Has there been a time when someone wasn't calling a bubble?
A new credit bubble gets ready to burst
41–50 of 126 posts
Re: A new credit bubble gets ready to burst
#42Re: A new credit bubble gets ready to burst
#43Really seems like Wall Street is in love with the term "shadow banking", because it implies "can't regulate it". Yet we know exactly who the participants are, the types of firms, and their practices. Step 1 to better regulation of creative rent seeking is to stop treating it like it's nebulous.
>Really seems like Wall Street is in love with the term "shadow banking", Actually, the hedge fund and private equity fund people hate that term because it implies something nefarious is happening. In reality, the new post-2008 crisis bank regulations in both Europe and USA to ensure stability causes a new phenomenon to emerge: Non-banks lending money to companies that banks are not allowed to lend to. Every economis…
The shadow banking is fine. The taxpayer isn't responsible if a PE fund engaged in direct lending to the middle market loses all their money.
But shadow banking can and should be scrutinized, and potentially regulated, if there are systemic risks that will lead to the taxpayer being on the hook once again. If it's just isolated private actors losing money it doesn't matter.
Re: A new credit bubble gets ready to burst
#44Really seems like Wall Street is in love with the term "shadow banking", because it implies "can't regulate it". Yet we know exactly who the participants are, the types of firms, and their practices. Step 1 to better regulation of creative rent seeking is to stop treating it like it's nebulous.
Isn't the root of the problem this: > To fund all this loan-making, the shadow banks have turned to insurance companies, pension funds, university endowments and wealthy investors, offering them a chance to buy into a diversified pool of loans that offer returns ranging from 6 percent to 13 percent, depending on the level of risk they are willing to assume. If some hedge funds and "wealthy investors" want to take on…
Systemic risk.
If everyone is making riskier bets for a significant, then those who do right may be outcompetes for long enough that they go by the wayside while the risk-takers dominate.
Then when the “black swan” comes the risk averse are already gone. Oh and the system is full of TBTF entities.
Re: A new credit bubble gets ready to burst
#45Really seems like Wall Street is in love with the term "shadow banking", because it implies "can't regulate it". Yet we know exactly who the participants are, the types of firms, and their practices. Step 1 to better regulation of creative rent seeking is to stop treating it like it's nebulous.
I've seen the term "rent seeking" used a few times here on HN, and I have no idea what it means. For those curious:
Rent-seeking happens when a person or business uses their position or resources to get some additional benefit from the government. The most common occurrence is when a company or industry lobbies the government to receive special subsidies, grants, and tariff protection. The term "rent" in economics means receiving a payment that is over the costs involved in the production of the item or keeping the item in service. These actions do not produce any benefit for the community-at-large but only redistribute taxpayer's resources.[0]
Re: A new credit bubble gets ready to burst
#46Earlier quoted context omitted.
I suspect that if you call the house flipping number someone will try to sell you a course or seminar, not loan you money.
My point was that I'm seeing signals that we're repeating history. Why do these home flipping courses pop up? You think they just come out of thin air? No. It means that there are market conditions that would allow an entrepreneur to sell their information. What do we know about the pre-crash market in association with these signals? We know that (1) these things sound like a get rich quick scheme and (2) that they l…
Please edit the nasty bits out of your comments here, even if someone else missed something you thought was obvious.
Re: A new credit bubble gets ready to burst
#47Earlier quoted context omitted.
My point was that I'm seeing signals that we're repeating history. Why do these home flipping courses pop up? You think they just come out of thin air? No. It means that there are market conditions that would allow an entrepreneur to sell their information. What do we know about the pre-crash market in association with these signals? We know that (1) these things sound like a get rich quick scheme and (2) that they l…
Please edit the nasty bits out of your comments here, even if someone else missed something you thought was obvious. https://news.ycombinator.com/newsguidelines.html
Done. Apologies.
Re: A new credit bubble gets ready to burst
#48Really seems like Wall Street is in love with the term "shadow banking", because it implies "can't regulate it". Yet we know exactly who the participants are, the types of firms, and their practices. Step 1 to better regulation of creative rent seeking is to stop treating it like it's nebulous.
>Really seems like Wall Street is in love with the term "shadow banking", Actually, the hedge fund and private equity fund people hate that term because it implies something nefarious is happening. In reality, the new post-2008 crisis bank regulations in both Europe and USA to ensure stability causes a new phenomenon to emerge: Non-banks lending money to companies that banks are not allowed to lend to. Every economis…
Banks seem to be involved as well, ”According to the latest report from the Federal Reserve, unregulated credit funds now have access to more than $1 trillion in lines of credit from regulated banks, an increase of 65 percent over five years”
So instead of banks lending directly to the risky mid-size businesses, they are lending to trustworthy middle men?
Re: A new credit bubble gets ready to burst
#49Earlier quoted context omitted.
Yes, by inflating asset values.
Can you please elaborate?
I'm assuming the logic goes something like:
If we are leveraged at 100% when we take the real valuation of assets into account, then, if we jack up the valuation on assets we hold, then we can chip away at the leverage ratio and get it to go down.
Re: A new credit bubble gets ready to burst
#50Really seems like Wall Street is in love with the term "shadow banking", because it implies "can't regulate it". Yet we know exactly who the participants are, the types of firms, and their practices. Step 1 to better regulation of creative rent seeking is to stop treating it like it's nebulous.
I've seen the term "rent seeking" used a few times here on HN, and I have no idea what it means. For those curious: Rent-seeking happens when a person or business uses their position or resources to get some additional benefit from the government. The most common occurrence is when a company or industry lobbies the government to receive special subsidies, grants, and tariff protection. The term "rent" in economics me…
On HN “rent seeking” has a broader meaning of “making money in a way I don’t like”.