Reasons the banking crisis isn’t a repeat of 2008 • Hacker News Board

Re: Reasons the banking crisis isn’t a repeat of 2008

#101

Post by treebeard901 » Sat, Mar 25, 2023, 1:43 AM UTC

In 2008, the Treasury and Federal Reserve had a ton of ammo to use to provide liquidity. Since then, they have tried to inflate their way out of it using creative accounting and quantitative easing.

The reason this could be worse than 2008 is that those methods will not work as well.

Part of the reason SVB failed so fast was because they held a lot of long term government debt, mortgages etc.

When they tried to sell it to provide liquidity for deposits they found there were not many buyers for it.

Since 2008, foreign purchases of long term debt have dropped from many of the main credit countries with no real replacement other than the federal reserve.

If the Fed moves from a buyer of last resort to the only buyer then that is game over. QE won't help because it will cause inflation. Inflation will move people, foreign countries and institutional investors away from long term debt.

Basically a hyperinflationary environment with systemic bank failures all caused by a sovereign debt crisis. Before long just funding the Govt will be impossible because the debt will no longer be seen as safe as it once was.

The difference is that the collapse won't be as immediate as 2008. It can be much more of a controlled demolition, until the methods they have used stop working.

It all just has to collapse at some point and reach an equilibrium again. It's only a matter of time...

Re: Reasons the banking crisis isn’t a repeat of 2008

#102

Post by ModernMech » Sat, Mar 25, 2023, 1:46 AM UTC

Avshalom wrote: post #70

It aint fucking lost on me that financial papers spent the better part of 2022 arguing that we were headed for a recession. The q4 numbers came in showing the US economy was still expanding and now those same papers are telling me we're in a banking crisis on the basis of like two and a half banks, with SVB and CS both being fully rescued. The fucking owners of capital seem bound and determined to destroy their own s…

> The fucking owners of capital seem bound and determined to destroy their own system.

Well yeah, everything worked out fine for them last time they did. Some got very rich. Why not try again?

Re: Reasons the banking crisis isn’t a repeat of 2008

#103

Post by quags » Sat, Mar 25, 2023, 1:46 AM UTC

fyzix wrote: post #23

History never repeats itself, but it does often rhyme. We cannot have a decade of 0% interest rates and expect no consequences. Peter Schiff predicted this from the moment the fed bailouted the banks in 2008. There's nothing the fed can do to escape this one, it's either massive inflation or massive recession. The fed has avoided the latter by bailing out the banks again so expect double digit inflation for the next…

If we go by another Peter, Peter Lynch in this case he would say no one can predict inflation or interest rates long term. Secondly his words is there is always something to worry about when investing - like when oil went to 40 and there would be a depression or when Japan was going to take over the world leading to Americas downfall - or when Japan was crashing and going to cause a depression. Or when oil went from 40 to 10 and would cause a depression. Or when in 82 the prime rate went to 20 and there was stagflation that no one predicted in 80 or 81. Now Schiff may be right and we are heading for this finally after years of slow growth from 2010-2018 when inflation was lower than the feds target of 2% something no one would have predicted in 2008. Schiff may be right after predicting multiple large depressions to finally get one right.

Re: Reasons the banking crisis isn’t a repeat of 2008

#104

Post by fyzix » Sat, Mar 25, 2023, 1:48 AM UTC

zoltar wrote: post #63

fyzix wrote: post #23

History never repeats itself, but it does often rhyme. We cannot have a decade of 0% interest rates and expect no consequences. Peter Schiff predicted this from the moment the fed bailouted the banks in 2008. There's nothing the fed can do to escape this one, it's either massive inflation or massive recession. The fed has avoided the latter by bailing out the banks again so expect double digit inflation for the next…

Is that the same Peter Schiff that said gold was going to $5,000/oz in 2012?

Schiff didn't account for the economic ignorance of the masses in his prediction. He understood that runaway inflation would cause the gold price to spike, he didn't foresee the confidence that traders have in the FED to fight off inflation.

The FED cannot win the inflation fight (confirmed by their recent soft pivot back to QE) and gold will not go up until the traders realize this fact.

