For this year, a total of 100 banks in the United States have already been in control of regulators. The latest banks to have been included in this list are the seven ones last Friday. Coincidentally, seven banks from Europe have also failed health check. Compared to last year, many analysts are predicting that the number of banks that will fail this year will surpass the previous year’s number of 140 banks. This is because of the current economic condition of the United States.
Specifically, the US Economy is facing debt problems caused primarily by mortgages, both residential and commercial. Among the latest banks that has just recently failed for this year includes Crescent Bank and Trust Company which is located in Georgia. The bank, has more than a billion dollars in assets.
In light of the European economic problems, a stress test was implemented to all the banks to simulate their reaction to a sovereign debt crisis and double dip recession. The test has just finished, and investors will test the results of this tests tomorrow.
On the other hand, many analysts are questioning the strength of these tests, because they only measured simulations on trading sovereign debts and not maturity bonds. Some of the banks that failed these tests include regional savings banks located in Spain, also known as cajas.
The price of gold reduced to $1,225 per ounce last Thursday in Europe. This is largely due to the rise of Euro against the dollar, implying that many consider that it’s highly risky to have a strong appetite for assets at the expense of bullion. The State Administration of Foreign Exchange, or SAFE, located in China, stated in their report that market for gold is not as suitable for allocation of assets because of its innate properties, including volatility, being illiquid and being small.