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

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

#361

Post by drexlspivey » Sat, Mar 25, 2023, 1:23 PM UTC

cm2187 wrote: post #245

drexlspivey wrote: post #47

Earlier quoted context omitted.

> Banks are different. A random drop in their stock price will lead to a perceptions failure that trigger run conditions. This is how Signature and Credit Suisse were, at least proximately, done in. You have the cause & effect wrong, the stocks tanks because the bank is failing. Tons of banks that are not publicly traded fail too.

Credit Suisse had a 14% CET1 ratio, higher than JPMorgan. The stock price was depressed because it wasn't turning a profit but it was nowhere near a level of losses where it would be a concern from a creditor point of view.

There were a series of news before investors started panicking, it’s not like people randomly decided to dump the stock without any reason.

> (March 9) Credit Suisse shares drop as annual report delayed following SEC call > Postponement comes as regulator weighs in on 2019 cash flow statements

> (March 14) Credit Suisse finds ‘material weaknesses’ in financial reporting controls > Swiss bank says it lacked effective processes to identify risk of misstatements

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

#362

Post by nonethewiser » Sat, Mar 25, 2023, 1:26 PM UTC

sandworm101 wrote: post #323

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…

>> No other country can compare. Except canada. The coasts. The transportation system, the tech industry... and canada has a far better-regulated banking sector, one that surfed past 2008 almost without incident. And for every natural resource, from water to uranium, Canada has more than it will ever need. I would far rather ride out the comming climate/economic crisis in calgary/vancouver than LA/SF.

Well tech and banking are clearly eclipsed by the US. And much of Canada has no transportation infrastructure. Are you sure you’re not comparing select Canadian cities to select American cities?

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

#363

Post by christophilus » Sat, Mar 25, 2023, 1:27 PM UTC

acd wrote: post #336

This time its different. Wait we have been through this before. The 2000 dot.com boom, 2008 subprime banking crisis where we bailed out the banks and the banking bonuses. 2023 silicon valley bank, credit suisse. Central bank zero interest policy caused this. Somehow it started in 1980-1990 Japan with their real eastate crisis and japanese bonds central banks going towards zero interest rates. Hopefully it will be bet…

I wish there was a branch of economics that predicted the boom / bust cycle and proposed an alternative solution.

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

#364

Post by nonethewiser » Sat, Mar 25, 2023, 1:28 PM UTC

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…

Every country has a single regulatory framework. Unfortunately for China 1 person can completely rewrite it.

China has a larger domestic market. The downside is the domestic market is still relatively poor and its state controlled by a uniparty government. When tough decisions need to be made, the CCP will protect the CCP over China.

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

#365

Post by christophilus » Sat, Mar 25, 2023, 1:29 PM UTC

bogomipz wrote: post #79

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 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." Why would GDP(a lagging indicator) and a current event(a wave of banks over the last two week) be mutually exclusive? You also seem to have overlooked some significant details and context. To date th…

> Why would GDP(a lagging indicator) and a current event(a wave of banks over the last two week) be mutually exclusive?

Exactly. Jeff Snyder pointed out that folks were puzzled over this exact thing in the 08-09 timeframe. And in fact, Janet Yellen talked about why it wasn’t a contradiction. She seems to have forgotten her own analysis, though.

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

#366

Post by Jochim » Sat, Mar 25, 2023, 1:32 PM UTC

ren_engineer wrote: post #149

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…

Capitalism is based around bad decisions being punished, which didn't happen in 2008 because of the bailouts. Nobody went to jail, nothing extreme enough was done to actually enforce cultural changes in the finance industry, so of course having the same problems occur was inevitable. Adding to the problem is that the economy is actually going to get less efficient on a fundamental level due to the geopolitical situat…

> Capitalism is based around bad decisions being punished

What constitutes a bad decision in your view?

My perspective is that Capitalism actively encourages and rewards the kind of behaviour most would consider to be morally and ethically bankrupt. The simplest example would be monopolising control of a limited but necessary resource, thereby granting you what is effectively absolute power over those who need it. Think oxygen supply on a moon base or fresh water on deserted island.

Take cigarette companies also. The "good" decision under capitalism was for them to knowingly deceive society on the health risks of their product. All so they could continue to profit.

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

#367

Post by Operative0198 » Sat, Mar 25, 2023, 1:32 PM UTC

Dylan16807 wrote: post #349

Operative0198 wrote: post #344

Earlier quoted context omitted.

> So you agree the recession prediction is not evidence for Shiff's competence? Economists make wrong predictions all the time. Am saying Schiff is not exactly entirely wrong on some of the ones he's made in the past. > ...have you looked at the trend, though? Inflation was climbing higher and higher until last June, and then it dropped by more than half. For the last 3-8 months the inflation rate has been about 4%.…

Wrong chart. That's a rolling average of 12 months. The peak was in June, so it's still dragging the yearly number up. The last 8 months were much lower than the previous several. https://tradingeconomics.com/united-states/inflation-rate-mo... https://i.imgur.com/MBwyLjJ.png Though that chart also shows inflation dropping...

I don't what you are on about. The chart figures I linked is sourced from the monthly CPI rate shared by BLS every month.

You are obviously trolling at this point.

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

#368

Post by kevviiinn » Sat, Mar 25, 2023, 1:33 PM UTC

emptysongglass wrote: post #285

kevviiinn wrote: post #278

Earlier quoted context omitted.

What I wonder is why a bunch of programmers seem to think they know economics and finance better than the fed

I am legitimately curious in any alternative that is not business as usual. Doesn't have to be crypto! Just name it.

See I don't work in finance, and I'm not afraid to say that I actually don't know what is best. I think other people could take that avenue as well

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

#369

Post by plonk » Sat, Mar 25, 2023, 1:34 PM UTC

TheOtherHobbes wrote: post #275

Beached wrote: post #172

Earlier quoted context omitted.

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

The privilege is maintained by having the biggest military force in the world - which is why the UK used to be in that position, and the US is in that position now. It's not inconceivable China could take over. Russia won't (lol...) and the EU doesn't have much interest in becoming militarised.

Does anyone seriously believe the US military is forcing the world to use dollars? What’s the leverage? Does France get invaded if the Euro becomes too important?

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

#370

Post by pjc50 » Sat, Mar 25, 2023, 1:36 PM UTC

TheOtherHobbes wrote: post #280

pjc50 wrote: post #270

Earlier quoted context omitted.

The alternative of allowing Russia to conquer another state and openly threaten further states would be far worse. The West has disengaged with Russia (and Russian money and gas) only very reluctantly.

China has been a clear threat since the 1990s. The US utterly failed to recognise it as a strategic danger. Russia could have been Westernised with a little more effort, and turned into an ally and partner. (Which is not to say it would have been easy, but it would have been possible.) Instead Russia was neoliberalised, turned into a mafia economy with huge concentrations of wealth on top of raging poverty, and its i…

> Russia could have been Westernised

> Instead Russia was neoliberalised

The West has also been neoliberalised.

Sadly I think that's why nothing better happened to Russia; everybody was comfortable with having a strongman to deal with and oligarchs to take money from. Even to the extent of overlooking crimes like the Salisbury poisonings and the airliner shootdown. It's a common pattern in US partner states.

Most of the former USSR and Yugoslavian states have sought freedom, although there are questions about Serbia, Hungary and to a lesser extent Poland.