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

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

#381

Post by pjc50 » Sat, Mar 25, 2023, 2:55 PM UTC

whitehexagon wrote: post #374

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…

I am curious, but with all the national debt in western economies, will higher inflation help service that debt going forwards? I mean, prices rarely ever come back down... Combined with higher tax incomes, seems like a kinda win-win for the governments? Or is this a follow on from recent currency wars, if that is appropriate phrasing? I dont know much about world finance, at least not enough to have sold CS in time.…

10% inflation on government bonds that were trending at near-zero interest rates is definitely half a win. Even very long duration bonds had very low rates. It does require salaries and therefore the tax base to keep up with inflation.

> Or is this a follow on from recent currency wars

What currency wars? The "gas wars" are far more significant.

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

#382

Post by sandworm101 » Sat, Mar 25, 2023, 2:57 PM UTC

nonethewiser wrote: post #362

sandworm101 wrote: post #323

Earlier quoted context omitted.

>> No other country can compare. Except canada. The coasts. The transportation system, the tech industry... and canada has a far better-regulated banking sector, one that surfed past 2008 almost without incident. And for every natural resource, from water to uranium, Canada has more than it will ever need. I would far rather ride out the comming climate/economic crisis in calgary/vancouver than LA/SF.

Well tech and banking are clearly eclipsed by the US. And much of Canada has no transportation infrastructure. Are you sure you’re not comparing select Canadian cities to select American cities?

Nope. Canadian populations live closer to their transport infrastructure than American populations. Canadian people actually live closer together than Americans, mostly in relatively tight cities. The big empty parts of the US are in reality inhabited by thousands of small towns. Drive any highway in the US and there is a town every dozen miles. The big empty parts of Canada are actually empty. Highways can go for hundreds of miles in some areas between towns. This is largely a result of historic land laws, crown ownership and mining in Canada v. frontier land grabs and farming in the US.

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

#383

Post by dalyons » Sat, Mar 25, 2023, 3:02 PM UTC

Operative0198 wrote: post #367

Dylan16807 wrote: post #349

Earlier quoted context omitted.

Wrong chart. That's a rolling average of 12 months. The peak was in June, so it's still dragging the yearly number up. The last 8 months were much lower than the previous several. https://tradingeconomics.com/united-states/inflation-rate-mo... https://i.imgur.com/MBwyLjJ.png Though that chart also shows inflation dropping...

I don't what you are on about. The chart figures I linked is sourced from the monthly CPI rate shared by BLS every month. You are obviously trolling at this point.

It’s not trolling just because you aren’t understanding what’s being said. Recent MoM figures show inflation is way down, the annualized will follow down shortly.

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

#384

Post by TheGigaChad » Sat, Mar 25, 2023, 3:25 PM UTC

Operative0198 wrote: post #176

paulpauper wrote: post #110

Earlier quoted context omitted.

he made many bad predictions, and continued to double down on them: dollar collapse, $5k+ gold, emerging markets boom, bitcoin crash, hyperinflation, bear market, recession, etc. every year He never deviated from his predictions or view even when shown to be wrong. He never stopped to consider maybe he was wrong, not that the economy is wrong.

He isn't wrong on any of those predictions. The dollar has never been at a more precarious position (on a hyper-inflation course and the BRICS are pondering about adopting the Yuan). Bitcoin (who knows what's coming next, but for sure never seeing 70K again) Hyperinflation (pretty obvious) Bear market (most of 2022 was in one, and most probably this year will follow) Recession (high certainty this will happen. Fed's…

[dead]

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

#385

Post by danaris » Sat, Mar 25, 2023, 3:43 PM UTC

satellite2 wrote: post #235

FredPret wrote: post #195

Earlier quoted context omitted.

The other advantage is the total net worth as opposed to GDP. You hear a lot about GDP and the US has the biggest economy by far. But the total net worth per person in the States is even further ahead of the rest of the world. Only Switzerland is ahead of the US in per-capita net worth (only by a hair though) and one suspects that’s partly due to so many Americans parking their money there. Having had the biggest GDP…

It's basically impossible to do any financial transactions in Switzerland as an American. Even something as mundane as opening a bank account to receive your salary is extremely complicated as most banks refuse to do business with Americans. A lot of Americans there renounced their citizenship because of this.

