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Bank Valuations Showing the Way Back to the 1980s

Looking at the prices and valuations of some banks the other day, it struck me that they had mostly returned to 1980s levels. This is after their values surged ahead in the 1990s, then "round-tripped" back in the most recent decade. Basically, they've gone nowhere in the past two and half decades, despite all the sound and fury. This, one would figure, from the fact that only the top six bank holding companies made money from the TARP program in 2009; the remaining banks (as a group) LOST money.

As go the banks, so goes the real economy. That's why banks "aren't lending" today, because their lending capacity is (at best) comparable to that of two or three decades ago. And it goes to the heart of why I have opined, in previous posts, that America's consumption standards will have to pull back twenty-five years or so to bring them back in balance with our incomes. The original 1930s represented a similar pullback to about 1910.

We will, however, get to keep the benefits of the intervening technological innovations So think in terms of having a 1980s income level, but with the new tech devices available at today's prices.

Disclosure: Although immeasurably wealthier than in the 1980s, the living standards of yours truly have not changed much since then (e.g. living in the same co-op apartment, now fully paid and owned).