REO Capital Predicts Financial Crisis Starts Before January 30 2013

Dec. 11, 2012 - PRLog -- REO Capital Predicts Financial Crisis Starts Before January 30,  2013

As predicted by REO Capital, the turmoil in the markets has started before all the tax increases go into effect January 30th, 2013. Citigroup, Goldman Sachs, JP Morgan Chase & RBC Capital Markets are starting layoffs as a part of a larger trend! Citigroup plans to cut 11,000 jobs, which is a part of a broader trend which we will continue to see layoffs & work force cuts as the economy falls into another Recession & GDP shrinks with Unemployment rising! Before the Recession, the financial sector accounted for nearly 6% of private sector jobs. As this economy falls deeper into a Recession with GDP barely above 1.5% everything driven by the financial sector will shrink!

Banks around the world have announced as many as 300,000 job cuts since the beginning of 2012 according to Bloomberg News. The number of positions open in Hedge Funds dropped 42% from a year ago! Currency Trading firms have cut back 30%. The overall listings for Financial Professionals are down 21% since last year.

As a result, Consumer Confidence index plunged in early December as consumers are confronted with the rising likelihood that political gridlock would push the country over the fiscal cliff. Consumers are concerned about an economic contraction next year if the White House and Congress fail to reach a budget pact by year-end. The "fiscal cliff" is a series of federal spending cuts and tax hikes worth $1.2 billion that would phase in next year if Washington does not take action to change the situation. Economists say the "fiscal cliff" could cause another U.S. recession. Consumers mood is seen as a predictor of their spending, which accounts for two-thirds of the U.S. economy. The steep drop in confidence at this time bodes poorly for retailers who count on year-end holiday shopping to boost their bottom line.

Also, with consumer confidence index plunging, this has had a direct effect on Consumer Spending. Consumer Spending a pillar of economic strength is showing signs of weakness. In recent weeks Consumer Spending numbers were released and showed lower spending over the summer and in the final three months of 2012 due to higher unemployment, prospect of higher taxes, & approaching "fiscal cliff" are all threats to sap consumers spending power at a time when other sectors of the economy are too weak to carry economic growth higher! Consumer Spending, which accounts for more than two thirds of economic output, is important at a time when other sectors are struggling!

For the economy, a smaller financial sector will cause credit to tighten & will be harder to access credit. Many companies will find it increasing difficult to meet their earnings numbers in the first quarter of 2013 and throughout the 2nd, 3rd & 4th quarters, due to increases in payroll taxes, higher corporate taxes, higher capital gains taxes & higher healthcare taxes! This broader trend of layoffs will not be limited to the financial sector in 2013. Take action before the Financial Crisis hits & look at alternative investments in the Private Equity Markets with higher returns & higher IRR's & contact us at REO Capital, LLC.

REO Capital, LLC is a boutique Capital Introduction firm working for managers that have a niche in their chosen strategy, that have a good past performance and who we believe have an offering that will be attractive to our clients. REO Capital will often work with the General Partners and the fund to also offer fund progress updates and consultation services throughout the life of the investment. The role of REO Capital, LLC is to Raise Capital, and provide research data from our partner - Boston Analytics, before & during the Capital Raise and serve as a bridge between Fund Managers and potential institutional investors.

Sincerely,

John Denes

CEO

REO Capital, LLC

Detroit, MI USA

London, England UK