US Banks Are In Trouble and Your Financial Situation will be in Trouble - Don't Let Their Mistakes Your Money

US Banks Are In Trouble and Your Financial Situation will be in Trouble Don't Let Their Mistakes Your Money  

Banks serve a great purpose in this world.

They take in individual reserves and together they lend to businesses or individuals who need capital for business opportunities. This business opportunity can be a company that wants to grow or an individual who wants to buy a home.

The more people save, the more money there is in the banking system and the more money there is, the more loans and more economic growth. This growth is natural and healthy because people's savings represent capital that they can use for further purchases in the future. Thus, when a business borrows more and invests in this capital capable of producing more goods, it is a wise decision because people already have more money to spend on these goods. Goes.

It becomes a healthy circular formula which is summarized as follows: "More savings" leads to "more loans to the business" which leads to "more business investment" which " Consumers are the best choice and of course more jobs are created. Which fuels the economy more.

Well, most of us know that the US savings rate was actually negative last year, meaning we spent more than we earned. That's less than saving 7.5% of our salaries just 30 years ago. So we see that the current economic boom is not caused by people's savings.

On the other hand, economies also grow when interest rates fall artificially because they are set in the United States. These low rates pushed the real estate bubble to new, incredible prices that the United States and the world have never seen before. And surprisingly, there is no economic justification for these high house prices outside of the herd mentality that prices will continue to rise.

Well, we've passed that point and are now seeing a drop in prices and an increasing inventory of homes for sale.

The problem with banks is that they also get stuck in the herd mentality, and increase the amount of money they lend to people to buy a home. And not only that, they are doing so in a risky and risky fashion through adjusted rate mortgages.

Currently, US commercial banks face incredible risks as more than 60% of their total assets are mortgaged assets !!! Let me reiterate that more than 60% of the assets of the US Commercial Bank are mortgaged - the post-war record is high.

Any disturbance in the real estate market as a result of these risks to banks has a severe negative impact on the US banking system. For example, the Japanese banking system became crippled after the rise of the 1980s when they concentrated most of their capital on real estate. Japan spent the next 14 years in recession and is now seeing the light of day.

Now that interest rates are rising, and will continue to rise, people who use adjusted mortgages are realizing an increase in monthly mortgage payments. As a result, the forecast rate is 38% higher than last year and the bank's bottom line is feeling the pinch.

Billionaire Warren Buffett recently said he was studying recent bank balance sheets and was concerned about the growing number of defaults in his books.

The fact is that even though banks are not ready and well diversified, this means you should have even more! How to prepare yourself is discussed in detail in a recent report titled "Rehabilitation - How to Survive and Prosper".