Banking collapse is bigger worries that stock market crash during deflation - by Joe Weinman
No one in the market place believed the Dow could go down 400 points or more in a day during 2007. The VIX (the scare indicator of Wall Street) showed the level of complacency. What is really scary is the total confidence the people still have in the banking system. The recession during deflation is so severe that 50 to 70% of the banks can eventually go belly up from losses in real estate, investment portfolios and more. Banking collapse is probably a bigger worry than a stock market crash during deflation. The checks and ballances within the banking systems are extremely weak. The cause is similar to the past, and common sense says the effects will be similar too.
The banks and financial institutions are paying salaries and bonuses like never seen before since the decline of the Roman Empire. These are all signs of bubbles. The confidence is so high that overconfidence will eventually bring down the banking empires."
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