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Reasons the banking crisis isn’t a repeat of 2008

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

#421

Post by bogomipz »

arcticbull wrote: post #403
bogomipz wrote: post #395

Earlier quoted context omitted.

>"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…

> 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." 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."

>"And after that banking rules became a lot stricter to reduce the risk of this happening again."

Except that Dodd-Frank legislation was continuously chipped away at, ultimately resulting in the 2018 "Economic Growth, Regulatory Relief, and Consumer Protection Act in 2018."[1].

This 2018 bit of legislation is notable in that it completely loosened the regulatory regime and oversight of small and midsize banks - the exact profile of institutions being discussed here!

Specifically this new legislation reduced the number of banks that were subject to stronger federal oversight. Under the Dodd-Frank legislation, banks with assets of more than $50 billion were subject to stress tests and higher capital requirements.

The newer 2018 legislation contained a section that basically eliminated that stronger regulation for banks with assets between $50 billion and $100 billion and moved the goal posts of "discretionary oversight" out to financial institutions with assets between $100 billion and $250 billion instead.

It's fascinating that you are arguing points without seeming to have an understanding of all that has changed since Dodd/Frank 13 year ago. You seem to be completely unaware of the developments since 2018 i.e the exact things that enabled the developments of the last two weeks.

[1] https://www.investopedia.com/terms/d/dodd-frank-financial-re...

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

#422

Post by safety1st »

paganel wrote: post #242
safety1st wrote: post #175

Earlier quoted context omitted.

For sure China has a ton of people and a huge economy. Fair point that the regulatory framework there may be more homogenous, but it's also weaker. And it lacks all the other inbuilt advantages I mentioned. Remember, the USA can ship goods back and forth between itself and what... 90% of the ex-US global economy? With very little geopolitical interference. This is largely a function of geography, plop a cargo ship in…

I think this is a skewed perspective. In case of a war the Chinese leaders won't care about the fact that they won't be able to sell their plasticky stuff to Europe or the US, they'll only care to have enough food for their population and enough raw materials for their Army (it takes lots of iron and access to cheap energy to make lots of artillery shells). Lack of enough food for their population was what brought th…

I'm not convinced this analysis holds up to the numbers. China imports around $135B of food per year. Before the war Russia was exporting around $35B. Admittedly a lot of the Chinese imports are luxury foodstuffs but that's still a big big gap. China can't feed itself, even with Russia's help. This is a recurring problem throughout China's history.

I think you underestimate the importance of "plasticky trinkets." Exports are the backbone of the Chinese economy. Without them it can't afford to import food, and millions of Chinese starve. If China declares war and isolates itself so that Russia is its primary remaining trade partner, millions of Chinese starve.

The biggest importers of food to China today are the US, Brazil, Australia, and a handful of Southeast Asian countries - basically that's all gone if China goes to war or isolates itself in some other way.

Now I mean sure anything can happen in a war and the CCP might very well choose to let millions of Chinese starve, they've done it before. My point here was that isolation would inflict terrible and permanent damage to China. A war is unlikely to happen in the first place because not only is this damage so great, but China would probably lose any battle that wasn't very close to their home theatre.

By the way, Chinese food security is a great topic for illustrating how dysfunctional they are as a country. Here's an article on the topic - https://www.cfr.org/article/china-increasingly-relies-import... - basically they don't have food security, achieving it is one of their top priorities, and they are failing to achieve that priority. The cost to grow soybeans in China is 30% higher than in the US, and the yield is 60% lower!

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

#423

Post by pfannkuchen »

fijiaarone wrote: post #295
kirse wrote: post #162

Earlier quoted context omitted.

No other country can compare. No one else has this. These in-built advantages are incredibly hard to beat. It's why it's on our currency - "e pluribus unum". It's also why Russia and China are constantly working to erode the unity of the American people, whether it's through false narratives that "we're more divided than ever", driving a wedge into political parties, fomenting rage-mode across social media, utilizing…

“A cord of many strands is not easily broken” is literally Fascism.

The "cord" in fascism is usually an ethnic group. I believe that is the problem with fascism, not the fact that there is a cord.

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

#424

Post by dotancohen »

dalbasal wrote: post #244
bcrosby95 wrote: post #68

Earlier quoted context omitted.

Analogies are like children. If its your own they're a brilliant, cute, funny, unique individual. If they're other people's they're loud, annoying, stinky little pests and oh god they're swarming you.

Actually they're more like teenagers.

