So why did investors have to loose big time on a 1.8B loss when the bank had 16B in assets?
Seems like SVB was scarified
Federal Reserve lent $300B in emergency funds to banks in the past week
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Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#152Earlier quoted context omitted.
What would the alternative have been? Don't lend it/provide it for banks and let ________ play out instead where _______ is defined as ________.
Not lending money to banks and letting them fail when their "safe" investment strategies fail.
That’s a great way to collapse the banking system and screw over millions of people
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#153This is one of those rare threads on HN where I can’t understand a single thing people are talking about
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#154Earlier quoted context omitted.
That's a funny way of saying that 'supply and demand meet in Japan' which you can do but decreasing demand or increasing supply. It really is that simple. When supply and demand are allowed to meet, prices stabilize. Otherwise please explain to me why you think that this is the one asset on earth not affected by supply and demand. And you could really use a solid citation. Thought exercise. There are 140,000,000 hous…
Have you been to Japan? There is massive excess supply of housing in Japan. They literally demolish entire villages because no one lives there anymore. Everyone who can moves to Tokyo, and prices there are insane. In the US, if we had 288 million homes, the big question would be ‘where?’. We already have millions of acres of land with literally no zoning rules at all. Even Greenlee County Arizona (1500 sq miles) is m…
You’re fighting a straw man, nobody is arguing you need to do what Japan did verbatim. The only argument I’m making is when you allow supply and demand to meet prices stop going up. All the rest is narrative.
The answer to where is “up.”
Also the prices in Tokyo aren’t insane at all they’re super affordable by any standard.
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#155I assume banks went ahead and bought subprime mortgage bonds with that $300B. And at this point why not? Everyone knows that the government will print an unlimited amount of money to keep the system going no matter what risks you take and how careless you are.
SVB and Signature banks both failed, their shareholders walked away with nothing. This does not encourage risk-taking on the part of the banks.
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#156I think what we're learning from all this is that the people we trust with our money, the "financial sector", can't be trusted with our money
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#157I think what we're learning from all this is that the people we trust with our money, the "financial sector", can't be trusted with our money
To whomever downvoted this - what happened at SVB and Credit Suisse was confidence inspiring? Trust building?
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#158Earlier quoted context omitted.
It’s a loan, not QE. QE is no strings attached money injected into the market. QT is still ongoing as of last week, however, I don’t see it lasting. I do think a .25 rate hike will still happen.
It's all a loan, whatever name you attach to it they have to borrow to print money. Reality check: US debt to GDP ratio is over 120% and the US doesn't have the credit to borrow anymore. We're looking at hyperinflation and a long depression unless they stop printing money and we experience massive austerity/spending cuts. We are literally in an economic death spiral (that's what a debt to GDP ratio of > 120% means) a…
Insolvent in the sense that they won't be able to pay the debt? That's not very likely given that the US controls the emission of its own currency, which is the currency the government bonds are denominated in.
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#159Earlier quoted context omitted.
It's a loan whose collateral is taken at par value rather than market price, which essentially increase the Fed's balance sheet. As of Wednesday last week, 4 months of QT have been reverted in a single week: https://fred.stlouisfed.org/series/WALCL
As long as the regular Joe doesn’t get extra money to spend, inflation will be check. Banks won’t go buy eggs anytime soon. We had close to 0% interest rates for almost a decade, and inflation was in check. It’s not the Fed that caused inflation, it is: * Suspending school debt (extra income) * Injecting real cash into the economy (stimulus checks and PPP loans to small businesses) * Supply chain bottlenecks after Co…
You don’t think all the refinance cash out money contributed to inflation? You couldn’t find a trade with free time in the second half of 2020, 2021, and 2022.
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#160Earlier quoted context omitted.
This is severely dismissing the economic distortion of monetary stimulus. We’ve effectively been printing money into wealthy individuals assets. Increasing wealth inequality has tangible negative effects on the economy and effectively functions as a reverse tax.
> Increasing wealth inequality has tangible negative effects on the economy and effectively functions as a reverse tax. I am not sure I understand what you are trying to say. Inflation either spikes up because of increased of demand, or lack of supply. In our case, both have happened: * Increased demand because free money is hitting the bank accounts of almost everyone. * Decreased supply because of supply chain bott…
My argument is that the last 13 years of low interest rates produced a distorted economy where wealthy individuals gained more wealth without making profits, and those without assets saw their incomes and living standards stagnate. Low-interest rates produced companies like Uber, and socialized losses for bank failures. Low-interest rates meant TSLA became the most valuable company in the world while turning a loss.
When you print money, Its unsurprising that those closest to the money printer will accumulate the most money.