Economic experts are sounding the alarm about a possible second wave of bank failures that could have a devastating impact on the global economy. A prominent expert, George Gammon, on his recent Youtube video update, has shared some key indicators that point to this impending crisis.
The increase in FHLB and BTFP loans
The analyst finds it amusing that troubled banks often need quick access to funds. Although they initially prefer to borrow from other banks or the FHLB, these options can be expensive and have strict terms. While the analyst notes that recent data shows a significant increase in loans from both the FHLB and the newly established BTFP. This suggests that more banks are experiencing financial difficulties and are looking for alternative sources of funding.
Discount window, a sign of trouble?
The Federal Reserve has a program called emergency loans discount window, which provides short-term loans to struggling banks. Gammon advises keeping an eye on this indicator. If there is a sudden increase in banks resorting to the discount window, it could be a clear sign that they are in serious trouble.
“The moment we have when we get to the next wave of this crisis is combining those two [FHLB and BTFP] charts with a discount window chart.”
Source: Federal Reserve Bank of St. Louis
What to expect next?
By closely monitoring FHLB and BTFP loan charts, along with discount window data, experts hope to predict when the next wave of the crisis will arrive. If the use of the discount window increases, it may indicate that more banks will fail in the coming weeks or months. This could lead us to a situation as serious, or even worse, than the global financial crisis of 2008.
The implications of this crisis could be significant, affecting not only banks, but also individuals and businesses around the world. It is important to stay informed and monitor the situation as it develops.
