401–410 of 441 posts
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It’s hardly the image of stability but saying people only have $4500 and it’s the Fed’s fault is wrong in two ways.
Problem being that total assets does not measure liquidity. That people only have $4500 of cash is a significant problem if they have a relatively minor emergency. Especially in the US, where a $4500 hospital bill is pretty cheap.
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Indeed - Credit Suisse isn't a retail bank (outside Switzerland), they're an investment bank so they're completely different and shouldn't be lumped in with the other 3. Two small crypto institutions and SVB. [edit] Not to mention Credit Suisse was holding $5B dollars of losses from Bill Hwang's Archegos shenanigans.
None of SVB, First Republic or Signature were retail banks either they were commercial banks. Regardless nowhere have I seen it reported that the current sequence of events is somehow a "retail banking crisis". It's amusing that you feel an investment bank somehow shouldn't be included in a discussion about a potential banking crisis. You might want to read up on the 2008 financial crisis and shadow banking. Bear Ste…
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> SVB’s uninsured deposits(anything over 250k) accounted for 94% of its total deposits and the FDIC took the extraordinary step of insuring those deposit after the fact. Did they need to? It's not clear anyone would have lost anything at all because depositors are senior to equity and bond holders. All the bank's equity would have been wiped out sure (and it was anyways) but losses to depositors would likely be slim…
>"It's extremely unlikely anyone, anywhere, would be at risk of losing any deposits - insured or uninsured - in this day and age in the US regardless of the FDIC's 'new' position." When IndyMac Bank failed in the 2008 financial crisis, the FDIC paid uninsured depositors 50 cents of every dollar[1][2][3]. I would say that very much of "this day and age." From the FDIC's IndyMac Resolution: "If it is determined that yo…
And after that banking rules became a lot stricter to reduce the risk of this happening again.
That's kind of the point, 2008 isn't "this day and age."
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> 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 conside…
In case of a war starting I do think China won't look at the money getting spent anymore, so at that point importing oil from Iran via train [1] or from Russia (again, via train) won't be a problem for them in terms of money.
I also do think they'll switch to "war economy" mode pretty soon after the war starting, so no more private cars on the roads and such, which will greatly alleviate China's oil-related needs.
Later edit: And there's also the Northern route. I don't think any US aircraft career will be brave/stupid enough (depending on how you look at it) to position itself close to the Sakhalin Island or close to Kamchatka, that's prime hunting ground for the Russian subs. Never mind going into the Arctic Sea itself.
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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.
The problem is akin to a boat. If you breach the hull which is one big container, the entire ship will surely sink. If you breach the hull of a ship which has many interior separate containers, only one container fills with water, and the ship continues afloat. The bigger banks and firms get relative to the market, the more susceptible the system is to a complete collapse, as they essentially become the market. There is simply no denying that Glass-Steagall prevented mergers of commercial and investment banks, and no denying that removing it made the system less robust in this very aspect. It's the same reason diversification reduces risk.
Does that mean that the system can't fail when there are no big players? No, absolutely not. But to say Glass-Steagall wasn't proximate to the 2008 crisis is highly dubious.
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How does a loan create money? A loan is just shifting funds from the lender to the borrower.
The normal definition of money includes bank balances. If you deposit $1000 of cash at a bank, and they loan it to someone else, you still have $1000 of money but now that other person also has $1000 of money. But the abstract (and more accurate) version is even more interesting. Let's assume the person getting the loan deposits the money at the bank. Now we don't even need to touch cash. Giving out a loan is just ad…
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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…
The utility they provide is the ability to deploy a US airbase and a full air wing within strike distance of any foreign capital.
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> but the idea that > are acting in a manner to maintain/increase their wealth aint exactly a conspiracy theory. This is the correct statement and it's not a conspiracy theory, it's a banality.
It's certainly not correct. If it was far fewer people would be in debt. People generally prioritise short term happiness over wealth building.
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I hate all these conspiracy theories. And you know why? It's because they imply hubris, arrogance, control. Let's just realize that we all have a lot less control over our environment than we think we do, and some things are just forces beyond anyone's control.
Since 2008 I believe there are participants in the economy that are more equal than others. Namely Wall Street players.
Read something like Anarchy - the East India Company. Sheer luck got them to where they ended up, despite them being a) a literal "conspiracy" (a corporation) and b) bumbling fools on repeated occasions.
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I hate all these conspiracy theories. And you know why? It's because they imply hubris, arrogance, control. Let's just realize that we all have a lot less control over our environment than we think we do, and some things are just forces beyond anyone's control.
Conspiracy theories? Check the data... What happened after 2007/ 2008? What happened during / after Covid? There is zero reason to imply any of those things. The data speaks for itself.
The data points to wealth redistribution but the causes are larger than some dark cabals. Globalization is the biggest one and globalization is such a huge topic not even 1000 CEO out together could begin to understand it.