America’s Biggest Banks: How Safe Are They?
“The Coming Worldwide Bank run”
Lost in the clamor over the central banks’ “let there be liquidity” pronouncement, Standard & Poor’s just downgraded fifteen major U.S. and European banks.
The downgrade doesn’t mean Bank of America, Goldman Sachs, Citigroup, Barclays, UBS, Wells Fargo and others will close shop tomorrow. But the long-term credit downgrade does raise questions about their stability.
After all, the 2007-2009 financial crisis has supposedly passed. But during the two-year “recovery,” did most big banks really return to sound fiscal health? Well, Standard & Poor’s downgrade speaks for itself.
One reason for the downgrades was Standard & Poor’s own revision to its rating system. Nonetheless, CNBC reported (11/29), “The outcome of the re-rating of the biggest banks was worse than S&P has forecast for all banks.”
And apparently, the big banks were in worse shape in 2008 than most people realized. Thanks to the Freedom of Information Act, Bloomberg just revealed that banks got more bailout money from the Federal Reserve than was previously made public: Continue reading
Foreigners Losing Confidence in Holding US Treasury and Agency Debt
By Bud Conrad, Casey Research
Foreign central banks buy US Treasury and Agency debt through accounts at the Federal Reserve, where it is held in custody. Without these central banks buying our debt, the US federal government would have to find a new source of funds or the result could be higher interest rates. Looking at the data on a monthly basis (and then multiplied by 12 to give the annual rate), here is the dramatic picture of how foreign central-bank purchases of our debt have shifted, from buying $500 billion to selling off $1 trillion. At this rate of selling over several months, interest rates would go higher – if other things were equal. Of course, things are not equal because the Fed has been forcing rates lower with its massive QE2 and other programs. QE2 was $600 billion over nine months, or an annualized rate of $800 billion per year. Since foreigners are selling off our government debt, Fed purchases of government debt are even more necessary. Continue reading
Will Gold Get Scarce?
By Jeff Clark, BIG GOLD
We’ve got it easy right now. Click or call, and you can quickly and conveniently own a gold coin or bar. But if global concerns cause another panic or the dollar breaks down, you could find yourself standing in a line at the local coin shop or getting a busy signal. Simply, for reasons I’ll discuss here, you may find it very difficult to get your hands on physical gold when that time comes.
It’s happened before. Though there were no precious metal ETFs in 1980, the demand for physical gold was so great that you literally had to wait in line at a coin shop to buy, with plenty of occasions when you would have been turned away due to lack of inventory. And you’ll recall we saw serious shortages, unexpected delays, and soaring premiums in late 2008.
Given the fragile state of global affairs and the waiting-in-the-wings crisis for the U.S. dollar, I’ll be surprised if we don’t see another panic into physical gold. And the question is, will there be enough metal to go around when the public – 95% of which own none – wakes up and wants to buy it? Continue reading
Central Banks Push Up the Gold Price
By David Galland, Managing Director, Casey Research
For some years now, Doug Casey has gone on record with his view that we’ll know the gold bull market is really picking up steam when central banks stop selling their reserves of gold and begin buying the stuff.
The following excerpt from a Wall Street Journal article titled “As Gold Hits Record, Central Banks in Focus” indicates that this is now happening… Continue reading
Has It Paid To “Follow” the Fed?
An Excerpt from Conquer the Crash by Robert Prechter
Yes, that’s a provocative question. Think of all the people who would squirm if they had to answer it.
For example, you’d see lots of squirming on Wall Street and in the media. They told stock market investors to trust the central bank in early 2001, by endlessly repeating the phrase “Don’t Fight the Fed!” That was the conventional wisdom then, even though you don’t hear it anymore now. The Fed did not stop the stock market from falling. Investors lost money.
The headline asks a question with “No” as the obvious answer. The notion that you “Don’t fight the Fed” has been a costly myth. Continue reading
