A baseball metaphor comes to mind this month. Recently I heard an economist who said that over the past 150 years, the world has experienced 15 significant worldwide recessions. This econ expert also noted that each of those recessions were precipitated by one of the following: Pandemic, War or Bank Failures.
Perhaps it has occurred to you, as it did to me, that we are currently experiencing the trifecta of all three somewhat simultaneously. Talk about a big strike zone!
I'm not an economist, but it appears that banks will curtail lending until their new higher FDIC insurance premiums are known? They will almost certainly restrict the flow of money until they know the new stricter supervisory burden they face; until the regulatory rules of the road are made clear; until they can predict the end of the meteoric rise in the Fed's inflation-fighting interest rate increases. Rate hikes have decimated the value of the Fed’s own bond portfolios (yes — even "risk-free" Treasuries can lose a quarter of their value in a year like this).
It's a tough time to be a banker… And as a direct result it may be a tough year for our industry, especially at the Dealer level. Classic makings of a credit crunch.
See more musings here:
https://issuu.com/dealernews/docs/issue_3_march_2f827bed089566/6
