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Reasons the banking crisis isn’t a repeat of 2008

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

#171

Post by Rury »

JumpCrisscross wrote: post #9
smcin wrote: post #7

Earlier quoted context omitted.

Well, their selective take is like a description of a mass shooting that only describes where the bodies ended up, but no discussion of who caused it, or even that bullets might have been involved, let alone which people actually did it: "Households had too much leverage in 2008 : Mortgage debt % potential GDP..." "The Global Financial Crisis was driven by price declines in low-quality assets with poor disclosure lea…

Glass-Steagall’s repeal wasn’t proximate to any post-repeal banking crises. (Glass-Steagall wouldn’t have prevented mortgage CDOs.) It certainly wouldn’t have done anything for SVB or Signature.

That's debatable. Glass-Steagall wouldn't have prevented CDOs, but Glass-Steagall's repeal paved way for previously illegal mergers and acquisitions between commercial banks and investment banks. Had these mergers not had been allowed, it is debatable banks would have been "too big to fail", and the entire system wouldn't have been so susceptible to collapse.

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

#172

Post by Beached »

creakingstairs wrote: post #163
safety1st wrote: post #154

Earlier quoted context omitted.

Over the years as my perspective has become more global I've come to realize what a privileged position the US is in, economically: * Ports on both the Atlantic and Pacific * A very effective transportation system in between * In the big growth sector where points 1 and 2 don't matter, tech, it's still #1 in the world anyway * A market of 350 million high income people (by global standards) under one regulatory frame…

All that but most of all, the fact USD is the world reserve currency is the biggest privilege. Every other countries have to stock up on USD/ have swaps in place and follow US when they raise fed interest rates instead of doing what’s best for the domestic economy. For example, South Korea’s USD reserves has been sharply going down as they’ve been trying to resist following the recent rate hikes to soften the blow to…

within reason of course. it's a position of privilege, but that position used to below to the UK. they lost that position over/after the world wars, and we got it. it is possible that doing whatever we want could push people to the euro as the reserve or the pound. it seems far fetched, but I could see a world where the euro the the world's reserve currency

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

#173

Post by bruce511 »

sneed-oil wrote: post #157
jzymbaluk wrote: post #100

Earlier quoted context omitted.

Of all the "evil" things one could do with gargantuan wads of cash, having it sit in a bank account is just about the most innocuous thing I can think of to do with it. It seems like a wise, cautious move actually, and it seems like it'd be bad to punish businesses for being cautious with their money

Their money is being used to make investments and they're getting paid interest for it. If their deposit was above the amount insured by the FDIC then they knew it could all be lost if the bank collapsed. I wouldn't call lending more than 250k to a bank "cautious" (that's what you do when you "deposit" your money in a bank), they could have bought Treasury bonds instead. But maybe they were smart and had guessed that…

It kinda depends on scale doesn't it? For an individual 250k in cash seems like a lot (although can easily happen just before or just after a large purchase.)

For even a "small" business though it's quite small. We're small (In this context 250k is tiny, and wouldn't cover our day to day balance.

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

#175

Post by safety1st »

vlovich123 wrote: post #160
safety1st wrote: post #154

Earlier quoted context omitted.

Over the years as my perspective has become more global I've come to realize what a privileged position the US is in, economically: * Ports on both the Atlantic and Pacific * A very effective transportation system in between * In the big growth sector where points 1 and 2 don't matter, tech, it's still #1 in the world anyway * A market of 350 million high income people (by global standards) under one regulatory frame…

> A market of 350 million high income people (by global standards) under one regulatory framework China almost has the same number of millionaires. Per capita it’s not as good, but in terms of volume. And I’d say they’re closer to a single regulatory framework than the US which has all sorts of conflicting state laws which get in the way of interstate commerce (despite the commerce clause). Sure there are a lot of ad…

For sure China has a ton of people and a huge economy. Fair point that the regulatory framework there may be more homogenous, but it's also weaker.

And it lacks all the other inbuilt advantages I mentioned.

Remember, the USA can ship goods back and forth between itself and what... 90% of the ex-US global economy? With very little geopolitical interference.

