The Next Banking Collapse Has Already Started

We are currently witnessing the first signs of the collapse of the European Banking Sector - and with it, we believe, maybe even the global banking sector.

There has always been one glowing beacon before a bank collapses - it raises interest rates. It was the same with the Icelandic Banks in 2008. They raised interest rates for the sole purpose of attracting deposits (savings) from people who thought they could get 5% APR returns.

Unfortunately there is no way these banks can afford to pay the 5% APR returns other than to take them from investors who keep coming in for the 5%. It is what is known as a Ponzi Scheme. Old investors are paid out by money coming in from new investors. Eventually though, the number of new investors needed to keep the ship sailing becomes so great that the ship ultimately falters and sinks because it has too many people to carry.

That is where we are now.

Greek Banks are trying to bring in new investors, German banks are on the brink of collapse and still the media are playing the situation down. This is 2007 the ending. What happened in 2007 was half a collapse supported by tax payers; we turned what should have been failed banks into what were zombie banks, neither alive nor dead, just bumbling through existence.

What also annoys us is that they stop new banks from appearing, but don't lend to customers who need the cash to grow their businesses.

This crash should take them out as the money needed by the taxpayer to bail them out this time will be too much. In our opinion several UK banks will go out of business completely in the next 2 years. It isn't so much a case of who will go, it's more about who will actually survive. There won't be many this time.

The Banks collapsing isn't a bad thing for the UK, they aren't doing much good at the moment anyway - what we need are new challenger banks that can try to attract customers by offering great products and providing reasonable lending policies.

So, what do we recommend?

Certainly if you have any shares in any of the UK banks you should offload those as quickly as possible.

Gold is above average price right now so we don't see that much of a bargain to be had. For example before Brexit it was £26,000 a kg and it's now at £33,200 a kg. We think that is at a normal price and will stay around and about this price for a few months.

The best thing to do by far is to pay off as much of your credit cards or existing loans as possible. There are some great returns to be had on peer to peer platforms at the moment. Helping others to lend at reasonable rates is a win win for both.

Of course care should be taken, but in general p2p is the best method of investing at the moment in our opinion.