ATLANTA— John Kanas, owner of a private equity firm that has recently dabbled in buying up failed banking institutions, is predicting that around 1,000 banks will fail in the upcoming 2 years. This number is significantly higher than the roughly 400 banks that the FDIC currently has on their troubled institution watch list. It probably is intended to grab headlines – and that’s a good thing. We have to recognize that we are far from out of the woods on this economic roller-coaster.
In the upcoming 12 months, we are going to get hit by a blizzard of bank failures as a consequence of the rapidly declining commercial real estate market, which is frequently financed by regional or local banks.
Here is a good quote from a recent Yahoo News article: “Bill Fitzpatrick, an analyst at Optique Capital Management, said he expects the number of problem banks will keep rising. ‘These are smaller institutions but they hold a lot of commercial real estate loans and that market will continue to deteriorate,’ Fitzpatrick said.”
Unfortunately, I believe the government’s stimulus package and various bailout programs have only prolonged the inevitable. Our economy is going to be sluggish for a long while yet.
The only benefit of this is that I think it will work against Barack Obama, because I think the average American is increasingly losing faith in the ability of government to solve their problems. That is the exact opposite of the affect Mr. Obama hoped to have on American political views when he took office. With any good fortune, this will kill his chances on cap-and-trade and on the public option in health-care reform.
TennesseePaul
Stephen VanNuys
Brooklyn Daniel
The Freedom Thinker
[...] Hope Our Economy is Sluggish There are those that write about the sluggishness or potential sluggishness of the U.S. economy in future years. In my opinion this is a best case [...]
It is unfortunate that each generation has to learn anew the failed lessons of excessive government at such a high cost.
“A smart man learns from his mistakes. A wise man learns from the mistakes of others.”
Don’t know about this. I read the Obama fact sheet. The economy is rebounding, jobs will grow and long term rates will be fine. That will increase consumer spending and thus commercial real estate will not see the drastic drop in value expected by some, as the newly employed people flood into the rented out spaces to spend gobs of money on goods and services.
Of course, if Mr. Obama is incorrect, and employment and interest rates fail to improve, I could see where the financial and real estate problem would still persist.
Really? Oh, ok, makes sense.
Don’t know if you heard? Krugman declared today that “deficits saved the world”
Oh, Krugman, yeah – he has been very accurate in his assessment of the world’s ills. Speaking in such ways as to recommend a bubble in housing after the tech bubble. I could see him encouraging a bubble in treasuries – it would seem to be totally acceptable in his world.
Thank god that we have the Nobel prize.
I’m starting to wonder if he writes these things as a joke. If we should take his op-eds as comedy instead. When you read him in that light, he’s slightly more amusing.