Zombie banks

The insolvency of fractional reserve banks really isn’t news:

Some of the large banks in the United States, according to economists and other finance experts, are like dead men walking. A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.

At its core, fractional reserve banking is no different than investing with leverage. At any time, even small movement against the position will render it insolvent; obviously, that small movement has taken place. It looks as if the Japanese zombie bank phenomenon has finally crossed the Pacific.