I hate being right about this stuff. Here comes the latest Friday night fright from the FDIC. First Priority Bank in Brandton, Florida is shut down This is not good for anyone.
Here is the list so far. There are an estimated 150 more to go based on some estimates Nouriel Roubini estimates 800. To keep it all in context there are over 8,000 banks in the country. We survived the S&L crisis with over 1,000 S&L's being shut down, this could be worse in terms of cost.
We will make it through this, but it could get very weird and be very bad the US dollar. The fed via the short and long term printing press will end up saving the day in a relative sense.
For the traders:
For the option traders that may read this blog, it could be interesting to go long vega with a short side skew on Friday and selling on Monday or Tuesday.
If things hold up and closings follow a normal distribution, we should see the peak Friday have 30-60 bank closings sometime in the next 3-9 months.
Please don't be shocked, this is just normal ebb and flow of things. We have been here before, 1866, 1873, 1893, ,1896 1901,1907, 1929,...well you get the picture etc. and we always make it through.
The human dance of greed, fear and stupidity marches on. Nothing new here, so just enjoy the view and take care of your health, friends and family. That is what is really important. If you want to read about panics as a historical phenomenon that are always with us and always will be start with Kindelberger. There really is little new under the sun just our moment to shine.
We come up with a new form of debt, slap a label on it, get manic about some asset then panic. To lift Barry Ritholtz quip to a larger historical macro level. Rinse, Lather, Repeat.
For those who complain about the shouting of fire in a crowded theatre. The panic response is an urban myth. The actual response to such situations is actually a fairly organized egress. People don't panic in reality the way you anticipate them to. I used to work with this guy and he knows group behaviour and egress patterns better than anyone.
