US Banks Are Now Extremely Vulnerable

Here’s Why US Banks Are Now Extremely Vulnerable

Forget Ebola – Here’s Why US Banks (and your savings) Are Now Extremely Vulnerable

For a casual observer of the US economy (most “experts”), you could say that things look pretty good. Unemployment is at its lowest rate in six years. Earnings of S&P 500 companies are higher than ever, while their debt is lower than it’s been in the last 24 years.

Nonetheless, rather than getting excited for good economic times, the big commercial banks are all battening down the hatches. They’re preparing for bad times ahead.

US Banks Are Now Extremely Vulnerable

Image credit: Merzperson

I often stress the importance of being prepared, so in theory, that should be a great sign.

But then, you look at what they are “defensively” investing in, and you see that what they consider as prudence is simply insanity.

What banks are stockpiling these days are US government bonds, and they’re not doing this casually, they’re going nuts for them.

In just the last month alone American banks increased their holdings of US treasuries by $54 billion, to a record $1.99 trillion.

Citigroup, for example, held $103.8 billion worth of bonds at the end of June, up 19% from the end of last year.

This is like preparing for an earthquake by running out and buying whole new sets of porcelain dishes and glass vases.

All it’s going to do is make things more dangerous, and even if you somehow make it through the disaster, you have a million more shards to clean up.

With government bonds you are guaranteed to lose both in the short-term and the long-term. Bonds keep you consistently behind inflation (even the deceptively named TIPS—Treasury Inflation Protected Securities), so the value of your savings is slowly being chipped away.

But that’s nothing compared to the long-term threats of the US government not being able to repay the loans.

Facing $127 trillion in unfunded liabilities – which is nearly double 2012’s total global output – and with no inclination to reduce those numbers at all, at this point disaster for the US is entirely unavoidable.

Read more

About the author

Red Pill Reports Some articles are aggregated under the Creative Commons License. If you feel this article has been re-published outside of these parameters, please contact us immediately to resolve any issues. We respect copyrights and address any concerns promptly. Real reporting digs for the truth. It is our hope to find it. Share it. Red Pill Reports is your prescription for truth.

Similar posts: