by Michael Snyder, The Economic Collapse Blog:
If the economy is fine, why are so many signs of trouble erupting all around us? Those that keep insisting that the U.S. economy is heading in the right direction conveniently ignore the very troubling facts and figures that I regularly share with my readers. When you take an honest look at the cold, hard numbers that the economy keeps producing, there is only one logical conclusion. Our entire system is crumbling, and it appears that conditions will soon get significantly worse.
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Just look at what is happening to our banks.
The FDIC’s most recent report tells us that there are 63 “problem banks” in the United States, and collectively our banks now have 517 billion dollars in unrealized losses…
According to the Federal Deposit Insurance Corporation’s first quarter report, the US banking system is sitting on a collective $517 billion in unrealized losses and has 63 “problem banks.”
Those losses have been sparked primarily by a surge in interest rates over the past two years, which have driven down the price of fixed-income securities held by banks.
Unrealized losses held by banks increased by $39 billion in the first quarter relative to the fourth quarter of 2023.
“Higher unrealized losses on residential mortgage-backed securities, resulting from higher mortgage rates in the first quarter, drove the overall increase,” the FDIC said.
I would love to know what banks are on that list.
Wouldn’t you?
But the FDIC will not tell us.
As Daisy Luther has accurately noted, the FDIC won’t release that information because they are afraid of bank runs…
We don’t get to know which banks are in trouble.
It could be my bank. It could be yours. Or maybe it’s not.
Are they big banks? Small ones?
The list is confidential to inhibit the likelihood of bank runs finishing off these institutions.
So we just don’t know.
If Americans had the truth, there would be bank runs all over the country tomorrow morning.
That is a rather comforting thought.
And the condition of our banks just continues to deteriorate because mountains of commercial real estate loans are going bad.
At this point, it has become clear that we have never faced a commercial real estate crisis of this magnitude in our entire history…
The CRE sector faces the triple whammy of falling prices, falling demand, and rising interest rates. The post-pandemic rise of telecommuting and work-at-home programs crushed demand for office space. Vacancy rates in commercial buildings have soared.
This has put significant stress on commercial real estate companies. The biggest bankruptcy in 2023 was the failure of the Pennsylvania Real Estate Investment Trust. The company had loaded up with more than $1 billion in liabilities.
The collapse of the commercial real estate market could easily spill over into the financial sector. That’s because a lot of loans are coming due.
According to the Mortgage Bankers Association, around $1.2 trillion of commercial real estate debt in the United States will mature over the next two years.
A lot of financial institutions will fail during the months and years that are ahead of us.
Just hope that your money is not in one of them.
Meanwhile, one recent survey discovered that approximately two-thirds of all small businesses in the United States are teetering on the brink of disaster…
A new survey reveals that over two-thirds of small business owners are terrified of the state of the economy under Joe Biden’s watch, fearing that current conditions and ongoing downward trends will lead to them having to close their businesses.
As reported by the Daily Caller, the poll from the Job Creators Network Foundation (JCNF) shows that 67% of small business owners maintain such fears about the economy as it stands today, marking a 10-point increase from sentiments two years ago. In the same poll, participants’ perceptions of economic conditions for their own businesses fell from 70.2 to 68.1. Perception of national conditions fell even more drastically, from 53.2 to 50.4.
Maybe you don’t care about what is happening to our small businesses.
But you should, because close to half of all workers in the United States are employed by small businesses…
Forbes estimates that at least 46% of all employees in the United States, around 61.6 million people in total, are employed by small businesses.
I think that it is quite an ominous sign that the household survey showed that the U.S. economy lost a whopping 408,000 jobs last month.
Sadly, I think that a lot more months like that are coming.
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