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The Looming Bank Collapse

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Re: The Looming Bank Collapse

#121

Post by apta »

missedthecue wrote: post #113
apta wrote: post #108

Earlier quoted context omitted.

Selling money is unethical because of the inherent exploitation involved, by taking advantage of someone who is in need of it. No one is saying not to make profit, just do it properly. You can rationalize interest as being compensated for risk, but it doesn't make any less exploitative. We have already seen how the economy keeps getting screwed, yet we don't learn.

"Selling money is unethical because of the inherent exploitation involved, by taking advantage of someone who is in need of it" This logic holds no water. The great majority of things sold are sold to people to need them. Why should money be any exception?

When you're selling a good or a service, you're exchanging one type for another, usually hand-in-hand. You buy food, furniture, etc. in exchange for money. There's value in the thing you're selling in exchange for a certain amount of money (which also has value).

When you sell money for money, this equation breaks. You're exchanging $1 for a different amount in the future, taking advantage of the fact that the borrower cannot pay you in the present. This is what defines interest and usury.

It's easy to get bogged down in the details to legislate or rationalize a certain action. Take a step back and see the destruction that interest based lending has caused throughout history, and in the present.

Re: The Looming Bank Collapse

#122

Post by jungletime »

vsareto wrote: post #84
itsoktocry wrote: post #60

Earlier quoted context omitted.

> Our system is 100% entirely dependent upon ARTIFICIALLY low interest rates There is no such thing as "artificial" or "natural" rates of interest. > Central banks are doing everything in their power to keep interest rates low because if they were to tick up even a little bit, the whole house of cards will come toppling down. Why would, or should, they "tick up"? Capital is abundant. If rates were higher, things woul…

>I love the idea that the entire global economy is fake, artificial and zombie-like, because it doesn't operate the way you think it should. A reasonable person would take a step back and question their premises and understanding. The new part is the expectation that governments will prop up companies during bad economies. This is bewildering to anyone with a naive view that believes America is a purely capitalistic…

This brings to mind Elon Musk and his many failed rockets. Normally a rocket failure is so expensive it has the potential to bankrupt even a rich company. In a pure capitalistic system investors would not risk suck long term goals as going to Mars, when it involves many rocket failures, and no profits. But its in the national interest to push such research forward for the sake of humanity. So if state provides some welfare, or a cushion, to hedge such risky thing as building rockets, don't we all benefit. In a similar way to the way government grants pay for research at universities. Its obviously a balance.

I live in Canada, a huge country. Its not profitable for any company to provide power to remote places with only a few inhabitants. Its only possible because the government mandates it, and the rest of us subsided it.

Re: The Looming Bank Collapse

#123

Post by missedthecue »

chishaku wrote: post #118
missedthecue wrote: post #117

Earlier quoted context omitted.

Systemic? No.

Do you know what a CLO is...? Or maybe you were born in 2009? FSB: "Available data indicates that banks have the largest direct exposures to leveraged loans and CLOs. These exposures are concentrated among a limited number oflarge global banks and have a significant cross-border dimension. ... A number of non-bank investors are also exposed to leveraged loan and CLO markets. These include investment funds, insurance…

There would have to be a lot more insured CLOs to represent systemic risk. The total nominal amount of CLOs is just not great enough to cause a systemic collapse.

If you look at what the other guy said in this thread, taking WFC as an example, they have ~$2T in assets, and $27B in CLOs. They could lose every dollar in CLOs at once and the firm would still be fine.

There are certain smaller companies and brokers that deal in CLOs that would not be having a fun time if CLOs went belly up as a whole. The banking system would be fine. There is simply not enough of that paper out there to pose a systemic threat.

Re: The Looming Bank Collapse

#124

Post by missedthecue »

apta wrote: post #121
missedthecue wrote: post #113

Earlier quoted context omitted.

"Selling money is unethical because of the inherent exploitation involved, by taking advantage of someone who is in need of it" This logic holds no water. The great majority of things sold are sold to people to need them. Why should money be any exception?

When you're selling a good or a service, you're exchanging one type for another, usually hand-in-hand. You buy food, furniture, etc. in exchange for money. There's value in the thing you're selling in exchange for a certain amount of money (which also has value). When you sell money for money, this equation breaks. You're exchanging $1 for a different amount in the future, taking advantage of the fact that the borrow…

The increase in money lending us directly correlated with a vast increase in the standard of living for the average human.

Just because you buy a dollar rather than a shirt does not suddenly make you exploited. Imagine if everything debt is used for had to be bought in full. Very few people would own homes. Very few capital investment projects would be undertaken. Very few automobiles would be owned. Your life is far better because debt exists. There is no society where debt does not exist that is doing better than societies that allow debt.

Re: The Looming Bank Collapse

#125

Post by johanvts »

apta wrote: post #121
missedthecue wrote: post #113

Earlier quoted context omitted.

"Selling money is unethical because of the inherent exploitation involved, by taking advantage of someone who is in need of it" This logic holds no water. The great majority of things sold are sold to people to need them. Why should money be any exception?

When you're selling a good or a service, you're exchanging one type for another, usually hand-in-hand. You buy food, furniture, etc. in exchange for money. There's value in the thing you're selling in exchange for a certain amount of money (which also has value). When you sell money for money, this equation breaks. You're exchanging $1 for a different amount in the future, taking advantage of the fact that the borrow…

If you are lending money at absurd rates because the borrower is desperate then we could call it exploitation, but this can happen in any transaction. All transactions are "taking advantage of the fact that the borrower cannot pay you in the present." If the person I'm selling food to already has enough food, why would he be buying more?

The difference with money seems rather to be that the value is created over time, where other transactions happen based on the current value of the things being exchanged. But given that we all die this doesn't strike me as morally wrong.

