In case your name happens to be "Gilligan" (first mate of the marooned S.S. Minnow), allow me to break the news to you: According to the mainstream financial experts, the U.S. banking sector has officially been rescued from worst credit crisis since the Great Depression.
See Recent News Items Below:
- "Whatever you think of the bailouts, one thing is clear: The banking crisis that rocked the world in 2008 is over." (The Business Insider)
- "Large Banks Bounce Back To Profit" (LA Times)-- AND -- "Virtually all the big name companies came in above or in-line with estimates. We believe that the worst of the credit crisis is now probably behind us." (AFP)
Fact: Since the very start of the financial crisis, the talking heads have glided down a slope of unwavering hope. At so many fleeting lows, they called the absolute "end" to the rout -- only to watch, dumbfounded, as bank shares were battered even further.
To illustrate this phenomenon, the following close-up traces the most prominent mainstream insights DOWN the Philadelphia/KBW Bank Index since 2006:
Here are the specific details from the chart:
- July 2006: Citigroup CEO Chuck Prince exclaims: "As long as the music is playing [in terms of liquidity], you've got to get up and dance. We're still dancing."
- July 2007: London Conference with the heads of world's largest investment banks assures: "Subprime implosion is a contained, isolated and temporary event with little risk of wider fallout."
- January 2008: Citigroup's Global Wealth Management calls for a "rebound in financials in 2008. With big banks, you're buying high-quality institutions at a fire sale." (Wall Street Journal)
- April 2008: Goldman Sachs chief executive predicts: "We're closer to the end than the beginning. I think we're getting to that point where people see the light at the end of the tunnel."
- November 2008: US Secretary Treasury says in a NPR interview: "I got to tell you. I think our major institutions have been stabilized."
- March 2009: "Bank executives express cautious optimism that the economic downturn is either at or near the bottom. A trough is finally in sight." (WSJ)
So: Only AFTER a two-year long, and 80%-plus deep collapse in the value of the Philadelphia/KBW Banking Sector Index; only AFTER the once prestigious titans of investment banking plunged to the level of penny stocks; only AFTER $12-plus Trillion in as-yet-to-be-repaid government aid, 92 bank failures in 2009 alone, and 400-and counting "problem institutions" added to an undisclosed FDIC list...
...Only then did an actual "trough" come in sight.
As for seeing the crisis unfold BEFORE the tide turned -- here, Elliott Wave International's team of analysts clearly forecast the deterioration of the U.S. banking sector.
In the rise up to the peak in the KBW index, the December 2006 Elliott Wave Financial Forecast wrote:
"[History] reveals that markets are primed for devastating hits. Hints of this potential are visible in the stocks of the biggest financial giants, as the KBW Banking Index is now sputtering badly. It's banishment from the last two months of rise points to something much more serious than a brief market correction."
Then, in the January 2007 Elliott Wave Financial Forecast, we warned what to expect from the coming 12 months: “2007,” we wrote, would be “The Year of the Financial Flameout.”
Now, in a special segment of the October 21, 2009 Short Term Update, our analysts reveal that a meaningful event has just occurred in the KBW Banking Index. For the first time since its March 2009 bottom, prices have penetrated a major "touch point." And, in STU's own words: "This is an initial signal" of whether the credit crisis is really over.