I wonder how many HN conversations would be cut short if we simply accepted that analogies are imperfect yet useful.

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

#425

Post by [deleted] »

safety1st wrote: post #422
paganel wrote: post #242

Earlier quoted context omitted.

I think this is a skewed perspective. In case of a war the Chinese leaders won't care about the fact that they won't be able to sell their plasticky stuff to Europe or the US, they'll only care to have enough food for their population and enough raw materials for their Army (it takes lots of iron and access to cheap energy to make lots of artillery shells). Lack of enough food for their population was what brought th…

I'm not convinced this analysis holds up to the numbers. China imports around $135B of food per year. Before the war Russia was exporting around $35B. Admittedly a lot of the Chinese imports are luxury foodstuffs but that's still a big big gap. China can't feed itself, even with Russia's help. This is a recurring problem throughout China's history. I think you underestimate the importance of "plasticky trinkets." Exp…

[deleted]

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

#426

Post by dalbasal »

dotancohen wrote: post #424
dalbasal wrote: post #244

Earlier quoted context omitted.

Actually they're more like teenagers.

I wonder how many HN conversations would be cut short if we simply accepted that analogies are imperfect yet useful.

I chuckled, but let's not. I apologize.

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

#427

Post by cpursley »

mike_d wrote: post #193
quesera wrote: post #179

Earlier quoted context omitted.

You left out: * Issues the global reserve currency * Maintains the largest military * Has the widest media reach * Has significant natural resources There are problems too, but the unfair advantages are quite strong, and self-perpetuating. Which is fortunate for Americans, because very few countries could be so haphazardly managed, without failing.

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

In a kinetic war with a hypersonic wielding power, those 11 carriers will be at the bottom of the sea in the first week. Any threatening surface ship, really.

I’d argue the real power are the US underwater assets.

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

#428

Post by smcin »

makomk wrote: post #258
smcin wrote: post #46

Earlier quoted context omitted.

Re Glass-Steagall and 2008 crisis, Robert Reich and Elizabeth Warren disagree with you [ https://robertreich.org/post/124114229225 ]. According to you, which legislation prevented the conflict-of-interest in banks writing trillions in subprime mortgages decades prior to 1999? or securities firms selling CDOs backed by subprime MBS? IIUC, the issue in 2008 was never "preventing mortgage CDOs" outright, but preventing…

Robert Reich and Elizabeth Warren have massive partisan and ideological axes to grind, and their careers basically rely on convincing people that it's all the fault of big businesses convincing the government to lift regulations and that they could fix all of this if voters only gave them and their side the power.

What specifically is the most incorrect claim/belief Reich and Warren have? And why is it that banks don't fail in Canada?

"it's all the fault of [hyperbole] big businesses convincing the government to lift regulations". Well who else was lobbying govt to roll back banking regulations, in the 1990s?

Which lobbyists paid former Sen. Phil Gramm? Gramm's wife Wendy as CFTC chairwoman till 1993 issued regulations that legalized the type of electricity trading that helped Enron make millions in illegal profits. In 1993 joined Enron and ended up on its audit committee, where she approved all the shenanigans. She made $ out of Enron, while her husband was passing legislation to help it, and Enron lobbyists contributing to his campaign.

Phil Gramm ended up on the board of UBS, and a McCain adviser on the economy. Insanity.

"...if voters only gave them and their side the power." Start by ending the revolving door. That's not "giving their side the power".

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

#429

Post by cultureswitch »

makerdiety wrote: post #53
majormajor wrote: post #30

Earlier quoted context omitted.

I think that's what the commenter was getting at, but I think the fixation on banks as a way of "printing money" as a big problem is wildly overblown. "Money" is more of a fiction than that, and that's ok. Creating a successful company creates money. Crypto created money (while often pitched as ultimately being about the opposite).

If money is a fiction, and if successful companies create money, then successful companies create fictional currency and assets. So crypto being successful and creating money is just as bad as a successful company like Facebook or Google. Because money is fictional and therefore useless. And it's okay to accumulate a useless asset like money? Strange. Is there another game we can play? One that exits from this bad ca…

Money is debt. It is a relationship between people, not a thing made of matter. In that sense you could describe money as fictional, but certainly not useless.

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

#430

Post by FredPret »

danaris wrote: post #385
satellite2 wrote: post #235

Earlier quoted context omitted.

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.

It's a global thing, not just Swiss. USA has some high-powered financial regulations and the ability to enforce them
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