(The Economic Collapse Blog)—We were warned that more banks would soon be getting into deep trouble. In fact, just yesterday I told my readers to circle March 11th because that is when a very important Federal Reserve program that has been propping up our banks will be allowed to expire. Unfortunately, we didn’t even have to wait for March 11th for the action to begin. On Wednesday morning, shares of New York Community Bank were absolutely crashing. Zero Hedge reported on the drama as it was unfolding…
Once the darling of the small banking crisis comeback, New York Community Bancorp has crashed 45% to fresh 30 year lows after The Wall Street Journal reports the bank is seeking to raise equity capital in a bid to shore up confidence in the troubled regional lender.
According to people familiar with the matter, NYCB has dispatched bankers to gauge investors’ interest in buying stock in the company.
There’s no guarantee there will be a deal, or that one would succeed in addressing the bank’s challenges, which as of Wednesday morning had led to a roughly 80% decline in its stock price since January.
As January began, shares of New York Community Bank were selling for more than 10 dollars.
At one point on Wednesday, they were trading for less than 2 dollars.
So why is New York Community Bank in so much trouble?
Well, we are being told it is because “the quality of its commercial real estate loans soured”…
The bank has faced a crisis in recent months after the quality of its commercial real estate loans soured and ratings agencies downgraded its credit status to junk.
Companies are giving up on offices and downtown retail spaces – after Covid normalized working from home and catalyzed the decline of downtown shopping.
That left the owners of commercial buildings unable to pay lenders like NYCB. Some 16 percent of its loans are for commercial real estate acquisition, development and construction.
In other words, New York Community Bank is sitting on a mountain of bad commercial real estate loans.
For a long time, I have been telling my readers that we are going to experience the greatest commercial real estate crisis in U.S. history.
Now, we have reached a stage where nobody can deny what is happening. In fact, billionaire real estate investor Barry Sternlicht says that there will be a trillion dollars in losses on U.S. office properties…
There are growing signs that commercial real estate is in serious trouble.
Barry Sternlicht, a billionaire real estate investor and Starwood Capital’s CEO, recently predicted $1 trillion of losses on office properties alone.
More than $900 billion, or 20%-plus of the total debt owed on US commercial and multi-family real estate, will mature this year, Bloomberg reported this week. Borrowers may have no choice but to refinance at much higher interest rates, or sell their properties at a big discount.
We have never seen anything like this before.
And it is going to have enormous implications for the financial markets.
According to Bloomberg, in recent weeks bond investors “have punished banks with heavy exposure to commercial real estate”…
Bond investors have punished banks with heavy exposure to commercial real estate, potentially adding even more pressure to the lenders’ profits as Wall Street scrambles to assess how widely pain in property debt will spread through the financial system.
Sadly, what we have witnessed so far is just the beginning.
Hundreds of banks all over the nation are drowning in bad commercial real estate loans, and the carnage is going to be immense.
But for the moment, there is some good news.
Somehow, New York Community Bank has been able to locate rubes that are willing to inject a billion dollars into the troubled financial institution…
Shares in New York Community Bank soared this afternoon after the struggling lender announced a $1 billion capital raise and new leadership.
NYCB agreed to a deal with several investment firms in exchange for equity in the regional bank, it announced on Wednesday afternoon.
Those firms include Hudson Bay Capital, Reverence Capital Partners and Liberty Strategic Capital, headed by former US Treasury secretary Steven Mnuchin.
Will this be enough to save New York Community Bank?
From a short-term perspective, I think that it will help.
But in the long run I do not think that New York Community Bank will survive.
Of course the same thing could be said about hundreds of other U.S. banks. In fact, as I discussed yesterday, Kevin O’Leary of “Shark Tank” fame is convinced that thousands of U.S. banks will fail during the years ahead.
Meanwhile, trouble signs continue to erupt for the economy as a whole.
According to a survey that was recently conducted by ResumeBuilder, 38 percent of U.S. business leaders expect their companies to conduct layoffs in 2024…
2024 is already looking grim. And it’s only February.
Thirty-eight percent of business leaders surveyed by ResumeBuilder think layoffs are likely at their companies this year, and around half say their companies will implement a hiring freeze. ResumeBuilder talked to around 900 leaders at organizations with more than 10 employees. Half of those surveyed cited concerns about a recession as a reason.
Another major factor: artificial intelligence. Around four in 10 respondents said they’ll conduct layoffs as they replace workers with AI, with Dropbox, Google, and IBM have already announced job cuts for that very reason.
By pumping trillions upon trillions of dollars into the system, those running things were able to keep the economy propped up for a while.
But in the process they created a tremendous amount of inflation, and now the inevitable implosion is coming anyway.
The U.S. economy is in far more trouble than most people realize.
We are going to be entering a period of great economic turmoil just as the most chaotic election season in U.S. history rattles the very foundations of our society.
So I hope that you have been enjoying the “lull” that we have been experiencing during the early portion of this year, because things will certainly get very “interesting” in the months ahead.
Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.
Bypass Big Tech Censors
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.