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Friday, July 29, 2011

Well, This Might Explain the Bank Failure Spike

It appears that the economy is slowing, with the last two quarters GDP disappointing.

1st quarter GDP was revised down from a 1.9% annual rate to an 0.4% annual rate, and the 2nd GDP disappointed, coming in at a 1.3% annual rage, below the 1.6% forecast.

So, as the (already grossly inadequate) stimulus has run out, the economy has sputtered to a halt.

No worry though, austerity will create growth by:

  1. Collect Underpants
  2. ?
  3. Profit
What this has to do with bank failures?

The fact that they are a lagging indicator.

You see banks become insolvent when too many of their loans go bad, and those loans go bad following the economy tanking, not before.

We are in a double dip recession in all but the NBER ruling.

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