Second “Lehman Moment” May Be Imminent

Bank Crisis, Part II [The Daily Reckoning] September 14, 2023 [WEBSITE]( | [UNSUBSCRIBE]( [register here]( Second “Lehman Moment” May Be Imminent - The economy may already be in recession… - The banking crisis, Phase II… - Goldilocks is about to get eaten by the bears… [We just had the biggest – and most drastic – operational change in our company’s history]( I believe it will have profound effects on our editors and readers alike. I’m urging you to listen to a short memo from our VP of Publishing. He explains why, after 20 years, this decision was 100% necessary… …and why this “fix” could have a significant impact on your personal wealth… [Click Here To Learn More]( Portsmouth, New Hampshire [Jim Rickards] JIM RICKARDS Dear Reader, What is the state of the U.S. economy and the banking system? The U.S. is facing a sharp recession that may already have begun. This recession may be combined with a financial crisis as we enter Stage 2 of the banking crisis that began on March 9, 2023. Recessions and financial crises are different phenomena, which usually arise separately but occasionally come in combination as in 2008. Don’t worry about the technical details, but indicators of recession include the following: - Inverted Treasury yield curve – when interest rates on longer maturities are higher than those on shorter maturities, it means investors expect a rapid drop in interest rates. That kind of drop is consistent with recessions, not stimulus - U.S. dollar index at highest level since November 2022 – a reflection of a global dollar shortage and growing liquidity crisis - China’s yuan in free fall against U.S. dollar (USD/CNY) – another reflection of the global dollar shortage - Japanese yen (closely linked to yuan) falling against U.S. dollar (USD/JPY) – also a reflection of the global dollar shortage and the dependence of Japanese banks on Chinese liquidity - Declining Chinese dollar reserves – dollars are being used to prop up the yuan - Declining U.S. job creation – eight straight months of downward revisions - Declining real incomes – a sign that inflation is not under control - Contracting world trade – rare except during the Great Depression - Rising credit losses in consumer credit, auto loans - End of student loan grace periods - Commercial real estate losses growing – partly a result of WFH - Germany is in recession/Chinese growth slowing rapidly - The Federal Reserve is preparing to raise interest rates 0.25% on Sept. 20 - Markets have not priced in this rate hike. The dollar will get even stronger. [Response Requested 1/1000th of an ounce of gold available for you]( As a reader of The Daily Reckoning, Jim Rickards is offering you 1/1000th of an ounce of gold when you upgrade your account. It will come in the form of a “Gold Back” - a new type of gold currency that’s starting to spread across America. If you have not responded to Jim’s offer yet, and want to know how to claim yours… Please click the link below for details. [Claim Your New Gold Back Currency Here]( What About Those High Growth Projections? The conundrum for analysts is how to reconcile the cascading evidence of recession with, for example, projected real growth of 4.9% (annualized) for the third quarter of 2023 as estimated by the Federal Reserve Bank of Atlanta. GDP growth was 2.1% for the second quarter, and 2.0% for the first quarter, roughly equivalent to the average annual growth of 2.2% from 2009–2019, the weakest recovery recorded. The answer is that the Atlanta Fed forecast is substantially driven by consumption and inventory accumulation. Both are non-sustainable. The critical threshold toward contraction was passed in the August–September 2023 timeframe. Consumption is non-sustainable because it relies on credit card and auto loan debt. Credit cards are now maxed out and consumers are suffering interest rates of 20–30% on unpaid balances, which can double balances in about three years. Gasoline prices have risen in the past year. Demand for gasoline may be inelastic, but the higher prices paid at the pump come at the expense of other forms of consumption. Prices for food, housing and home heating continue to inflate. Gasoline and home heating in particular will continue to rise as a lagged effect of Saudi Arabian and Russian oil output cuts. Inventories swelled in anticipation of continued strong consumption, which has now faded. As a result, wholesalers will slash orders for new goods and heavily discount prices to dump existing inventories. The Banking Crisis, Phase II In addition to a looming recession, the banking crisis