This morning, Sunday, October 16, I listened to Richard D. Wolff's
broadcast. One of the items he noted was that several of our nation's
largest banks are seriously planning for a major recession this
winter. Of course they are not sharing their plans, nor are they
including those of us who happen not to be Wall Street
Billionaires...which is most of us. I thought revisiting this article
from last August, would be well worth the doing. Carl Jarvis
*****
Banks get ready for 'economic nuclear winter' Monday, 29 Aug 2016 |
7:30 AM ET | 00:39
The first half of 2016 has been a roller-coaster for financial
markets. A combination of uncertainties surrounding the U.K.'s vote to
leave the European
Union and weaker-than-expected corporate earnings results across the
region means a tough second half looms.
European banks, in particular, have had a very tough six months as the
shock and volatility around Brexit sent banking stocks south. Major
European banks
like Deutsche Bank and Credit Suisse saw their shares in free-fall
after the referendum's results were announced. In the U.K., RBS was
the worst-hit, with
its shares plunging by more than 30 percent since June 24.
The current uncertainty over when the U.K. will start the process of
quitting the EU has banks on tenterhooks. But a source told CNBC that
banks are "preparing
for an economic nuclear winter situation."
Speaking on the condition of anonymity due to the sensitive nature of
the topic, a source from a major investment bank told CNBC that
financial services
firms have put together a strategy in place that takes into account
the worst-case scenario that could happen by the end of this year.
"This could mean triggering Article 50, referendum in other European
nations leading to a break-up of the euro or sterling hitting below
$1.20 or lower.
The banks are ready for anything now," the source said.
The source further explained that the challenge in 2016 is nothing
compared to when the Lehman Brothers collapsed in 2008 and the banking
sector is this
time a lot more resilient. "Markets hate uncertainty and the events
this year have unfortunately created a lot of mystery around what is
going to happen
next."
Meanwhile, a common theme across second-quarter results has been a
warning of uncertain times ahead. From big investment banks to mining
firms like BHP
Billiton and Glencore to the auto sector, companies have cited
uncertainty and volatility in markets as a reason for weak results and
have warned that
the second half will be challenging.
