This week’s consternation over Portugal’s debt issues led to me wonder: are we prepared for another global financial crisis, if it comes to that? The easy answer is no one is ever really prepared for one, that is why we call them crises. While I can cite any number of ratios, facts, and figures to support why the US financial system is in healthier shape than it was in 2007, on the eve of the last financial crisis, I take small solace in such numbers.
The reason is pretty simple: a financial crisis is really nothing more than the absence of liquidity in the financial system. Granted, this normally happens when bank asset values fall apart, but as the old expression goes: it only takes one bad apple to ruin the whole bunch. While a little hyperbolic when it comes to the banking system, I think it safe to say a couple of well-placed bad apples, as it were, can cripple a financial system of relatively well capitalized financial institutions.…Read On…
The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.