is not over. In fact, I believe the banking system is once again on the verge of a total meltdown. I’ve been monitoring this situation for months and the latest research indicates the collapse could begin at any moment. This is the kind of situation we haven’t seen since 2008, when I warned a senior member of Congress that the financial system was about to collapse. Three weeks later, Lehman Bros. went under. That’s why I’m holding a [live Zoom call]( this evening at 7 p.m. Eastern to help you prepare. I dropped everything to organize this presentation because I believe the situation is that urgent. I’ll show you the exact reason why many banks are at risk, the names of the most vulnerable banks and the exact steps you should take to protect your wealth. [Go here now to register for FREE.]( Let’s break this down a bit more... [Man Who Predicted Bitcoin Warns: “Don’t Buy Bitcoin!”]( [Click here for more...]( James Altucher first predicted Bitcoin all the way back in 2013… And ever since, he’s been one of the biggest advocates for it. But now, he’s warning Americans that buying Bitcoin could be a big mistake… [Click Here To Learn More]( Get Ready for the Aftershock The sequence of 2023 failures was Silvergate Bank (March 9), Silicon Valley Bank (March 10), Signature Bank (March 12), Credit Suisse (March 19) and First Republic Bank (May 1). But that’s just the beginning. A major aftershock is set to take down major U.S. regional banks in the coming weeks on a level we haven’t seen since 2008. In other words, the banking crisis appears to be over. But that’s only because the FDIC abandoned its own rules and guaranteed every deposit in the banking system regardless of size. The Fed followed suit and offered loans at par value secured by every Treasury security of every member of the Federal Reserve System even though the market values of the securities were 20–30% lower than par. After these actions, the Fed and FDIC have no more rabbits to pull out of their hats. The financial crisis in 1997–1998 had a quiet period in the winter of 1998. The financial crisis of 2007–2009 had two quiet periods — one in the late fall of 2007, and another in the late summer of 2008. Both crises reemerged with even worse consequences after these quiet periods ran their course (after about four months in 1998 and 2007, and only one month in 2008). We should expect the current banking crisis to reemerge soon with failures among non-TBTF banks with total assets in the $100–500 billion range and high ratios of uninsured-to-total deposits. The Bottom Line for Investors A dual crisis — recession and financial panic — is in the cards.There’s still time to reduce equity exposure and increase cash allocations, but the time grows short. These reallocations will not be easy to execute once the recession and panic arrive. A small allocation to physical gold bullion (about 5% of net assets) will offer protection against inflation, illiquidity and account freezes. The Wall Street Goldilocks (or soft-landing) narrative is a fairy tale. In the real world, Goldilocks will be eaten by the bears. Regards, Jim Rickards for The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) P.S. For months, our federal overlords have tried to ensure us that the banking crisis was contained. [But my latest research indicates it’s far worse than we thought.]( Due to a rapidly developing situation, I’ve declared that a [new “Lehman Moment”]( could be just days or weeks away. And it’s critical you get the list of banks at risk BEFORE this moment takes place. That’s why I’m going live in a [Live Emergency Briefing]( tonight at 7:00 p.m. ET (via Zoom) to break down the situation. [REGISTER FOR MY EMERGENCY ZOOM BRIEFING HERE. IT’S 100% FREE.]( In 2008, I warned a senior member of Congress that a financial crisis was about to rip through the country — three weeks before Lehman Bros.’ historic collapse. That’s why I’m dropping EVERYTHING to get you this urgent briefing. Tonight, you’ll learn not only how to prepare, but how to seize your chance to use this crisis for the potential chance at a fortune. [To register for my Emergency Banking Summit, click here now.]( Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) [Jim Rickards] [James G. Rickards]( is the editor of Strategic Intelligence. He is an American lawyer, economist, and investment banker with 35 years of experience working in capital markets on Wall Street. He is the author of The New York Times bestsellers Currency Wars and The Death of Money. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. 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