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By Michael Snyder
\nThe Economic Collapse<\/p>\n
In comments that he made after the deal was consummated, JPMorgan Chase CEO Jamie Dimon boldly declared that\u00a0\u201cthis part of the crisis is over\u201d<\/a>\u2026<\/p>\n \u201cThere are only so many banks that were offsides this way,\u201d Dimon told analysts in a call shortly after the deal was announced.<\/p>\n \u201cThere may be another smaller one, but this pretty much resolves them all,\u201d Dimon said. \u201cThis part of the crisis is over.\u201d<\/p><\/blockquote>\n And the U.S. Treasury is telling us that the U.S. banking system\u00a0\u201cremains sound and resilient\u201d<\/a>\u2026<\/p>\n \u2018The banking system remains sound and resilient, and Americans should feel confident in the safety of their deposits and the ability of the banking system to fulfil its essential function of providing credit to businesses and families,\u2019 a Treasury spokesperson said.<\/p><\/blockquote>\n Does reading that make you feel better?<\/p>\n It shouldn\u2019t.<\/p>\n They always offer such platitudes before things start getting really bad.<\/p>\n As I noted at the beginning of this article, the three banks that have collapsed so far this year were collectively bigger than all of the banks that collapsed in 2008\u00a0combined<\/a>\u2026<\/p>\n The three banks held a combined total of $532 billion in assets, which \u2013 according to the New York Times and when adjusted for inflation \u2013 is more than the $526 billion held by all the US banks that collapsed in 2008 at the peak of the financial crisis.<\/p><\/blockquote>\n We are only one-third of the way through 2023.<\/p>\n And as Charlie Munger\u00a0recently observed<\/a>, many of our banks are absolutely packed with \u201cbad loans\u201d right now\u2026<\/p>\n Charlie Munger believes there is trouble ahead for the U.S. commercial property market.<\/p>\n The 99-year-old investor told the Financial Times that U.S. banks are packed with \u201cbad loans\u201d that will be vulnerable as \u201cbad times come\u201d and property prices fall.<\/p><\/blockquote>\n He is quite correct.<\/p>\n In particular, the collapse of commercial real estate prices threatens to create\u00a0a massive tsunami of defaults<\/a>\u2026<\/p>\n Berkshire Hathaway, where Munger serves as vice chairman, has largely stayed on the fringe of the crisis despite its history of supporting American banks through times of turmoil. Munger, who is also Warren Buffett\u2019s longtime investment partner, suggested that Berkshire\u2019s restraint is partially due to risks that could emerge from banks\u2019 numerous commercial property loans.<\/p>\n \u201cA lot of real estate isn\u2019t so good anymore,\u201d Munger said. \u201cWe have a lot of troubled office buildings, a lot of troubled shopping centers, a lot of troubled other properties. There\u2019s a lot of agony out there.\u201d<\/p><\/blockquote>\n As I keep telling my readers, we really are on the verge of the largest commercial real estate crash in all of U.S. history.<\/p>\n And as mountains of commercial real estate loans go bad, a lot more banks will start to go under.<\/p>\n The \u201ctoo big to fail\u201d banks will scoop up those that they like, while others are simply liquidated and go out of existence.<\/p>\n Ultimately, I believe that we are going to see a wave of consolidation in the banking industry like we never have before.<\/p>\n