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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

#191

Post by _0w8t »

bryanrasmussen wrote: post #140
hgomersall wrote: post #96

Earlier quoted context omitted.

It's almost like we should be optimising people getting stuff for creating actual value.

A decade ago I had lunch with a friend through kindergarten (our daughters were friends) he was a financial advisor and things were going good for him. I complained, as people who 'make' stuff often do, that finance was unbalancing everything and taking too big a share of profits (not to be annoying to him, just sharing a viewpoint) and he replied that the reason why finance was getting more of the share was because…

There is an observation that the real salaries stagnated since seventies for an average American because all the growth went into financial industries. Those rose in the last 50 years from few percents to close to a quarter of economy essentially resulting in a hidden tax paid by everyone to bankers.

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

#192

Post by geysersam »

mrbombastic wrote: post #125
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…

I buy this outline but honest question, was the massive covid stimulus avoidable? I rode a bicycle around NYC during the early days of covid and it was a ghost town, like not a person on the streets in a city of 8 million. On the weekend I took a ride up state for a hike and virtually every business was closed on the way. It seemed inevitable at that point the economic consequences of this were going to be massive an…

What you are describing are the real physical consequences of a global pandemic.

What is QE? How can financial stimulus limit the physical consequences of businesses closing?

QE can only redistribute wealth. This is an axiom. If we are lucky/played our cards well, this redistribution results in a more efficient economy overall. For example, because it alleviates overly risk adverse behavior by market actors.

However, QE also reduces market efficiency by polluting the price signal. For example, by increasing wealth inequality.

I feel this is a common misunderstanding. QE is treated like some magic wand to improve economic measures such as stock market valuations and profits.

When the fed/gov uses tools like quantitative easing it should be obligatory for journalists to ask: "Why do you think this redistribution of wealth results in net positive impact on the economy?".

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

#193

Post by dageshi »

okeuro49 wrote: post #182
dageshi wrote: post #164

Earlier quoted context omitted.

Can't see that as ever working. There'd be no practical way to shield the vulnerable or the carers and beyond that if it's left to run rampant in the wider population eventually the medical system is overwhelmed and collapses.

> There'd be no practical way to shield the vulnerable or the carers The shielding system was an official policy in the UK https://www.local.gov.uk/sites/default/files/documents/SHIEL... > left to run rampant in the wider population eventually the medical system is overwhelmed and collapses. The risk of hospitalisation was low around the 30s and younger.

> The shielding system was an official policy in the UK

Yeah, it still didn't and doesn't work though. Carers will have families, they'll have children in school, they'll potentially have more than one job. You can't shield the "carers" so you can't shield the vulnerable outside of a wider scale lockdown. Lockdown was the only thing that stopped case numbers going up till the vaccine came along.

> The risk of hospitalisation was low around the 30s and younger.

The average age in the UK is 40. So pretty much half the population would need to completely isolate from the other half while the younger half lived their lives as normal.

yeah, not going to happen.

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

#194

Post by systemvoltage »

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…

I think the blame squarly lies on 2). Sweden and Florida didn't follow the Science™ and instead followed reason, rationale and logic. The rest of the country was obessesed over lockdowns, especially those on the political left. It was a religion of HN.

These are policy failures on all fronts - from monetary to public health.

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

#195

Post by unyttigfjelltol »

dsomers wrote: post #148
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…

> 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. This is because they fucked up their duration risk handling, no one held a gun to SVBs head and forced them to invest so heavily in long duration bonds. If they bought more short duration bonds none of this would be a problem. Other banks didn’t make th…

Maybe, but the latest Fed action violates a 40-year downtrend in interest rates, so it was exceptionally improbable from a historical perspective. From 2020 trough to 2022 peak, government interest rates increased almost 1,000%, which means the magnitude also is hard to anticipate or plan for, and the effects extreme from failing to do so. You can do a regression of interest rates from whenever to now, draw a line that's never violated until 2022 (even the 2020 lows were in-trend) and the 2022 highs were almost 50% higher than the trend.

I don't make excuses for dumb decisions, but... someone said recently when the Fed taps the brakes someone always goes through the windshield. This was a far more extreme scenario than tapping the brakes on a car. More like the moon stopped. We all knew it could theoretically, and what do you know, it just stopped.

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

#196

Post by throwaway049 »

prennert wrote: post #126
somenameforme wrote: post #87

Earlier quoted context omitted.

I never understand things like this. She looks like a deer caught in the headlights when he asks her the most predictable and basic question about her decisions. How can you be in such a position, make such decisions, and be unable to offer a compelling answer to the most basic questions? Even if it some sort of a hidden agenda and [further] centralizing banking is just seen as a convenient stepping stone towards CBD…

There is a concept in the armed forces for making decisions in a given timeframe (struggling to find a source for this). Essentially you do the best you can in the time you are given. Then you move on and iterate. If you dither too much you probably don't have to make a decision anymore as the enemy has made it for you. In that framework it is accepted that a solution is not perfect. I think about these crises the sa…

They had 48h in this case, but who gets bailed out and on what terms is a massive strategic decision that should not be made on the hoof. I must be naive because I thought planning for this kind of problem was part of her job.

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

#197

Post by wccrawford »

actionablefiber wrote: post #39
micah94 wrote: post #8

Earlier quoted context omitted.

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.

Hold onto that account like it's gold. My bank's savings accounts are 0.01%. With a minimum of $10,000 it goes up to 0.05%. At 1 million dollars, it's 1.4%.

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

#198

Post by bryanrasmussen »

_0w8t wrote: post #191
bryanrasmussen wrote: post #140

Earlier quoted context omitted.

A decade ago I had lunch with a friend through kindergarten (our daughters were friends) he was a financial advisor and things were going good for him. I complained, as people who 'make' stuff often do, that finance was unbalancing everything and taking too big a share of profits (not to be annoying to him, just sharing a viewpoint) and he replied that the reason why finance was getting more of the share was because…

There is an observation that the real salaries stagnated since seventies for an average American because all the growth went into financial industries. Those rose in the last 50 years from few percents to close to a quarter of economy essentially resulting in a hidden tax paid by everyone to bankers.

essentially the point I was making. Although I think real salaries also stagnated because every household became a two-income household so people's household incomes rose hiding the fact that they were actually getting screwed over.

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

#199

Post by nkrisc »

skellington wrote: post #109
somenameforme wrote: post #87

Earlier quoted context omitted.

I never understand things like this. She looks like a deer caught in the headlights when he asks her the most predictable and basic question about her decisions. How can you be in such a position, make such decisions, and be unable to offer a compelling answer to the most basic questions? Even if it some sort of a hidden agenda and [further] centralizing banking is just seen as a convenient stepping stone towards CBD…

[flagged]

You can make a point about the administration, but if you’re talking about nepotism, specifically, you’re making a point about the wrong administration. There’s a much better example of a recent administration engaging in “peak nepotism”, a recent one that had the president’s children working in the White House.

I’m assuming the point you’re trying to make isn’t actually about nepotism and you’ve simply misunderstood what the word means.

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

#200

Post by l33tman »

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…

Instead of explicitly bailing out banks why can't the government in this situation change the rules of the government bonds for the specific bank to let them mature today instead of at the nominal time? Or this is maybe how they do the bailout..
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