101–110 of 226 posts
Yes, because interest rates clearly need to go a lot higher to get inflation under control around the world, yet banks are already starting to fail from the stress of it at these low rates, and the central banks' bailout mechanism is itself inflationary. Although, strictly speaking the answer should be no , this is not the start of a new financial crisis, it is a continuation of the 2008 crisis.
In 2008, I just learned about stock market and investing right as the market crashed. I sent about $250 a month towards a variety of stocks every month. In 2023, I took out all my money from the stock market, having lost a bit, but still over $100k, and I bought a condo outright with a mountain view across the street from a hospital which has now become popular with travel nurses. Since it doesn't carry a mortgage, I'm able to completely profit from it and make a way better return than if I were to have left my money in the stock market or even put it in a CD again.
For now, it is what it is: https://www.cnn.com/2022/11/07/investing/stock-market-biden/...
Once there is more confidence / new leadership in our economy, I'll start putting my money back into the stock market. For now, I'm working on obtaining a third property for additional passive income though these interest rates are still insane. My latest quote was around 6% - 7%. Everyone and everything just seems to affect the stock market though it's still got a history of decent returns if you invest in the right places and even more slowly over time, as I had done.
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Yes. It’s counter-intuitive but both lowering and raising interest rates are inflationary. A rise in rates means more bond coupon and more bonds sold (new money), and lowering rates results in more bank lending (new money). A rise in rates is actually more inflationary, since bank lending won’t necessarily increase with lowering rates, but a rise in rates necessarily means more bonds and bond coupon from banks purcha…
> It’s counter-intuitive but both lowering and raising interest rates are inflationary. Counterintuitive, sure, but less counterintuitively, it is also false. > A rise in rates means more bond coupon and more bonds sold (new money) No, it doesn’t mean more bonds sold. (Purchasing bonds is lending; the idea that lending increases with both rate increases and rate decreases is…wrong. Borrowing, whether via banks or via…
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> Banks are not overleveraged. Banks are holding $600+ billion in currently worthless bonds. https://www.google.com/search?q=620+billion+dollar+bonds+ban...
No, the bonds are worth something, and the losses can narrow by a lot if they're allowed to hold to maturity, deposit interest rates rise slowly enough and if broad interest rates drop some time on the future. The risk that they can't narrow is indeed real and whether to backstop that is a source of contention here.
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We have a gigantic housing bubble and banks are holding the bag.
Is it a gigantic housing bubble? Prices clearly peaked, and the YoY price increase in some places had gotten a bit silly. But don't a lot of cities still just have a lot less housing than they should because of decades of not building enough? And even the decline in prices is mostly about the higher mortgage rates?
I think the bubble is due to extremely high home prices. In my metro area, prices are up 70% since 2020. So a drop of 40% to correct to 2020 levels isn’t unheard of.
Personally, I think the price is structural adjustments as people shift to remote work and that makes different houses more valuable (suburbs and exurbs have really increased quite a bit).
Yes, because interest rates clearly need to go a lot higher to get inflation under control around the world, yet banks are already starting to fail from the stress of it at these low rates, and the central banks' bailout mechanism is itself inflationary. Although, strictly speaking the answer should be no , this is not the start of a new financial crisis, it is a continuation of the 2008 crisis.
Yes, because interest rates clearly need to go a lot higher to get inflation under control around the world, yet banks are already starting to fail from the stress of it at these low rates, and the central banks' bailout mechanism is itself inflationary. Although, strictly speaking the answer should be no , this is not the start of a new financial crisis, it is a continuation of the 2008 crisis.
Honest question, how is (in the case of SVB and Select) making sure depositors don’t lose money while the bank itself is closed and assets sold off, holders of it’s debt (those who lent money to the bank), and those that owned the stock all lose their investments? I understand the 2008 bailouts were actually giving money to the banks that were/are deemed “too big to fail” and allowing them to more or less operate as…
>There are people on HN who weren't alive in 2008. Are there that many under-15s here? As someone who lived through the S&L crisis of the Middle Ages, the current agitation doesn't even rise to that level; so far there hasn't been an indication of widespread outright fraud perpetrated by bank execs. This seems more like a less favorable (i.e. less free money from the Fed) environment exposing a few banks with very po…
Albeit it's better than talking to ChatGPT.
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But also bank failures are disinflationary so is the bailout negating the rate hikes or just negating the new regime of tighter lending standards by banks? I dont think anyone has a solid answer to that question
I think the repeating pattern is the banks end up over leveraging based on value of things like MBS or this one is maybe interest rates because money has been free to them for so long (holding lots of worthless bonds I think). In the end, none of it is their money they are playing with so they have a high risk tolerance and a history of getting bailed out, bought out and at a minimum getting bonuses paid out. And the…
I think we can all agree this pretty much sums it up. Basically every major problem we face in America is the result of lobbying and gerrymandering.