Thursday, March 9, 2023
Most people are not paying attention to what is going on in the Banking Sector which is starting to send out warning signals. Major newspapers are reporting that consumer debt is at historic high levels as interest rates continue to increase. Default rates on auto loans are low by historiccal standards, but starting to increase as the Federal Reserve pushes interest rates higher.
Today a large bank in California dealing with crypto transactions as well as regular bank loans filed for liquidation. Will depositers be paid on a timely basis? Investors that once had a stock trading at over $100/share, a year ago, may be lucky to get $3.00/share today.
Credit Suisse, the second largest bank in conservative Switzerland is starting to look like a penny stock, as it makes new lows each week, after making a series of speculaive loans that did not work out.
Asian investors (say “Chinese”) are looking to redeem their investments in the Blackstone private (non-trading) real estate income fund are told they have to wait in line to make withdrawals.
From my vantage point, it is beginning to look a lot like 2008, as investors seek to find the nearest exits. Of course, I don’t have a crystal ball, and this could turn out to be one of those periodic buying opportunities.
But the record Government, Corporate and Public Debt should give any reasonably cautious investor great pause before jumping in.
The next major hurdle on the road to an economic “soft landing” is the two political parties trying to avoid a major meltdown as they try to arrange for another increase in the Country’s Debt Level.
Stay tuned.