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America’s banks are missing hundreds of billions of dollars

economist.com

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Re: America’s banks are missing hundreds of billions of dollars

#31

Post by nostromo »

1. The government requires banks buy their debt and hold it as reserves because it's considered the safest investment.

2. The government decides that, oops, it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly.

3. New treasuries yield 4 or 5 times as much in interest as the ones from 1-2 years ago. Why would anyone want to buy those old treasuries near face value now?

4. The old treasuries decline 30-40% in present value. Oops, they're not so safe after all if you need your money back before maturity, which is often decades away.

5. A bunch of VCs decide they'd like their money back today, not in 20 years. A bank doesn't have it on hand, so it goes under.

6. Banks going under is bad look, so the government decides to inject massive liquidity into banks, now finding itself both tightening and loosening fiscal policy simultaneously.

SVB is certainly not blameless here, but the Fed's money printer and the government's wildly excessive stimulus has to be one of the worst policy errors since the 2007/08 financial crisis.

Re: America’s banks are missing hundreds of billions of dollars

#32

Post by uejfiweun »

swader999 wrote: post #21
eclipxe wrote: post #14

Earlier quoted context omitted.

What’s obvious?

[flagged]

Are you implying that the banking industry and the fed are somehow colluding with the NYC DA's office? That's a hot take... although I have to admit, the DAs behavior has been suspicious, with him initially refusing to press charges against Trump on business violations, and now pressing charges on this porn star thing which is apparently a much weaker case.

Re: America’s banks are missing hundreds of billions of dollars

#34

Post by dukeofdoom »

jeezfrk wrote: post #15
swader999 wrote: post #5

[flagged]

It's too obvious that it takes almost 4 to 6 years to get even the most obvious crooks with recorded fraud and lawbreaking on the books? Yeah. Usually longer... or never. We should be glad for what few we can get.

I still don't get the crime. Is trying to spare your wife further embarrassment by paying hush money to a porn star that tried to extort you a crime?

Calling her "horse face"? What is the crime worthy of arresting a president? Payment was on the books and through a lawyer.

Re: America’s banks are missing hundreds of billions of dollars

#35

Post by kurthr »

dukeofdoom wrote: post #6

When was the last time anyone checked what percentage gold their gold bars are?

I assume you're talking about the article from yesterday, but this could well be just another wrinkle in the ~$600M Prateek Gupta and TMT metals fraud.

https://www.business-standard.com/article/companies/trafigur...

Re: America’s banks are missing hundreds of billions of dollars

#36

Post by uejfiweun »

nostromo wrote: post #31

1. The government requires banks buy their debt and hold it as reserves because it's considered the safest investment. 2. The government decides that, oops, it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly. 3. New treasuries yield 4 or 5 times as much in interest as the ones from 1-2 years ago. Why would anyone want to buy those old treasuries near face value now? 4. The…

Yeah, it's kind of infuriating, and even more infuriating is the fact that at the first sign of trouble they are gonna turn the printer back on. The alternative is a major recession, which obviously sucks, but sometimes forest fires are necessary to make way for new growth. Without the necessary pain of a recession, our economy is doomed to continue in this bizarre state of zombie companies, asset bubbles, and scams.

Re: America’s banks are missing hundreds of billions of dollars

#38

Post by gen220 »

nostromo wrote: post #31

1. The government requires banks buy their debt and hold it as reserves because it's considered the safest investment. 2. The government decides that, oops, it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly. 3. New treasuries yield 4 or 5 times as much in interest as the ones from 1-2 years ago. Why would anyone want to buy those old treasuries near face value now? 4. The…

Does the government require banks to buy long-term treasuries? [1]

Or did banks choose to buy long-term treasury bills, chasing the highest paper returns (i.e. discounting the risk of potential rising interest rates in the future)?

It's not a rhetorical question, but a sincere one.

[1]: https://en.wikipedia.org/wiki/United_States_Treasury_securit... states that Treasuries are sold in all varieties of duration, from 4 week bills to 30 year bonds.

Re: America’s banks are missing hundreds of billions of dollars

#39

Post by actionablefiber »

micah94 wrote: post #8
Uvix wrote: post #4

I’d managed to miss the memo that money market funds have such high rates now. I’ll have to consider doing the same, honestly…

Yeah, I had like $4k left in a brokerage account. Then one month I noticed ~$100+ dropped in there and I was like WTF? That's 10x what I see in my savings account for the same amount of money just sitting there! So my money market is now my savings account. The risk is that you could lose your principal...but I guess not anymore!?! Thanks SVB, FRC, et al.

My savings account pays me 4% interest. You may want to shop around for a new bank.

Re: America’s banks are missing hundreds of billions of dollars

#40

Post by 7e »

nostromo wrote: post #31

1. The government requires banks buy their debt and hold it as reserves because it's considered the safest investment. 2. The government decides that, oops, it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly. 3. New treasuries yield 4 or 5 times as much in interest as the ones from 1-2 years ago. Why would anyone want to buy those old treasuries near face value now? 4. The…

1. Why is cash parked at the Fed not an option?
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