Warning to all investors. Reread Buffett’s warning: “There will be another bubble leading to a huge recession … I guarantee it.” But worse, this time, global macroeconomic trends threaten no-growth recovery, a long bear market, and long-term austerity. Start planning now.
America’s banks closed more branches than they opened last year, the result of government regulation, consolidation and the digital revolution.
Some of the most aggressive banks in shuttering branches were also some of the largest. They included Bank of America, Capital One, Wells Fargo, PNC, Citi and BB&T.
“All the costs are regulation are pressing on banks as a whole, and with a low interest rate environment it’s harder and harder to make money,” Nancy Bush, contributing editor at SNL Financial, the research firm that produced the closure report, told CNNMoney.
… BofA closed the most branches, 256, while opening only 12 last year, according to CNNMoney. Wells Fargo closed 80 while opening 19, PNC shut 82 while opening 32 and M&T closed 51 while opening 3.
“We will never have a branch-free banking industry, it’s just that they’re going to be more concentrated and less present in non-urban markets,” Bush predicted.
Many government officials around the world are concerned that massive monetary easing in numerous nations is sparking a global currency war.
Governments from Germany, to Russia, to Brazil, to Thailand have expressed worry that the world is plunging into a currency war, Bloomberg Businessweek reports.
The current focus is on Japan, where the central bank this week announced it would increase its quantitative easing and also set a target of 2 percent for inflation.
Before the Bank of Japan even revealed its policy, Bundesbank President Jens Weidmann warned Japan against politicization of monetary policy that would lead to a weaker yen.
“A consequence [of government pressure to ease], whether intended or not, could lead to an increasingly politicized exchange rate. Until now, the international monetary system has come through the crisis without a race to devaluation, and I really hope that it stays that way.”
GOLD BANK RUN ACCELERATING: First Venezuela, Then Germany, The Netherlands, And Now Switzerland Want Their Gold Back!! Bundesbank: ‘The Gold Repatriation Is – Without Doubt- “Preemptive” In Case A “Currency Crisis” Hits The European Monetary Union.’ Every Other Bank, Corporation, And Individual Will Scramble To Recover Their Own Gold Located In Some Vault In London, New York, or Paris…
US banks shaken by biggest deposit withdrawals since 9/11
US Federal Reserve is reporting a major deposit withdrawal from the nation’s bank accounts. The financial system hasn’t seen such a massive fund outflow since 9/11 attacks.
The first week of January 2013 has seen $114 billion withdrawn from 25 of the US’ biggest banks, pushing deposits down to $5.37 trillion, according to the US Fed. Financial analysts suggest it could be down to the Transaction Account Guarantee insurance program coming to an end on December 31 last year and clients moving their money that is no longer insured by the government.
The program was introduced in the wake of the 2008 crisis in order to support the banking system. It provided insurance for around $1.5 trillion in non-interest-bearing accounts with a limit of $250,000. It was aimed at medium and small banks as the creators of the program believed bigger banks would cope with the crisis themselves.
Mystery: $114 billion withdrawn from banks
More than $114 billion has been withdrawn from the nation’s biggest banks in the first full week of January, and industry analysts are struggling to understand why.
In a fractional reserve banking system this $114 billion is actually worth $1.4 Trillion.
Flashback: Electronic Run On the Banks
This guy explains how fragile this ponzi scheme actually is.
This is a front run excuse for them to print more money because for every dollar withdrawn it lowers their balance sheet reserves buy 30 or more dollars.
Fractional Reserve Banking
The table below displays the relending model of how loans are funded and how the money supply is affected. It also shows how central bank money is used to create commercial bank money from an initial deposit of $100 of central bank money. In the example, the initial deposit is lent out 10 times with a fractional-reserve rate of 20% to ultimately create $500 of commercial bank money (it is important to note that the 20% reserve rate used here is for ease of illustration, actual reserve requirements are usually a lot lower, for example around 3% in the USA and UK). Each successive bank involved in this process creates new commercial bank money on a diminishing portion of the original deposit of central bank money. This is because banks only lend out a portion of the central bank money deposited, in order to fulfill reserve requirements and to ensure that they always have enough reserves on hand to meet normal transaction demands.
Worldwide Recession: Unemployment Near Depression Level, Poverty Is Still Spreading, Monetary Policy Is Fueling Currency And Trade Wars, And Inflating New Speculative Bubbles. SOROS Warned Of Japan’s New Monetary Policy Will Badly Affect The German Economy!!
A long-term budget plan is needed by April 15 (i.e. spending and entitlement cuts), and it’s possible the crew on Capitol Hill will have to wrangle over the debt ceiling again come May 19.
So, while we have dodged a dip in GDP for the first part of the year, a GDP slip could easily come in the second half.
Budget Deal Aside… It’s the Economy
Economist and author John Williams believes the economy is hurting more than most people suppose.
For 2013 he says, “As this goes forward, you’re going to see we’re going to be in a new recession.”
Citing the Fed’s loose monetary policies aimed at juicing stagnant growth, Williams wrote on his website Shadowstats.com (which analyzes government statistics), “That’s nonsense…There’s nothing they can do to stimulate the economy.”
Williams has long maintained that the Fed’s moves are nothing more than a lifeline to the troubled U.S. banking system.
“If the Fed wasn’t doing what it’s doing…I’d presume you’d be on the road to a banking system collapse. The banking system is still in trouble,” said Williams.
UPDATE ON MARKETS FROM V–FOOLS RALLY–MARKET COLLAPSE
On January 11th on the Hagmann and Hagmann show with Steve Quayle and myself as guests I broke down the plans that would emerge in the next coming weeks and months beating all market headlines by weeks yet again. Today I want to bring to remembrance something I have highlighted months ago in one of my alerts, that as the endgame is being played out…
There has been some confusion about the quality of the ongoing Q4 earnings season, which has seen some 47% of the S&P 500 companies report to date (and with 53% still left things can certainly change). The confusion apparently is that this has been a “good” earning season so far. Nothing could be further from the truth, and as Goldman shows in its midterm Q4 earnings report, the reality, not spin, is that earnings are tracking at $24.03, or some 6% below the consensus estimate at the start of earnings season of $25.51. This revised number, which could well drop even more from here, means that Q4 earnings will post a minuscule 1% growth in EPS year over year compared to Q4 of 2011 when Europe was imploding, and when the world’s central banks had to arrange a global bailout to prevent yet another Armageddon.