Earlier quoted context omitted.
This is 2006
People have been saying that since 2016.
Because we’ve deferred the pain of 2008 for years. The market makes no sense.
Ask HN: Do you think this is the start of the new financial crisis?
61–70 of 226 posts
Re: Ask HN: Do you think this is the start of the new financial crisis?
#62Yes, 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.
How is it a continuation of the 2008 crisis?
Re: Ask HN: Do you think this is the start of the new financial crisis?
#63The vibes are similar to early 2008. But the financial structure is different. Banks are not overleveraged. Housing is not all adjustable rate. That being said, easy to see weakness. Commercial real estate is a big one. I'm somewhat concerned about non-bank Financials. Some large foreign banks (CS(dead) , DB, HSBC) I'm skeptical of. And a recession feels imminent (felt to me this way even before SVB). To sum up, I do…
> Banks are not overleveraged. Banks are holding $600+ billion in currently worthless bonds. https://www.google.com/search?q=620+billion+dollar+bonds+ban...
I understand that that's a scary number, but definitions are important.
There is no $600B of worthless bonds. There is $600B of unrealized losses. The bonds are worth something.
Moreover, unrealized losses are not leverage. Banks in 2008 were levered 30-to-1. No such thing now.
Re: Ask HN: Do you think this is the start of the new financial crisis?
#64Yes, it feels like it felt just before the 2008 crisis - I was looking into banks financial statements and it was pretty incredible feeling - like wow it can’t be that bad ! Markets didn’t start to tank yet, so you don’t know if you’re crazy or not. Same here - there are bubble signs everywhere (SPACs, startup valuations, joke money called Dogecoin with market cap of 10B$ !), banks are sitting at >600B$ of unrealized…
How was Credit Suisse bailed out? It seems like they were closed and sold, as happens with a bank that fails. Bailouts, by 2008 standards, would have been giving money to Credit Suisse so they could continue operating and avoid the fallout of their bad choices.
The SNB provided government guarantees to the tune of 260B Swiss francs. That's a bailout.
Re: Ask HN: Do you think this is the start of the new financial crisis?
#65is there a indirect causal relationship or link between the demise of svb and that swiss bank?
Re: Ask HN: Do you think this is the start of the new financial crisis?
#66No, I remember 2007-2008 pretty clearly. That felt much more precarious. Right now it seems pretty clear that if your bank fails you're going to get your money. That's not to say that this isn't the start of some kind of a financial crisis. But it could be very different from 2008. In this case I think the risk is more towards high inflation - for example, if enough banks were to fail (hypothetically - I doubt this w…
I don’t think hyperinflation and bank bailouts go together. https://marginalrevolution.com/marginalrevolution/2023/03/ba...
The argument you linked is ignoring the fact that when you provide a bank with dollars (M1 bailout cash), it is lent out by the banks and creates a much bigger sum of M2 money (bonds, liquid assets) because of fractional reserves.
Any bailout that is large enough, and isn't done in tandem with major deflationary events, would certainly impact inflation.
I think 2008 was spectacularly smooth with respect to inflation/deflation because they allowed enough banks to fail.
Re: Ask HN: Do you think this is the start of the new financial crisis?
#67No, I remember 2007-2008 pretty clearly. That felt much more precarious. Right now it seems pretty clear that if your bank fails you're going to get your money. That's not to say that this isn't the start of some kind of a financial crisis. But it could be very different from 2008. In this case I think the risk is more towards high inflation - for example, if enough banks were to fail (hypothetically - I doubt this w…
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?
Re: Ask HN: Do you think this is the start of the new financial crisis?
#68I think it's more like 2000 when there was a significant over-investment in tech, then Greenspan increased interest rates quickly and all the companies had to adapt to non-free money. I think the housing market will correct (crash) and tech jobs will be harder to come by for junior folks and people who aren't that great at it. Not a great time to job hop. It won't be horrible like 2008 but it won't be great. Should b…
> Should be over by the 2024 election.
Re: Ask HN: Do you think this is the start of the new financial crisis?
#69The vibes are similar to early 2008. But the financial structure is different. Banks are not overleveraged. Housing is not all adjustable rate. That being said, easy to see weakness. Commercial real estate is a big one. I'm somewhat concerned about non-bank Financials. Some large foreign banks (CS(dead) , DB, HSBC) I'm skeptical of. And a recession feels imminent (felt to me this way even before SVB). To sum up, I do…
> Banks are not overleveraged. Banks are holding $600+ billion in currently worthless bonds. https://www.google.com/search?q=620+billion+dollar+bonds+ban...
Some of them are even holding bags of rocks.[0]
[0] https://www.wsj.com/livecoverage/stock-market-news-today-03-...
Re: Ask HN: Do you think this is the start of the new financial crisis?
#70[dead]