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130 Bank Failures and Complacency in the Markets

Stock-Markets / Credit Crisis 2009 Dec 07, 2009 - 05:35 AM GMT

By: Andrew_Abraham

Stock-Markets

This last week the Fed closed 6 more banks making total to 130 bank failures since the crisis started. There are strong expectations that even more small and regional banks will fail. Just these 6 banks cost the FDIC $2.3 Billion dollars.I believe there is something like 500 banks on the FDIC watch list. However all this time there is complacency in the markets. Bad loans are still out there…you name it from credit card debt to residential housing to a more menacing threat the commercial real estate markets.


However we have a back drop of the world is wonderful. Unemployment ( supposedly ) fell to 10%. Stock markets are up…right world is wonderful.

Not that I am a pessimist.. maybe a realist…What I see is that this crisis has created banks that are even larger…and complex. Speaking about complex, do you remember why AIG had issues? Simple… it is called the $62 Trillion…yes with a t…Derivative monster created by these large banks. These derivatives without counter party assurances are still floating out there…I ask myself what has changed? Then the next issue is not just the amount of debt…what about servicing this debt. This debt is not just in the US..but throughout Europe..including Switzerland.

One can look at the VIX as a gauge of complacency in the markets…and you guessed it… Complacency with a capital C.
I find it very hard to believe we are out of the woods…and that a systematic collapse has been avoided.

As a commodity trading advisor… I do not need to figure out the world. All I need to do in order to succeed is follow my plan with discipline..patience and let the markets guide me. I realized many years ago.. No one knows any more than me…and all it comes down to are bets. I prefer to make bets based on trends…not my opinions..

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading advisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Visit Angus Jackson Partners (http://www.angusjacksonpartners.com) Contact: A.Abraham@AngusJackson.com (mailto:A.Abraham@AngusJackson.com)

© 2009 Copyright Andrew Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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