I'm not sure this is the best example. The reason America puts Swiss banks with American customers under extra scrutiny is specifically because Swiss banks are infamous for enabling tax evasion.

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

#386

Post by JumpCrisscross » Sat, Mar 25, 2023, 3:48 PM UTC

Rury wrote: post #171

JumpCrisscross wrote: post #9

Earlier quoted context omitted.

Glass-Steagall’s repeal wasn’t proximate to any post-repeal banking crises. (Glass-Steagall wouldn’t have prevented mortgage CDOs.) It certainly wouldn’t have done anything for SVB or Signature.

That's debatable. Glass-Steagall wouldn't have prevented CDOs, but Glass-Steagall's repeal paved way for previously illegal mergers and acquisitions between commercial banks and investment banks. Had these mergers not had been allowed, it is debatable banks would have been "too big to fail", and the entire system wouldn't have been so susceptible to collapse.

> it is debatable banks would have been "too big to fail"

Pre-GLB’s LTCM is a potent counterfactual to this claim. Truth is, the topology of our banking system changed with computerisation. This enables tremendous opportunity. But it introduced novel fragility.

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

#387

Post by cm2187 » Sat, Mar 25, 2023, 4:17 PM UTC

drexlspivey wrote: post #361

cm2187 wrote: post #245

Earlier quoted context omitted.

Credit Suisse had a 14% CET1 ratio, higher than JPMorgan. The stock price was depressed because it wasn't turning a profit but it was nowhere near a level of losses where it would be a concern from a creditor point of view.

There were a series of news before investors started panicking, it’s not like people randomly decided to dump the stock without any reason. > (March 9) Credit Suisse shares drop as annual report delayed following SEC call > Postponement comes as regulator weighs in on 2019 cash flow statements > (March 14) Credit Suisse finds ‘material weaknesses’ in financial reporting controls > Swiss bank says it lacked effective…

Yeah. No restatement to the numbers already published. Doesn't look good but should hardly move the stock price, let alone the credit worthyness (two distinct things).

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

#388

Post by Dylan16807 » Sat, Mar 25, 2023, 4:29 PM UTC

bogomipz wrote: post #378

Dylan16807 wrote: post #233

Earlier quoted context omitted.

> Perhaps you are well-off but losing a pay check for couple of weeks has real consequences for lots of people. They're arguing that companies could already make payroll just fine with access to half their balance. A 100% guarantee was not necessary.

If your payroll plus all other outgoing expenses was greater than $250K then no you would not be able to "make payroll just fine." This is simple math. Arguing against basic math is absurd.

I said half their balance. I didn't say anything about 250k. Please reread the comment thread.

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

#389

Post by Dylan16807 » Sat, Mar 25, 2023, 4:33 PM UTC

Operative0198 wrote: post #367

Dylan16807 wrote: post #349

Earlier quoted context omitted.

Wrong chart. That's a rolling average of 12 months. The peak was in June, so it's still dragging the yearly number up. The last 8 months were much lower than the previous several. https://tradingeconomics.com/united-states/inflation-rate-mo... https://i.imgur.com/MBwyLjJ.png Though that chart also shows inflation dropping...

I don't what you are on about. The chart figures I linked is sourced from the monthly CPI rate shared by BLS every month. You are obviously trolling at this point.

The main inflation number that everyone talks about compares each month to one year previous.

When inflation changes rapidly, it gives you outdated information.

When you look at the underlying data for each month compared to the previous month, you can see that the spike was higher than 9% and we are currently lower than 6%.

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

#390

Post by quags » Sat, Mar 25, 2023, 4:43 PM UTC

pjc50 wrote: post #268

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…

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)

New Jersey certainly has had budget issues and pension issues. But the current leadership has done fairly well with a budget suppress and continuing to fund the pension system. So as of now the loss of the single taxpayer while a loss to the budget hasn’t put a huge hole in the system. Obviously fully funding the pension after years of under funding will take time so we will see how it turns out.