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

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

#351

Post by [deleted] » Sat, Mar 25, 2023, 1:02 PM UTC

TexanFeller wrote: post #198

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 yuan may be the competition we should fear. Since we disconnected Russia from our financial systems, Russia is willing to do business with our biggest rival, China, in their currency.

[deleted]

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

#352

Post by nonethewiser » Sat, Mar 25, 2023, 1:06 PM UTC

FredPret wrote: post #226

tfourb wrote: post #216

Earlier quoted context omitted.

Actually the U.S. in 3rd place behind Switzerland and Luxembourg in terms of mean wealth per adult and Hong Kong is not far behind. But you are right that the other countries on the upper ranks are mostly smaller nations with large banking sectors: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... While I agree that the U.S. has an enormous built-in advantage over other countries, I would really highlig…

While it is true that the US mean is much higher than the median, the median person still benefits greatly from that wealth. The rich invest their wealth in business, real estate for rent, and real estate for themselves, making all these things better. I'm currently in the EU, in a country that outperforms the US in median wealth by about 20%. While it's clear that life here is good, I'm also struck by how much worse…

> After accounting for all income, charity, and non-cash welfare benefits like subsidized housing and food stamps, the poorest 20 percent of Americans consume more goods and services than the national averages for all people in most affluent countries.

https://www.justfacts.com/news_poorest_americans_richer_than...

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

#353

Post by beepbooptheory » Sat, Mar 25, 2023, 1:07 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…

I don't think the language models have much living standards to worry about other than having a ton of electricity.

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

#354

Post by nonethewiser » Sat, Mar 25, 2023, 1:08 PM UTC

maxerickson wrote: post #303

pjc50 wrote: post #268

Earlier quoted context omitted.

This has all sorts of distorting effects. It turns out that one guy was paying a substantial fraction of New Jersey's budget, and he moved. https://www.nytimes.com/2016/05/01/business/one-top-taxpayer... (then ended moving back again, because Florida)

Note that it put the income tax forecast at risk. The individual taxpayer was paying ~hundreds of millions per year into an $86 billion dollar budget. It's kind of wild that an individual would be paying a tenth of a percent (or so) of a state's income taxes, but it's maybe not a substantial fraction.

Not that surprising when you have a progressive tax system and people who make tons of money.

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

#355

Post by drawkbox » Sat, Mar 25, 2023, 1:09 PM UTC

TheAlchemist wrote: post #292

The fact that they publish this in the first place, is worrying, to say the least. It's also quite true - the banking crisis won't be a repeat of 2008. But, unlike 2008 which was fairly limited to (arguably huge) banking and residential mortgage sectors, this crisis will hit hard everywhere - valuations are still insane, the % of zombie companies is off the charts, inflation is everywhere, FED and governments have mu…

> valuations are still insane

Most of the value from the pandemic pump has already been dumped. Some valuations are already too low.

In terms of companies, term sheets have already been halved in many cases or withdrawn. As always the scrappy and research and development focused companies will win.

The slowdown will probably keep going for a while due to the bigger reason, geopolitical market and trade changes. The funding inflows and outflows have changed dramatically and companies that relied on sometimes foreign authoritarian money will be hurting the most, that was the risk and it is present. Though this is also increasing investment in markets and manufacturing in the West. Long term growth will be immense. The market is almost falsely being held down at this moment due to these influence/attack/change vectors.

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

#356

Post by Jochim » Sat, Mar 25, 2023, 1:14 PM UTC

CamperBob2 wrote: post #346

TheOtherHobbes wrote: post #286

Earlier quoted context omitted.

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.

How often we've heard these sentiments. "If only sensible people (meaning the ones who agree with me) made the rules..."

I'm not quite sure what your point is. We ask exactly that question to voters at each election.

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

#357

Post by meltyness » Sat, Mar 25, 2023, 1:15 PM UTC

Joel_Mckay wrote: post #263

I find it more interesting few seem able to recall what happened the year prior in 2007. Recall the elevated marketing hype from those trimming portfolios knowing full well what was happening. What I see is a short term 30% sales bump in real-estate (ratio of debts in negative amortization) as the amateur tries to find inflationary shelters after getting disappointed by laggard bond markets. Kind of reminds one of gi…

Where's the "occupy movement"? Where's the "CHAZ/CHOP" of 2023? What about "hope"? Are netizens signing up for exorbitantly expensive new services on a widespread basis?

If individuals aren't being "excessively enriched" by conditions it's unlikely to become another spectacular market wide blow-up.

Social causes are a proxy for froth. A short Friday memo probably isn't.

Exuberance is in the hands of price gougers right now, and even that's mostly confined to California,... and eggs.

Sure we're back to "grocery delivery" (which marked the height of the .com bubble) but it's the biggest players involved, the technology is practically free these days, and the immunocompromised benefit!

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

#358

Post by wozer » Sat, Mar 25, 2023, 1:16 PM UTC

hettygreen wrote: post #174

I wasn't worried about this until Chase Bank felt the need to publish "Reasons the crisis isn't a repeat of 2008"

Well, since it's the investment branch of the bank that's publishing, it would be strange if J.P. Morgan weren't writing about it. Additionally, I think it's definitely worth a read, as it provides detailed information in a cautious style.

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

#359

Post by nonethewiser » Sat, Mar 25, 2023, 1:17 PM 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…

You forgot the most important thing, especially for war. Oil.

China imports a fuckton of it. But not from Russia, but the Middle East (by sea) because it’s cheaper and easier.

It’s actually very difficult to move that much oil over land. The best way is by pipeline but that takes many years and is fairly easy to disrupt. And it still leaves you with the problem of having to distribute it at the other end.

Now consider grain can’t flow in a pipe.

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

#360

Post by Jochim » Sat, Mar 25, 2023, 1:21 PM UTC

vkou wrote: post #206

JackFr wrote: post #159

Earlier quoted context omitted.

Do depositors have some sort of moral superiority to investors , or simply a legal priority? Citibank equity holders (one of the the more egregious bailouts from the GFC) 15 years later are still down 90%. So it’s not like in the bad old days of 2008 investors were getting off scot free.

> Do depositors have some sort of moral superiority to investors, or simply a legal priority? Depositors don't stand to benefit from a bank engaging in stupid risky bets with depositor money. Investors do (on the upside of those bets). This is why depositors should (and do) have moral priority for their money. Investors also are able to directly control the degree of stupid risk-taking behaviour taken by the bank, by…

While I largely agree, it could be argued that banks engaging in risky behaviour might attract depositors with higher interest rates than a more responsible bank.

If depositors know that their money is fully covered, you incentivise them to move their money from responsible banks to irresponsible ones. It's easy to imagine a knock-on effect where responsible banks are incentivised to behave less so in order to retain custom, with the whole system becoming more fragile as a result.