This is largely a function of geography, plop a cargo ship in the water, sail it, boom you arrive in Western Europe, or East Asia, without getting anywhere near some other country's sphere of influence.

China can't say the same. To ship cargo to America they have to sail near multiple political rivals (and they seem to enjoy antagonizing America itself as well). To ship cargo to Europe they need to do the same. So there are all these countries and political forces that could disrupt Chinese trade at any time. In the long run they have inbuilt geographic risk, the US has inbuilt geographic immunity.

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

#176

Post by Operative0198 »

paulpauper wrote: post #110
sph wrote: post #69

Earlier quoted context omitted.

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.

He isn't wrong on any of those predictions.

The dollar has never been at a more precarious position (on a hyper-inflation course and the BRICS are pondering about adopting the Yuan).

Bitcoin (who knows what's coming next, but for sure never seeing 70K again)

Hyperinflation (pretty obvious)

Bear market (most of 2022 was in one, and most probably this year will follow)

Recession (high certainty this will happen. Fed's soft landing is a mirage, history shows a rate cut after aggressive hiking usually leads into one)

Schiff is not outright wrong on his predictions. He just never gave time stipulations for his predictions.

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

#177

Post by bruce511 »

fyzix wrote: post #128
dragonwriter wrote: post #111

Earlier quoted context omitted.

> Schiff didn’t account for the economic ignorance of the masses in his prediction. Literally every economic misprediction can be blamed on not accounting for the way people actually behave in real-world economies, but…that’s not something that adds credibility for the next prediction by the same predictor.

1.decade of 0% apr >>> 2.high inflation >>> 3.gold price surge We have gotten 1 and 2 but we haven't gotten to 3 because traders believe that the FED can win the inflation fight. The FED abandoned the inflation fight with a soft pivot yet traders are still not buying gold. This is what Peter couldn't foresee...traders' unwillingness to go against the FED. This is not a misprediction because in any sane world, the pro…

>> This is not a misprediction because in any sane world,

Describing any part of the financial system as sane (rational) is laughable. The system is built on the irrational nature of people.

In some absurd way, bank runs are an expression of actual rationality - give me my cold hard cash now, I don't trust you lot anymore.

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

#178

Post by ciconia »

safety1st wrote: post #154
quags wrote: post #103

Earlier quoted context omitted.

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…

Over the years as my perspective has become more global I've come to realize what a privileged position the US is in, economically: * Ports on both the Atlantic and Pacific * A very effective transportation system in between * In the big growth sector where points 1 and 2 don't matter, tech, it's still #1 in the world anyway * A market of 350 million high income people (by global standards) under one regulatory frame…

> No other country can compare. No one else has this. These in-built advantages are incredibly hard to beat.

You left out the most important advantage: the US has plenty of oil and gas;

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

#179

Post by quesera »

safety1st wrote: post #154
quags wrote: post #103

Earlier quoted context omitted.

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…

Over the years as my perspective has become more global I've come to realize what a privileged position the US is in, economically: * Ports on both the Atlantic and Pacific * A very effective transportation system in between * In the big growth sector where points 1 and 2 don't matter, tech, it's still #1 in the world anyway * A market of 350 million high income people (by global standards) under one regulatory frame…

You left out:

* Issues the global reserve currency

* Maintains the largest military

* Has the widest media reach

* Has significant natural resources

There are problems too, but the unfair advantages are quite strong, and self-perpetuating.

Which is fortunate for Americans, because very few countries could be so haphazardly managed, without failing.

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

#180

Post by riffraff »

safety1st wrote: post #154
quags wrote: post #103

Earlier quoted context omitted.

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…

Over the years as my perspective has become more global I've come to realize what a privileged position the US is in, economically: * Ports on both the Atlantic and Pacific * A very effective transportation system in between * In the big growth sector where points 1 and 2 don't matter, tech, it's still #1 in the world anyway * A market of 350 million high income people (by global standards) under one regulatory frame…

You missed one massive advantage: the US has a good and reliable legal system.

It can not be overstated how good this is for an economy, and it's something emerging markets struggle with, and even some of the advanced economics.

It'll always be easier to start and run a business where you can rely on tribunals to solve problems quickly and somewhat fairly.

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