According to government figures this morning the worst U.S. economic slump since the Great Depression eased up a bit in the second quarter as new government spending programs added 11% to GDP.
Even still, gross domestic product shrank at a 1 percent annual pace after a 6.4 percent drop the prior three months.
So is this the beginning of the end or the end of the beginning?
That’s the $12 trillion question.
Here a bet that the next wave is about to come crashing down.
From Bloomberg by Elena Logutenkova entitled :Ackermann Says Bad Loans Are ‘Next Wave’ of Crisis
“Rising delinquencies among consumer and corporate borrowers are the “next wave” of the financial crisis and may affect banks that have avoided losses so far, said Chief Executive Officer Josef Ackermann.
“This crisis has consisted of a series of earthquakes, with changing epicenters,” Ackermann said late yesterday at an event in Zurich. “Bad loans are the next wave. Banks that have fared relatively well so far will also be affected by this.”
Deutsche Bank, Germany’s biggest lender, said this week it set aside 1 billion euros ($1.4 billion) for risky loans in the second quarter. The seven-fold increase in provisions and below- forecast revenue from trading sent the Frankfurt-based bank’s shares to the biggest decline in four months on July 28.
“We were struck by the 44 percent increase in problem loans in the quarter,” Morgan Stanley analysts Huw van Steenis and Hubert Lam said in a note today, cutting their rating on Deutsche Bank shares to “equal-weight” from “overweight.”
“The crisis is not over,” Ackermann said. ‘When one looks at the developments of global economic growth, then it can be expected that starting in the second half of this year we slowly move into the positive territory. But we’re still moving on a low level.’
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