271–280 of 450 posts
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Would pre-2018 regulations (when they were eased for banks with deposits less than $250B) have prevented this?
I think so. I believe that this is the reason EU banks have been ok so far, as they do need to hedge interest rate risk.
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…
All the pandemic showed us is how ill-equipped we really are to deal with an actual challenge, from individual people to policymakers.
The last 3 years have been so devoid of any basic rationality across the board.
Can anyone recommend some good blog articles or books (aimed at lay people) on how the global economy works, bank interactions with other banks, and government management of inflation and interest rates? I'd like to understand a bit about both the previous crash and the current banking crisis, but feel I need to do some background reading first.
Be careful out there reading blogs. Maybe I'm biased because I have a degree in Econ from MIT, but I'd highly recommend starting out with the "orthodox" treatment of the subject, as you'd learn at a university. To that end Core Econ[0] is a very solid, free, engaging, easy to read book that covers it. Chapter 10, "Banks, money, and the credit market", is particularly what you're asking about. You can take a look at t…
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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.
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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.
Earlier quoted context omitted.
I think so. I believe that this is the reason EU banks have been ok so far, as they do need to hedge interest rate risk.
EU banks are ok? Didn't Credite Suisse just go under and had to be forcedly saved by its main competitor?
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This is a wrong characterization and makes it look like it's the Fed fault all along. Government bonds still have risks (ie: The government not paying) but more importantly, they are tightly linked to the main interest rate. Their prices can fluctuate significantly and do all the time. Bankers know that. That's kind of the first or second lesson they'd teach you at a basic financial course. Everything is priced in te…
Finally! People calling it what it is. Corruption. And the domestic angle isn’t even the worst. Breton-Woods put America in a sort of custodianship which they have betrayed. Raising and lowering rates to promote your domestic economy without even considering the global impact is fucked up if you promised the world that your currency can serve as a trusted foundation. World order is still fluctuating all as a result o…
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…
This is a wrong characterization and makes it look like it's the Fed fault all along. Government bonds still have risks (ie: The government not paying) but more importantly, they are tightly linked to the main interest rate. Their prices can fluctuate significantly and do all the time. Bankers know that. That's kind of the first or second lesson they'd teach you at a basic financial course. Everything is priced in te…
No one has lost their deposits yet: I can't tell whether you are inaccurately describing the status quo, or making a prediction?
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They’re protected. There’s an FDIC for securities. Same $250k limit, same likelihood of going above that in practice. https://www.sipc.org/for-investors/what-sipc-protects > Money market mutual funds, often thought of as cash, are protected as securities by SIPC.
Money market accounts and money market mutual funds are not the same thing and are not protected the same way.
Money market accounts are protected by FDIC: https://www.consumerfinance.gov/ask-cfpb/is-a-money-market-a...
> Yes. Like other deposit accounts, money market accounts are insured by the FDIC and NCUA up to $250,000 for each account holder.
You're protected by something either way.