ATTENTION POTENTIAL INVESTORS
A March report by JPMorgan (JPM.N) indicated the bank expects about 21% of outstanding loans in commercial mortgage-backed securities will eventually default. One of five Commercial real estate lending represents 5.7 trillion in assets held by US banks. (70% is held by smaller, regional banks).
We believe the potential effects of 1 trillion dollars in real estate lending losses will negatively impact the economy.
Prior to commercial real estate loans defaulting, banks will need to sell off bad loans at huge losses or become insolvent. Many regional banks may fail.
The additional burden of worthless Treasury bills on banks’ balance sheets will be a further drag on the economy. A recent University of Chicago analysis indicates that smaller banks are hiding losses by using accounting maneuvers in an attempt to rename 10-year notes as Held-to-Maturity (HTM) assets rather than sell them at a loss or classify them as Available For Sale. (AFS)
We believe the financial crisis is disguised and under-reported and urge customers to CONSIDER diversification away from traditional market assets which can be affected by commercial real estate losses and the knock-on effect of insolvent financial institutions.
To learn more about the current market dynamics and how precious metals can be a great hedge against the financial crisis, give us a call now.
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