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Bank failures come in waves

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Re: Bank failures come in waves

#181

Post by xeromal »

twelve40 wrote: post #37
personjerry wrote: post #29

It's awfully easy to say this and make your analysis after the fact. But past results aren't indicative of the future. See also: Taleb's The Black Swan

What was the black swan event here, exactly? sounds like simply a bunch of slopiness? Also, why are you so sure we are after the fact and not in the middle/beginning of it?

The black swan event was the fed driving up treasury rates which made the bank's bonds worthless. Of course, it was dumb of them to assume they would never go up, but clearly many many banks thought it was ok.

I always think of that saying "If you owe someone a thousand dollars, you're in trouble. If you owe someone a million dollars, they're in trouble."

As much as I'd like to see greedy banks burn, the main people who will feel the most pain are the regular joes.

Re: Bank failures come in waves

#182

Post by krferriter »

shagymoe wrote: post #176
v4dok wrote: post #170

Earlier quoted context omitted.

An economy run on Bitcoin is an absolute dystopia. You reluinquish monetary control to a deflationary coin, being in the whim of Bitcoin whales. People who advocate for it, either are whales or they are stupid. Ask south europe how well it worked for them having no power over their monetary policy.

Continuing this charade of "the government and banks are competent at monetary control" is more stupid. Inflation is theft.

The USD and Euro are managed by central banks much better at monetary policy than random rich people trying to manipulate an asset market (like those for cryptocurrencies) because they have an untreated gambling addiction. The idea that US Dollars are less stable and reliable in terms of price trends over the long term than cryptocurrencies is just ridiculous. Small amounts of inflation is good for the economy. It incentivizes people to put their money stashes back into productive use, instead of just keeping it sealed in a box.

Re: Bank failures come in waves

#183

Post by dgb23 »

em500 wrote: post #93
dgb23 wrote: post #87

Earlier quoted context omitted.

Am I reading this right? They expected this mechanism to be too efficient for regular, already established banks to compete? So a safer, more efficient mechanism for banking is declined in order to keep the established banks competitive? Isn't that sort of outrageous?

You're in good company if you find that outrageous. But the (speculative) reasoning is not so much to keep them competitive , but to keep borrowing cheap . In the real world, lots of people want to borrow money for 3, 5 or 10 years for their business or 10, 20, 30 years for their mortgage (and preferably at fixed rates), while very few people want to lend out money for such long terms at fixed rates. So the way banks…

My understanding so far is that these deposits are often overburdened. In part due to speculative investments.

From a perspective of someone who understands very little of these matters, it seems like responsibilities are shuffled around and the whole structure is unclear.

There are other ways to solve the problem you describe right? For example credit unions come to mind.

I usually look things up on this site, as it seems to discuss financial matters neutrally and explains them so I can understand them: https://www.investopedia.com/terms/c/creditunion.asp

Re: Bank failures come in waves

#184

Post by enumjorge »

shagymoe wrote: post #176
v4dok wrote: post #170

Earlier quoted context omitted.

An economy run on Bitcoin is an absolute dystopia. You reluinquish monetary control to a deflationary coin, being in the whim of Bitcoin whales. People who advocate for it, either are whales or they are stupid. Ask south europe how well it worked for them having no power over their monetary policy.

Continuing this charade of "the government and banks are competent at monetary control" is more stupid. Inflation is theft.

If Bitcoin had a history of stability your point would have more weight, but as it stands I don’t know how people can present it as a viable alternative with a straight face. Banks are having a crisis—-Bitcoin seems to have at least one every year.

Re: Bank failures come in waves

#185

Post by shagymoe »

krferriter wrote: post #182
shagymoe wrote: post #176

Earlier quoted context omitted.

Continuing this charade of "the government and banks are competent at monetary control" is more stupid. Inflation is theft.

The USD and Euro are managed by central banks much better at monetary policy than random rich people trying to manipulate an asset market (like those for cryptocurrencies) because they have an untreated gambling addiction. The idea that US Dollars are less stable and reliable in terms of price trends over the long term than cryptocurrencies is just ridiculous. Small amounts of inflation is good for the economy. It in…

Bitcoin != cryptocurrencies. You might as well be comparing dollars and beanie babies. Define "much better" and for who because they're very clearly, very bad at monetary policy.

Re: Bank failures come in waves

#186

Post by rtkwe »

madsbuch wrote: post #123
sgsag33 wrote: post #90

Why do we even need banks? If they make money by lending money that mostly belong the people (state/feds) anyways, I guess we all would be better if banking was just a state monopol. I guess I'm just missing some points here so maybe someone can help and explain me why this is a bad idea?!

In my understanding, the role of banking is to take on the intrinsic risk when doing money allocation. 1. The central banks control supply (by controlling their interest rates) 2. The banks allocate resources (lending out with a risk premium) 3. Consumers and entrepreneurs use the money for value creation. To me it seems like banks ought to be able to fail. The problem is that banks have gotten the responsibility of…

The old distinction between investment and savings banks seems like one of the many regulations we should bring back. Let businesses choose between the two and if their investment bank goes belly up well that's tough. Could even keep FDIC insurance low for both but like so many things legislatures keep falling to pressure to undo the regulations learned from past collapses.

Re: Bank failures come in waves

#188

Post by shagymoe »

enumjorge wrote: post #184
shagymoe wrote: post #176

Earlier quoted context omitted.

Continuing this charade of "the government and banks are competent at monetary control" is more stupid. Inflation is theft.

If Bitcoin had a history of stability your point would have more weight, but as it stands I don’t know how people can present it as a viable alternative with a straight face. Banks are having a crisis—-Bitcoin seems to have at least one every year.

If Bitcoin were the default currency, the value would not fluctuate, it would just slowly rise. Responsible savers would be rewarded. Irresponsible risk takers would generally be punished.

Re: Bank failures come in waves

#189

Post by rtkwe »

MichaelMoser123 wrote: post #105
unsupp0rted wrote: post #43

What’s the purported bad assumption during the current wave? That interest rates would never rise?

that's what he is saying after the slides Is there another bad assumption today? The recent failure of Silicon Valley Bank has raised fears of a new banking crisis. One way to look at SVB's failure is: SVB assumed that interest rates won't rise. what i don't understand: how did they handle the banking crisis of the eighties? Somehow that one didn't manage to kill the economy, how?

For one we hadn't gutted Glass-Steagall yet so banks were still separated into investment and savings/commercial so banks weren't as leveraged. We keep undoing and rapidly relearning why these things were put in place and the cycle from repeal to collapse is only getting tighter.

Re: Bank failures come in waves

#190

Post by jpmattia »

mejutoco wrote: post #154
nkuttler wrote: post #121

Earlier quoted context omitted.

> I think this crisis is the strongest yet reason to push for CBDCs as only a central bank can fully guarantee a deposit This makes zero sense. A CBDC doesn't have a stronger "guarantee" than normal central bank money, yet it has all kinds of negatives like total surveillance and control.

Exactly. And regarding > only a central bank can fully guarantee a deposit The buck stops at the government, as we are seeing with changing laws to allow Credit Suisse acquisition or by Biden and European representatives statements abou "doing whatever is needed" or similar.

> The buck stops at the government, as we are seeing with changing laws...

Not to mention the majority party in the US House is threatening default.

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