Re: Reasons the banking crisis isn’t a repeat of 2008

#105

Post by paulpauper » Sat, Mar 25, 2023, 1:49 AM UTC

It helped greatly that the fed acted so fast. Had nothing been done it would have been way worse. Even Charles Schwab even was down 20% on Monday ,and this was after the bailout. Things were getting really scary.

Re: Reasons the banking crisis isn’t a repeat of 2008

#106

Post by fdr » Sat, Mar 25, 2023, 1:50 AM UTC

Dalewyn wrote: post #80

fyzix wrote: post #23

History never repeats itself, but it does often rhyme. We cannot have a decade of 0% interest rates and expect no consequences. Peter Schiff predicted this from the moment the fed bailouted the banks in 2008. There's nothing the fed can do to escape this one, it's either massive inflation or massive recession. The fed has avoided the latter by bailing out the banks again so expect double digit inflation for the next…

>bailing out the banks My understanding this time around is the depositors rightfully got bailed out (both to maintain peoples' trust in banking, and because losing your money to others' failures fucking sucks), but the banks themselves were left out to dry.

There's some interesting wheels-within-wheels of moral hazard here. In particular, it sucks to be a sedentary depositor that did not contribute to the bank run, to let those depositors cook is to make it much better to be twitchy and contribute to runs.

Re: Reasons the banking crisis isn’t a repeat of 2008

#107

Post by paulpauper » Sat, Mar 25, 2023, 1:52 AM UTC

fyzix wrote: post #23

History never repeats itself, but it does often rhyme. We cannot have a decade of 0% interest rates and expect no consequences. Peter Schiff predicted this from the moment the fed bailouted the banks in 2008. There's nothing the fed can do to escape this one, it's either massive inflation or massive recession. The fed has avoided the latter by bailing out the banks again so expect double digit inflation for the next…

Peter Schiff predicted this from the moment the fed bailouted the banks in 2008.

He predicted dollar collapse, hyperinflation for 11 years, and a bunch of other stuff the didn't come true. Major broken clock syndrome on his part. Inflation finally spiked, but after being wrong since 2008. Gold still has not done much in a decade. The inflation was from the post-covid recovery, which was so strong that supply chain could not keep up, not as a consequence of 2008.

It's very easy to predict something will eventually happen. Anyone can do that. Way harder to predict when,

Re: Reasons the banking crisis isn’t a repeat of 2008

#108

Post by sanp » Sat, Mar 25, 2023, 1:56 AM UTC

fyzix wrote: post #23

History never repeats itself, but it does often rhyme. We cannot have a decade of 0% interest rates and expect no consequences. Peter Schiff predicted this from the moment the fed bailouted the banks in 2008. There's nothing the fed can do to escape this one, it's either massive inflation or massive recession. The fed has avoided the latter by bailing out the banks again so expect double digit inflation for the next…

Yes. Peter Schiff has predicted 20 of the last 0 collapses and depressions.

Re: Reasons the banking crisis isn’t a repeat of 2008

#109

Post by sanp » Sat, Mar 25, 2023, 1:57 AM UTC

fyzix wrote: post #104

zoltar wrote: post #63

Earlier quoted context omitted.

Is that the same Peter Schiff that said gold was going to $5,000/oz in 2012?

Schiff didn't account for the economic ignorance of the masses in his prediction. He understood that runaway inflation would cause the gold price to spike, he didn't foresee the confidence that traders have in the FED to fight off inflation. The FED cannot win the inflation fight (confirmed by their recent soft pivot back to QE) and gold will not go up until the traders realize this fact.

Ah! Blame the economic ignorance of the masses and the traders. Peter was always right even if reality turned out to be different.

Re: Reasons the banking crisis isn’t a repeat of 2008

#110

Post by paulpauper » Sat, Mar 25, 2023, 1:58 AM UTC

sph wrote: post #69

zoltar wrote: post #63

Earlier quoted context omitted.

Is that the same Peter Schiff that said gold was going to $5,000/oz in 2012?

Person that made a bad prediction in their life should never be listened to ever again, for everything they say is wrong. Show me anyone that predicted two consecutive macroeconomic trends, ever.

he made many bad predictions, and continued to double down on them:

dollar collapse, $5k+ gold, emerging markets boom, bitcoin crash, hyperinflation, bear market, recession, etc. every year

He never deviated from his predictions or view even when shown to be wrong. He never stopped to consider maybe he was wrong, not that the economy is wrong.