Actually only a small percentage of Americans own stocks and this means that only the big banks and other financial institutions are benefiting from this. Banks do not create a lot of value and all they do is steel from the economy.
Some of the big banks like The Deutsche bank are already struggling financially. The repo market is also very unstable and this is becoming a challenge to most banks. This has forced the Federal Reserve to step in to bring back the sanity in the repo market which has been a smoking gun. The Fed has announced that they will be providing up to $500 billion in liquidity. We are on the verge of a serious bank collapse. In reality banks are interconnected and a collapse of one banks can easily trigger a banking crisis. At the moment most banks are overleveraged and they are loaded with debt. The debt in the banking sector is at all time highs and this is very dangerous to the financial system and the economy at large. The debt bubble in the banking sector has been ignored for many years and it is now about to burst. Many banks will have to go bankrupt and with the current economic fallout, it might be next to impossible for the Federal Reserve to bail out banks this time. Just a few days ago the labor department reported over 3.3 million jobless claims because of the recent disruption in business activities. Businesses are struggling to remain afloat and as businesses go thorough difficult financial times, analysts are predicting that it will be almost impossible for some banks to keep up with the financial demands. Some small banks in the US are already facing headwinds to remain in business without being acquired. The biggest banking crisis of all tim3es might be ahead of us! At the moment we have record levels of unemployment in the United States. This means that millions of Americans have already lost their incomes and if they have any loans, it will be almost impossible for them to pay because if this crisis continues for months, it will be difficult to even by food in the US. This will definitely result to a cascade of defaults and American banking sector will register the biggest losses in history. Some of the banks have issued excess loans might not make it past this crisis. It is still unclear how the $2 trillion aid package will contain this economic fallout. The United States economy has been suffering for several months and the health problem is becoming complicated every day. At the moment there in no light at the end of the tunnel and economist are predicting that the economy will suffer more loses. The 2008 global financial crisis forced some banks to shut down and records show that 489 financial institutions were closed. With the current bank crisis, many analysts are pointing out that the levels of capital in various banks will drop significantly. At the moment, the economy is suffering as a result of public health problem and this is very different from the 2008 financial crisis where the economy suffered because of the collapse of the housing market. In this cycle of banking crisis, the amount of loan defaults the banks will have to suffer is not clear at the moment because it will take 2-3 months for loan delinquencies to turn into charge offs which becomes loses for the banks. Analysts are winning that it will be impossible for the banks to avoid big losses in this crisis. Companies in airlines and the hotel business are most hit by this economic collapse. These two industries will experience a lot of financial difficulties and banks that are over exposed in these industries will suffer the most with a serious bank collapse in America.
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