I expect it – so does Richard Bove:
A prominent banking analyst said on Sunday that 150 to 200 more U.S. banks will fail in the current banking crisis, and the industry’s payments to keep the Federal Deposit Insurance Corp afloat could eat up 25 percent of pretax income in 2010.
Richard Bove of Rochdale Securities said this will likely force the FDIC, which insures deposits, to turn increasingly to non-U.S. banks and private equity funds to shore up the banking system.
“The difficulty at the moment is finding enough healthy banks to buy the failing banks,” Bove wrote.
The FDIC is expected on August 26 to vote on relaxed guidelines for private equity firms to invest in failed banks, after critics said previously proposed rules were too harsh and would actually dissuade firms from making investments.
Bove said “perhaps another 150 to 200 banks will fail,” on top of 81 so far in 2009, adding stress to the FDIC’s deposit insurance fund.
We’re well in to Great Depression levels of bank failures – not there, yet, but certainly heading that way. Do keep in mind that all of the economic data indicating an economic rebound is, to put it bluntly, bogus. Its all smoke and mirrors put out by banks and government officials who are desperate to have people believe that all is well in the hope that some how, some way, American consumers will just buy a whole bunch of **** and pull us out of the recession. Ain’t gonna happen – not only is unemployment and falling wages crimping the ability to do such a thing, but the American people – yours, truly, included – just doesn’t want to spend a lot of money.
Think of it like this – I got my lap top in 2005. Its obviously out of date, right? Certainly – the cyber-geeks have developed all kinds of new stuff to put on computers. Trouble is, who needs it? The lap top works just fine – it does every thing I need it to do and given the way these things are manufactured, the physical lap top will probably last me another ten years. And so, I’m not going to buy what I don’t need – no matter how cool the upgraded stuff is. I think that a majority of Americans are viewing things the same way – buy what you need; save your money; don’t be suckered by the latest ad campaign which is trying to convince you to part with your money for something only marginally better than what you’ve got right now.
American consumers both cannot and will not lead the way out of this depression – and because these consumers are not doing this, we’re rapidly falling in to a deflationary spiral. Now, this could be changed by the Fed printing money like no tomorrow – we could go back to the 1970’s “stagflation” – but the basic thrust of things is that less is fine…less frippery, less conspicuous consumption, less profligacy. The only way we’ll get out of this mess is by earning our way out of it – if people can earn money and then save it (hit the road, tax man!) we’ll eventually have a rebound in consumer spending. But if anyone is expecting the American people to agree to bury themselves further in debt in order to bail out statist liberals and dimwitted financiers, he’s got another thing coming.
UPDATE: OMB and CBO see total federal government debt doubling over the next decade. Does anyone out there want to argue that this is sustainable? The people have figured it out but Uncle Sam (and the liberals) haven’t. We can’t borrow our way out of this.
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