hoagster7
May 31st, 2008, 08:33 PM
http://www.gold-eagle.com/editorials_08/willie052808.html (link to entire editorial)
The BKX bank stock index is staring at the precipice, for huge additional declines. The technical breakdown receives little press or network coverage, probably because it smashes their propaganda messages from the last month or more. The bank recovery is nowhere visible. In fact, several important banks have announced increased expected losses in just the last couple weeks, precisely as my forecast has stated consistently and without hesitation. Housing prices are accelerating downward, which precede yet another round of bank bond losses. My forecast is for future losses to be centered mainly in the prime rated category, and losses to be larger in magnitude than the subprime category. Prepare for a second bigger and more painful round of bank destruction. Their balance sheets are depleted of capital. They are not prepared with loss reserves or basic remaining capital to withstand what comes next. Their core capital is on a net basis totally borrowed. Major bank names and many midsized banks will be forced into bankruptcy in the next year or more, as they fail to resupply cash into capital. Another major breakdown is in progress. The bearish triangle base, shown recently in another public article, has been breached. The target is 56 in an earth-shattering decline. Even Goldman Sachs was downgraded by a major analyst this week. Be clear in the message, that the entire US financial industry is insolvent, in ruins, and not easily remedied. The sector has been led to the toilet by housing bubble that busted dramatically in a very predictable manner. A nation cannot build an economy atop a housing bubble and expect to survive.
The bond insurer MBIA is the largest, and it is doomed to go bust in dramatic fashion. This event is written in stone. If not the downgrade of its own corporate bond rating, then surely their payouts on failed mortgage bonds will kill them. The former makes recapitalization impossible, while the latter drains them into bankruptcy. As MBIA and its small group of competitors go down in flames, the bank industry will entire utter turmoil of unmistakable terms. Calls will be made for nationalization, as in USGovt takeover of bond insurance. Such calls will join those for the mortgage Resolution Trust Corp. While the self-serving nitwits in Congress argue with the syndicate representatives in the Administration, the national home equity and bank capital will continue to tragically burn. THE NATIONAL RESPONSE WILL BE MONETIZATION OF BANK AND EVENTUALLY HOME EQUITY BANKRUPTCY AND INSOLVENCY. Gold & silver will skyrocket as policy kicks into gear during desperate times. The irony, another black eye to the financial sector, is that MBIA will likely continue to bear a shiny AA or AAA rating, even as it goes bankrupt. That is a fine closing statement for this article.
The BKX bank stock index is staring at the precipice, for huge additional declines. The technical breakdown receives little press or network coverage, probably because it smashes their propaganda messages from the last month or more. The bank recovery is nowhere visible. In fact, several important banks have announced increased expected losses in just the last couple weeks, precisely as my forecast has stated consistently and without hesitation. Housing prices are accelerating downward, which precede yet another round of bank bond losses. My forecast is for future losses to be centered mainly in the prime rated category, and losses to be larger in magnitude than the subprime category. Prepare for a second bigger and more painful round of bank destruction. Their balance sheets are depleted of capital. They are not prepared with loss reserves or basic remaining capital to withstand what comes next. Their core capital is on a net basis totally borrowed. Major bank names and many midsized banks will be forced into bankruptcy in the next year or more, as they fail to resupply cash into capital. Another major breakdown is in progress. The bearish triangle base, shown recently in another public article, has been breached. The target is 56 in an earth-shattering decline. Even Goldman Sachs was downgraded by a major analyst this week. Be clear in the message, that the entire US financial industry is insolvent, in ruins, and not easily remedied. The sector has been led to the toilet by housing bubble that busted dramatically in a very predictable manner. A nation cannot build an economy atop a housing bubble and expect to survive.
The bond insurer MBIA is the largest, and it is doomed to go bust in dramatic fashion. This event is written in stone. If not the downgrade of its own corporate bond rating, then surely their payouts on failed mortgage bonds will kill them. The former makes recapitalization impossible, while the latter drains them into bankruptcy. As MBIA and its small group of competitors go down in flames, the bank industry will entire utter turmoil of unmistakable terms. Calls will be made for nationalization, as in USGovt takeover of bond insurance. Such calls will join those for the mortgage Resolution Trust Corp. While the self-serving nitwits in Congress argue with the syndicate representatives in the Administration, the national home equity and bank capital will continue to tragically burn. THE NATIONAL RESPONSE WILL BE MONETIZATION OF BANK AND EVENTUALLY HOME EQUITY BANKRUPTCY AND INSOLVENCY. Gold & silver will skyrocket as policy kicks into gear during desperate times. The irony, another black eye to the financial sector, is that MBIA will likely continue to bear a shiny AA or AAA rating, even as it goes bankrupt. That is a fine closing statement for this article.