Banking troubles loom large
Here we go again
I have enabled a 7-day free trial to all my posts. This changes the structure of my entries somewhat. From now on more of the analysis will be behind a paywall. This is a change I’ve been pondering for a while, because the “free bee” analysis is kind of a marketing piece, and bit of a drag for me. I just like to jump straight into the issue, and I am going to do more of that from now on.
So, in the future, only the Issues discussed summary-section is always free, all or almost all of the analysis will be behind a paywall. I will naturally publish occasional free pieces.
Moreover, I will start to publish a new section, entitled: Expected short-run developments. In this section I will forecast economic and/or geopolitical developments that I expect to occur during the coming weeks or the next few months. The aim of these short-term forecasts is to give a more concrete view of what can be expected to both subscribers of mine and that of GnS Economics Newsletter, and to challenge us further (to improve). I hope that our subscribers track and comment them. The first one will be free (explanation behind a paywall).
So, without further delay, let’s dive in to the topic of the week. Please check our warning on a re-surfacing of the banking crisis, as it directly relates to the topic.
Issues discussed:
The ‘arbitrage element’ of the Bank Term Funding Program of the Federal Reserve.
U.S. regional banks have continued to provide vast amounts of commercial real estate (CRE) loans exposing themselves to catastrophic losses.
U.S. banks have seen some improvements in their financial situation, but CRE losses weigh heavily.
European banks, however, are the first ones to feel the ‘sting’ of CRE in this third wave of the global financial crisis.
Expected developments (explained below):
Markets will turn down some time after mid-March, which will escalate into a rout in April.
Banking crisis re-emerges in March with failure/takeover of some European and U.S. banks.
European leaders will propose turning the EU into a defense alliance through, e.g., eurobond issuance for re-arming Europe.