A massive credit card debt catastrophe is coming. Even though we are not yet in a recession, banks are already perilously close to collapse.

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Americans are defaulting on their credit cards and auto loans at levels not seen since the financial crisis.

The current accumulation rate of credit card debt may lead to rapid delinquency, potentially triggering a bear run and potentially a recession.

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Real-Estate Doom Loop Threatens America’s Banks

Record High: Banks Increasingly Rely on Fed’s Emergency Funds

Usage of the Fed’s emergency bank funding facility hit a record $108 billion, signifying growing financial stress. Money-market funds surged by $42 billion to a record $5.625 trillion. Institutional fund assets rose by $24 billion, and retail funds grew by $17.7 billion. The gap between fund assets and bank deposits widens, reflecting distrust in traditional banking. The Fed’s balance sheet shrank by $20 billion, signaling potential economic challenges. Fed Quantitative Tightening (QT) continues with $18.4 billion sold last week, adding to market uncertainty.

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‘Significant Downside Risks’ for Banking Industry: FDIC Chair

FDIC Chair Martin Gruenberg warns of significant risks to the US banking industry due to inflation and high interest rates, leading to weakened profitability and credit quality. The second quarter was one of the most tumultuous periods for banking since the 2008 crisis. Deposits continued to decline, adding pressure on banks to raise funding costs. Gruenberg notes these challenges, along with concerns about a softening commercial real estate market, will remain under FDIC scrutiny.

Bank of America’s Hartnett Says Get Defensive Brace for a Hard Landing

Bank of America warns of a potential “hard landing” for the US economy and a stock market selloff over the next two months due to the lingering threat of higher interest rates. Rising bond yields make stocks less appealing, with the S&P 500 earnings yield trailing behind Treasury bill yields. Michael Hartnett, the bank’s strategist, emphasizes the need to “get defensive” and prepare for a “long and hard landing” as yields continue to climb.


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