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

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

#281

Post by dtech » Sat, Mar 25, 2023, 10:37 AM UTC

paganel wrote: post #240

mike_d wrote: post #193

Earlier quoted context omitted.

Whenever the "what actually backs the US dollar" discussion comes up I remind them: 11 aircraft carriers.

> 11 aircraft carriers. That only works when the US has to fight military super-powers that rely on sea-transport in order to feed their people and their military, like Japan had to do in WW2. The moment another super-power stops depending on sea routes in order to provide basic needs for its people and its military then things start getting more complicated. Case in point, the current Russia + China alliance. They c…

I don't know the exact number but almost all of China's oil is imported, and almost all of that comes through Sea. That is not something Russia can fix on a short timeline. It's one reason why Pacific naval power remains an important advantage of the US and why they're so aggresive in the South Chinese Sea territorial "disputes".

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

#282

Post by TheOtherHobbes » Sat, Mar 25, 2023, 10:38 AM UTC

kevviiinn wrote: post #278

emptysongglass wrote: post #273

Earlier quoted context omitted.

Every time I see the fed adjusting these levers of debasing a money they print I shake my head and wonder why no one questions these levers as leading to a healthy economic society. Now my money is worth this much less tomorrow so now I must work this much extra for a raise to cover the loss. Doesn't this strike anyone as an absurdist parody play starring us its marionettes? If crypto isn't the answer, what is? I thi…

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

Because if the fed wrote software it wouldn't stay in business for long.

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

#283

Post by ornornor » Sat, Mar 25, 2023, 10:38 AM UTC

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…

For those wondering like I did, CPI is Consumer Price Index.

My understanding is that it’s a standardized basket of goods that supposedly represent the average household, and it calculates inflation on this basket on a regular basis.

This doesn’t reflect anyone’s reality however and I think a quick and dirty way to calculate your own CPI would be to check the difference year on year for all your rent and living expenses (including fuel if relevant etc) + your groceries (food toiletries etc), and figure out how has this changed year on year.

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

#284

Post by Yiin » Sat, Mar 25, 2023, 10:41 AM UTC

kevviiinn wrote: post #278

emptysongglass wrote: post #273

Earlier quoted context omitted.

Every time I see the fed adjusting these levers of debasing a money they print I shake my head and wonder why no one questions these levers as leading to a healthy economic society. Now my money is worth this much less tomorrow so now I must work this much extra for a raise to cover the loss. Doesn't this strike anyone as an absurdist parody play starring us its marionettes? If crypto isn't the answer, what is? I thi…

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

It's like asking why nurses think they know more about hospital processes when management is making bad decisions that doesn't solve real problems. I wish you are right though.

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

#285

Post by emptysongglass » Sat, Mar 25, 2023, 10:41 AM UTC

kevviiinn wrote: post #278

emptysongglass wrote: post #273

Earlier quoted context omitted.

Every time I see the fed adjusting these levers of debasing a money they print I shake my head and wonder why no one questions these levers as leading to a healthy economic society. Now my money is worth this much less tomorrow so now I must work this much extra for a raise to cover the loss. Doesn't this strike anyone as an absurdist parody play starring us its marionettes? If crypto isn't the answer, what is? I thi…

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.

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

#286

Post by TheOtherHobbes » Sat, Mar 25, 2023, 10:42 AM UTC

hgomersall wrote: post #218

roenxi wrote: post #126

Earlier quoted context omitted.

The bankers are closet creatives; they're probably going set up structures where the equity-holders are on paper running something that looks like a charity and there is a class of "depositors" who are making suspiciously high returns. They just need to figure out how to get the money into their sphere of control as a deposit rather than as equity. Indeed, in the SVB case there is probably an interesting story around…

So they should be told not to do that and be put in prison if they persist. We (the people) make the rules, but the regulators are rather too cosy with the bankers. I'd start by stopping any securitization and having the banks keep all their loan assets on their own balance sheets.

We don't make the rules. They do.

If sensible people made the rules the financial industry would be stable and boring, inequality would be far lower than it is, prosperity would be far wider, and life would generally be more pleasant and financially successful - not just for a small cadre of middle class programmers, but for everyone.

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

#287

Post by nycdatasci » Sat, Mar 25, 2023, 10:44 AM UTC

The three reasons: (1) Policymakers have tools to solve banking crises, and the bigger banks are much stronger (2) The economy is in a much different place (3) The magnitude of the problem is, so far, much smaller

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

#288

Post by kevviiinn » Sat, Mar 25, 2023, 10:46 AM UTC

Yiin wrote: post #284

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

It's like asking why nurses think they know more about hospital processes when management is making bad decisions that doesn't solve real problems. I wish you are right though.

Unless all of those programmers work for financial institutions I don't see how that analogy follows

It's more like asking why patients think they know more about hospital processes when management is making (perceived) bad decisions that don't solve real problems

We are users of the service, not people who work within the financial system

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

#289

Post by hellothere1337 » Sat, Mar 25, 2023, 10:47 AM UTC

A good strategy to not get to a "crisis" would be to keep increasing interest rates in order to squeeze the middle class and at the same time print trillions to provide liquidity to the big players like banks. In this way not only will you push wages down through constant layoffs, remove all the advantages that employees had for negotiation during the coronoa boom. But you also squeeze the middle class with huge inflation thus eroding all their savings and hope.

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

#290

Post by Dylan16807 » Sat, Mar 25, 2023, 10:47 AM UTC

rsync wrote: post #262

Dylan16807 wrote: post #229

Earlier quoted context omitted.

Position yourself for the windfall how? Let's say Alice will be wrong several times and then right once, and Bob will be right several times and wrong once. Both of them start with $10k. To give Alice every advantage, let's say her bets pay out 10x or nothing, and Bob's bets pay out 4x or nothing. We'll also say Alice magically knows which time she'll be right, but Bob won't know which time he'll be wrong. Alice will…

Your math is correct, of course, but these aren't the two strategies to choose between and there is a set of behaviors for which your parent is correct. The issue (using your analogy) is that Bob is exposed to profound, unseen risks that are deeply discounted in the marketplace - he is "picking up nickels in front of a steamroller" as Taleb puts it. At the same time, you have the Alice strategy wrong: Alice makes reg…

> Alice makes regular, extremely leveraged hedge purchases - perhaps even 100:1 or more - and just ignores the steady outflow of her premia.

If Alice wins after 10 bets, with 200:1 return, and she bets the same percent each time, the absolute best she can get is an 8x return on her initial bankroll.

> The issue (using your analogy) is that Bob is exposed to profound, unseen risks that are deeply discounted in the marketplace - he is "picking up nickels in front of a steamroller" as Taleb puts it.

For Bob to be "picking up nickels" that means Bob is getting ripped off on the things he's right about. If "right until you're wrong" involves tiny little rights and an enormous wrong, then sure it's not very appealing. But that needs to be stated explicitly. Without a qualifier, I expect "being right" to be at least coin flip odds. Because who cares if you can predict something that's 95% likely to happen?