Re: The Looming Bank Collapse

#126

Post by apta »

missedthecue wrote: post #124
apta wrote: post #121

Earlier quoted context omitted.

When you're selling a good or a service, you're exchanging one type for another, usually hand-in-hand. You buy food, furniture, etc. in exchange for money. There's value in the thing you're selling in exchange for a certain amount of money (which also has value). When you sell money for money, this equation breaks. You're exchanging $1 for a different amount in the future, taking advantage of the fact that the borrow…

The increase in money lending us directly correlated with a vast increase in the standard of living for the average human. Just because you buy a dollar rather than a shirt does not suddenly make you exploited. Imagine if everything debt is used for had to be bought in full. Very few people would own homes. Very few capital investment projects would be undertaken. Very few automobiles would be owned. Your life is far…

> The increase in money lending us directly correlated with a vast increase in the standard of living for the average human.

You said it yourself, it's correlation, not causation. There are other factors that occurred in that time frame that increased the standard of living for people.

> Imagine if everything debt is used for had to be bought in full

That's how things were generally run back in the day, people saved up, then bought what they wanted. Also, people purchased on installments.

Your argument is basically that the ends justifies the means. That economic growth is the end goal, sell more cars, etc. so we need to put everyone in debt. We are already seeing the huge wealth gaps that exist in hyper capitalistic societies, due to no small part to running everything on interest and other immoral practices. I posit that if there were no interest, things would be more fair, and producers would have to reduce prices, making it easier for people to own stuff, compared to the inflation we see.

Re: The Looming Bank Collapse

#127

Post by apta »

johanvts wrote: post #125
apta wrote: post #121

Earlier quoted context omitted.

When you're selling a good or a service, you're exchanging one type for another, usually hand-in-hand. You buy food, furniture, etc. in exchange for money. There's value in the thing you're selling in exchange for a certain amount of money (which also has value). When you sell money for money, this equation breaks. You're exchanging $1 for a different amount in the future, taking advantage of the fact that the borrow…

If you are lending money at absurd rates because the borrower is desperate then we could call it exploitation, but this can happen in any transaction. All transactions are "taking advantage of the fact that the borrower cannot pay you in the present." If the person I'm selling food to already has enough food, why would he be buying more? The difference with money seems rather to be that the value is created over time…

> If the person I'm selling food to already has enough food, why would he be buying more?

Food is perishable, and people like diversity in what they eat. Your example is an apples to oranges comparison. If he doesn't like what you offer, he'll go elsewhere.

> The difference with money seems rather to be that the value is created over time, where other transactions happen based on the current value of the things being exchanged.

Yes. Furthermore, when lending money to someone with interest, the lender gets what he put in and more, whereas say leasing a car out, he'll get it back, but it would have been consumed. This type of exchange doesn't happen with money.

> But given that we all die this doesn't strike me as morally wrong.

We can take that to it's conclusion and say nothing matters at all. People are out protesting against racial inequality, but we'll all die at the end, so it doesn't matter.

Re: The Looming Bank Collapse

#128

Post by QuesnayJr »

cryptica wrote: post #103
QuesnayJr wrote: post #53

Earlier quoted context omitted.

It's not that we don't see it, but we don't agree. I honestly don't have the energy to try to explain it here anymore -- the conversation always turns unpleasant, and I need a place on the Internet where I can avoid thinking about economics for a while.

>> the conversation always turns unpleasant Rationalizing the irrational tends to be unpleasant. I think it's a complete fabrication that people are dependent on the financial system and that we need economic stability. People enjoy drama and they are able to recover from any economic failure. Even total failure. Too big to fail is total BS. If a solar storm wiped out all records of bank accounts and all records of a…

Oh look, the conversation has turned unpleasant again. How unpredictable.

Re: The Looming Bank Collapse

#129

Post by gridlockd »

mrep wrote: post #105
gridlockd wrote: post #24

"There are more than $1 trillion worth of leveraged loans currently outstanding. The majority are held in CLOs." To get some perspective, the FED recently added almost three trillion dollars of "not QE" to the balance sheet, mostly because of COVID-19. They'll be bailed out. "But this time, the bailout proposal will likely face stiffer opposition, from both parties" Doubtful. Everything can be blamed on the virus thi…

What part of the FEDs balance sheet [0] are you concerned about getting bailed out because it is pretty much entirely composed of the US government's own debt through US treasury securities and citizens homes through mortgage backed securities? [0]: https://www.federalreserve.gov/releases/h41/current/h41.htm

I'm saying the banks holding CLOs will get bailed out much in the same way as those holding mortgage-backed securities. I'd be concerned if this didn't happen.

Re: The Looming Bank Collapse

#130

Post by kerkeslager »

thephyber wrote: post #11
kerkeslager wrote: post #5

> The federal government stepped in to rescue the other big banks and forestall a panic. The intervention worked—though its success did not seem assured at the time—and the system righted itself. Of course, many Americans suffered as a result of the crash, losing homes, jobs, and wealth. An already troubling gap between America’s haves and have-nots grew wider still. Yet by March 2009, the economy was on the upswing,…

This line struck me as odd: > and the system righted itself I suppose maybe it depends what "the system" refers to, exactly. If it's the same bankers who shape the financial system and the banks who all own part of the Federal Reserve which printed money to put price supports under their worst assets, then sure, "the system" "righted" "itself". But in the end, there is no right or guarantee that every person will get…

> But in the end, there is no right or guarantee that every person will get a job, be able to keep a house, or will not lose wealth.

That's true for most people, but it's simply not true for the wealthy in practice. The government did try to make an example of a few players in the 2008 collapse, but for the most part, the message sent by the handling of the 2008 crisis was that if you're a big enough company and you take a risk that doesn't pay off, the poor and middle class will be forced to subsidize your mistake.

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