Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19
Will Stock Market 2019 be like 1999? - 14th Feb 19
3 Charts That Scream “Don’t Buy Stocks” - 14th Feb 19
Capitalism Isn’t Bad, It’s Just Broken - 14th Feb 19
How To Find High-Yield Dividend Stocks That Are Safe - 14th Feb 19
Strategy Session - How This Stocks Bear Market Fits in With Markets of the Past - 14th Feb 19
Marijuana Stocks Ready for Another Massive Rally? - 14th Feb 19
Wage Day Advance And Why There is No Shame About It - 14th Feb 19
Will 2019 be the Year of the Big Breakout for Gold? - 13th Feb 19
Earth Overshoot Day Illustrates We are the Lemmings - 13th Feb 19
A Stock Market Rally With No Pullbacks. What’s Next for Stocks - 13th Feb 19
Where Is Gold’s Rally in Response to USD Weakness? - 13th Feb 19
US Tech Stock Sector Setting Up for A Momentum Breakout Move - 12th Feb 19
Key Support Levels for Gold Miners & Gold Juniors - 12th Feb 19
Socialist “Green New Deal” Points the Way to Hyperinflation - 12th Feb 19
Trump’s Quest to Undermine Multilateral Development Banks - 12th Feb 19
Sheffield B17 US Bomber Crash 75th Anniversary Fly-past on 22nd February 2019 Full Details - 12th Feb 19
The 2 Rules For Successful Trading - 12th Feb 19 -
Financial Sector Calls Gold ‘Shiny Poo.’ Are They Worried? - 11th Feb 19
Stocks Bouncing, but Will They Resume the Uptrend? - 11th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

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

© 2005-2019 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

6 Critical Money Making Rules