Analyst Dennis Gartman points out that banks are beginning to de-leverage post-crisis at a pace never seen before:
The Gartman Letter: One week ago this morning we wrote about the growth in bank assets, drawing upon a chart sent to us by our friend, Eric Pomboy of Syzygy Research Group. We noted that bank assets have been falling rather sharply over the course of the past several months as the nation’s banks collectively and individually deleverage at a pace we’ve not seen before in our lifetime, nor are we likely ever to see again.
From their highs approximately $12.6 trillion in late ’08, bank assets have fallen to $11.75 trillion in recent weeks, and as banks have de-leveraged they’ve essentially swapped-out loans for US Treasury security holdings. We said then that simply by “casting” forward a trendline that we thought rather evident we could guess-timate that the unwinding or deleveraging of America’s banks would stop sometime in mid’11 when total bank assets were down to $10.0-10.5 trillion.
We like to keep things simple. Advanced maths and computers scare us, and in the case of Long Term Capital Management, or Bear Stearns, or Lehman or the IMF, they’ve proven utterly and rather completely worthless… or worse!