Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
The Precious Metals Bears' Fear of Fridays - 23rd Nov 17
UK Economic Austerity, Bloodletting and Incompetence - 23rd Nov 17
Stocks Are At The End Of The Line – Prepare Yourself Now! - 23rd Nov 17
Some Traders Hit. Some Traders Miss. Here's How to be Part of the 1st Group - 22nd Nov 17
Geopolitical Risk Highest “In Four Decades” – Global Gold Demand to Remain Robust - 22nd Nov 17
Relationship between Crude Oil Price and Oil Stocks - 22nd Nov 17
Harry Dent’s Gold Prediction Invalidated - 22nd Nov 17
Gold Sector is On a Long-term Buy Signal - 21st Nov 17
Saudi Arabia and Israeli Alliance Targets Iran - 21st Nov 17
What History Says for Gold Stocks in 2018-2019 - 21st Nov 17
US Bond Market Operation Twist by Another Name and Method? - 21st Nov 17
Learning from Money Supply of the 1980s: The Power and Irony of “MDuh” - 20th Nov 17
Trump’s Asia Strategy, Goals and Realities - 20th Nov 17
Crude Oil – General Market Link - 20th Nov 17
Bitcoin Price Blasts Through $8,000… In Zimbabwe Tops $13,500 As Mugabe Regime Crumbles - 20th Nov 17
Stock Market More Correction Ahead? - 19th Nov 17
Universal Credits Christmas Scrooge Nightmare for Weekly Pay Recipients - 18th Nov 17
Perspective on the Gold/Oil Ratio, Macro Fundamentals and a Gold Sector Bottom - 18th Nov 17
Facebook Traders: Tech Giant + Technical Analysis = Thumbs Up - 18th Nov 17
Games Betting System For NCAA Basketball Sports Betting - Know Your Betting Limits - 18th Nov 17
Universal Credit Doomsday for Tax Credits Cash ISA Savers, Here's What to Do - 18th Nov 17
Gold Mining Stocks Fundamentals Q3 2017 - 17th Nov 17
The Social Security Inflation Lag Calendar - Partial Indexing - 17th Nov 17
Mystery of Inflation and Gold - 17th Nov 17
Stock Market Ready To Pull The Rug Out From Under You! - 17th Nov 17
Crude Oil – Gold Link in November 2017 - 17th Nov 17
Play Free Online Games and Save Money Free Virtual Online Games - 17th Nov 17
Stock Market Crash Omens & Predictions: Another Day Another Lie - 16th Nov 17
Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe - 16th Nov 17
Announcing Free Trader's Workshop: Battle-Tested Tools to Boost Your Trading Confidence - 16th Nov 17
Instructions to Stop a Dispossession Home Sale and How to Purchase Astutely at Abandonment Home - 16th Nov 17
Trump’s Asia Tour: From Old Conflicts to New Prospects - 16th Nov 17
Bonds And Stocks Will Crash Together In The Next Crisis (Meanwhile, Bond Yields Are Going Up) - 16th Nov 17
A Generational Reset That Will Redistribute Wealth to the Bottom 60% Is Near - 16th Nov 17
Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - 16th Nov 17
Gold’s Long-term Analogies - 16th Nov 17

Market Oracle FREE Newsletter

Traders Workshop

Credit Crisis Timeline - From Foreclosures To Bank Failures

Stock-Markets / Credit Crisis 2008 Feb 29, 2008 - 01:00 PM GMT

By: Paul_Lamont

Stock-Markets

Best Financial Markets Analysis ArticleAs Charles Kindleberger asks in the investment classic Manias, Panics and Crashes ; “the essence of financial distress is loss of confidence. What comes next - slow recovery of belief in the future as various aspects of the economy are corrected, or collapse of prices, panic, runs on banks, a rush to get out of illiquid assets and into money?”

Our timeline of financial distress is below:


From Foreclosures To Bank Failures

The FDIC is going on a hiring spree in anticipation of “an increase in failed financial institutions as the nation's housing and credit markets continue to worsen.” Jim Marino of the FDIC's Division of Resolutions and Receiverships states “the notion that a bank is too big to fail shouldn't be out there.” As we explained last month, the U.S. banking system is borrowing their entire reserves, currently -$17B , from the Federal Reserve. TheStreet.com also reports that “non-current loans exceeded reserves for the first time since 1993.” On Feb 28 th , Ben Bernanke said there probably will be bank failures as the housing slump takes its toll . According to the FDIC Quarterly Banking Report :

“Total noncurrent loans -- loans 90 days or more past due or in nonaccrual status -- rose by $26.9 billion (32.5 percent) in the last three months of 2007. This is the largest percentage increase in a single quarter in the 24 years for which noncurrent loan data are available. Eight institutions accounted for half of the total increase in noncurrent loans in the fourth quarter, but noncurrent loans were up at half of all insured institutions. The percentage of loans that were noncurrent at year-end was 1.39 percent, the highest level since the third quarter of 2002.”

We called the FDIC to inquire about the eight institutions that accounted for half of the total increase and were told this information is not available to the public.

They Can Sell Faster Than You

We also mentioned in September that twenty-six Florida cities defaulted on their bonds after the real estate bubble of 1927. Now Vallejo, CA is in trouble . We expect the same thing that happened 80 years ago and recommend investors to avoid municipal bonds. This will also be a complete surprise to bond insurance firms. Banks are already working on a capital infusion for the insurers due to their subprime losses . The insurers' rating is supporting the value of $2.4T in loans held mostly by banks and as CNBC reports “the banks and the rating agencies are aware that, if it (Ambac) collapses, there will be a huge decline in the stock market.”

The Wall Street Firms will know if the Ambac deal fails long before investors. We commented last April : “As the editor of The Commercial and Financial Chronicle in November of 1929 reported on the Great Crash, ‘the crowd didn't sell, they got sold out.' The trading desks of the Wall Street Firms will cash out as the panic develops, the lady in Omaha will be stuck on the phone with a busy signal… To avoid this, investors should be moving now to financially healthy institutions and buying U.S. Treasury Bills.”

By Paul Lamont
www.LTAdvisors.net

Lamont Trading Advisors, Inc. is an investment management firm that specializes in the preservation of wealth. Visit www.ltadvisors.net for more information. This Investment Flash can be freely distributed with proper attribution. Our monthly Investment Analysis Report provides a more in-depth look at the markets and requires a subscription fee of $40 a month.

***No graph, chart, formula or other device offered can in and of itself be used to make trading decisions.

Copyright © 2008Lamont Trading Advisors, Inc. Paul J. Lamont is President of Lamont Trading Advisors, Inc., a registered investment advisor in the State of Alabama . Persons in states outside of Alabama should be aware that we are relying on de minimis contact rules within their respective home state. For more information about our firm, or to receive a copy of our disclosure form ADV, please email us at advrequest@ltadvisors.net, or call (256) 850-4161.

Paul Lamont Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Tom
24 Mar 08, 01:37
The Time Line For Foreclosure

see also:

The Time Line For Foreclosure Has Changed

http://www.foreclosureslam.com/?q=foreclosure-timeline-has-changed


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife