puts the needs at upwards of $1.5 trillion. (more…)
Why is George Soros Short the Euro? MUST READ!
Posted by Larry Doyle on March 3rd, 2009 6:10 AM |
In very short order, I have gained a deep respect and regard for our Economic All-Star, John Mauldin. I have come to appreciate that Mauldin and I view the market through the same lens focused on the global economy. While many media outlets focus on the day to day, if not hour to hour trading activity, I believe they are truly missing the forest for the trees.
While I have written twice over the last week about eastern Europe being the weakest link in the world of global finance, Mauldin and his colleague Niels Jensen of Absolute Return Partners provided insights and analysis that is numbing.
Why is George Soros short the euro? Let me provide a synopsis of Mauldin’s and Jensen’s “Europe On the Ropes.” Assuming those visiting Sense on Cents have an interest in the markets and economy, this piece is somewhat lengthy, but a MUST READ!! A link is provided at the end of my review. (more…)
