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U.S. bank lending slumps by most on record in final weeks of March

finance.yahoo.com

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Re: U.S. bank lending slumps by most on record in final weeks of March

#61

Post by dragonwriter »

amanaplanacanal wrote: post #50
throwaway6734 wrote: post #13

Earlier quoted context omitted.

The government will be gouging the young to pay for it. From the generation that brought you Ronald Reagan, boomers will have no trouble bankrupting the youth to pay for their entitlements

The boomer playbook has always been voting themselves benefits to be paid for by their children and grandchildren. This seems to be universal: liberal, moderate, or conservative. See the national debt. And I say this as a boomer myself.

> The boomer playbook has always been voting themselves benefits to be paid for by their children and grandchildren

The Boomers were in their prime working years when the Silents under Reagan did the US’s biggest tax burden shift onto them, and cut their expected benefits along with it.

What are you referring to, specifically?

Re: U.S. bank lending slumps by most on record in final weeks of March

#62

Post by jameslk »

tlogan wrote: post #54

I think this is just a temporary slump caused by the SVB failure. The economy is not doing great but it is not in a complete metldown. I do expect interest rate to continue going up: inflation seems to be quite stubborn.

When lending stops, people stop buying things[0], like cars and houses. Or all that crap on Buy Now, Pay Later plans. There's these huge credit bubbles we have[1] that are going to be deflated very quickly once debt is no longer easily and cheaply available.

0. https://en.wikipedia.org/wiki/Credit_cycle

1. https://en.wikipedia.org/wiki/Everything_bubble

Re: U.S. bank lending slumps by most on record in final weeks of March

#63

Post by sofixa »

user3939382 wrote: post #42

It's interesting that many of us here are programmers and understand that debugging becomes exponentially more difficult as you add a number of variables beyond 1 to your deductive tests. Yet when it comes to the economy, which is the product of an unfathomable number of variables, from the same people there are consistently these confident assessments of why we see x, y, z and what will happen. It's worth discussing…

In my opinion it's classic Dunning-Kruger effect. For some reason the people in question took some Econ 101 or read some thing somewhere, and are extremely confident in their extremely limited economics knowledge, being completely ignorant of how complex it actually is in the real world.

As an aside, if there's one thing strategy games (and in particular Paradox' Grand Strategy games and Democracy) have taught me that might actually be real world applicable, is that nothing is simple or easy, and anyone (especially politicians) that they have one easy solution that will fix all problems is either ignorant or a charlatan.

Re: U.S. bank lending slumps by most on record in final weeks of March

#64

Post by mholyland »

user3939382 wrote: post #42

It's interesting that many of us here are programmers and understand that debugging becomes exponentially more difficult as you add a number of variables beyond 1 to your deductive tests. Yet when it comes to the economy, which is the product of an unfathomable number of variables, from the same people there are consistently these confident assessments of why we see x, y, z and what will happen. It's worth discussing…

I've always thought that the Fed gets too much blame for the economy going badly, when all they can control is the interest rate and QE/QT. It's like an inverted pendulum PID problem[0] but with an unfathomable number of variables and stakes.

0. https://www.youtube.com/watch?v=I5GvwWKkBmg

Re: U.S. bank lending slumps by most on record in final weeks of March

#65

Post by pibechorro »

mholyland wrote: post #64
user3939382 wrote: post #42

It's interesting that many of us here are programmers and understand that debugging becomes exponentially more difficult as you add a number of variables beyond 1 to your deductive tests. Yet when it comes to the economy, which is the product of an unfathomable number of variables, from the same people there are consistently these confident assessments of why we see x, y, z and what will happen. It's worth discussing…

I've always thought that the Fed gets too much blame for the economy going badly, when all they can control is the interest rate and QE/QT. It's like an inverted pendulum PID problem[0] but with an unfathomable number of variables and stakes. 0. https://www.youtube.com/watch?v=I5GvwWKkBmg

They introduce top down decisions on what is a bottom up complex emergent system. Beyond being an exercise in futility to control it that way, it introduces irrationality to the whole thing as it becomes a politically driven thing. That irrationality makes everything else behave that way and we loose any sense of "natural" trends and predictability. The bailouts are a perfect example, we are now surrounded by zombie companies and uninteted consequences which are making the whole thing more fragile and unstable.

Re: U.S. bank lending slumps by most on record in final weeks of March

#66

Post by NoboruWataya »

ljoshua wrote: post #36

When the article says, “Commercial bank lending dropped nearly $105 billion in the two weeks ended March 29, the most in Federal Reserve data back to 1973,” and later also notes that banks “divested” themselves of billions of dollars in loans, where is the money going? Are they selling the loans off their books to third parties? Or are they just refusing to make new loans that they would have otherwise consistently m…

I can't answer that concretely, but there is an active secondary market for corporate loans, so I have always understood divestment to mean selling the loans to third parties (eg, credit funds and CLOs), as you mention.

Re: U.S. bank lending slumps by most on record in final weeks of March

#67

Post by jameslk »

mholyland wrote: post #64
user3939382 wrote: post #42

It's interesting that many of us here are programmers and understand that debugging becomes exponentially more difficult as you add a number of variables beyond 1 to your deductive tests. Yet when it comes to the economy, which is the product of an unfathomable number of variables, from the same people there are consistently these confident assessments of why we see x, y, z and what will happen. It's worth discussing…

I've always thought that the Fed gets too much blame for the economy going badly, when all they can control is the interest rate and QE/QT. It's like an inverted pendulum PID problem[0] but with an unfathomable number of variables and stakes. 0. https://www.youtube.com/watch?v=I5GvwWKkBmg

Monetary policy has incredible sway over the economy, so they should bear the brunt of the blame. It's odd to me that everyone talks about how important democracy and elections are, but when it comes to the mighty dollar, the thing that runs this country and largely the world, all decisions affecting its value are made by a board of unelected individuals behind closed doors through opaque models. The FOMC membership itself partly consists of bankers elected by other bankers, which always seemed like a conflict of interest to me. The Fed deserves more scrutiny, if anything.

Re: U.S. bank lending slumps by most on record in final weeks of March

#68

Post by tzs »

kneebonian wrote: post #2

The days of cheap capital are over, and not because of the Fed. The largest generation, boomers, are now retiring. Up until now they've been pumping money into the economy and the investing with their 401k and things like that. Now that trend is reversing as they retire they are taking money out of the 401k, out of their life savings, at the same time their purchasing power is decreasing. The end result is a lot less…

> The largest generation, boomers, are now retiring.

Aren't the majority of Boomers already retired?

The usual definition of Boomers is those born in [1946, 1964]. That's people currently 59-77 years old.

Some people do now divide Boomers into two groups, Boomers born in [1946, 1954] and Boomers II born in [1955, 1964], so Boomers II are now just moving into retirement.

Re: U.S. bank lending slumps by most on record in final weeks of March

#69

Post by 0xbadcafebee »

MR4D wrote: post #49
0xbadcafebee wrote: post #26

Earlier quoted context omitted.

Controversial opinion: The US's buying power has led to global negative externalities directly tied to the cost-cutting measures needed to drive perpetually increasing profits and population growth, most of which was fueled by a strong growing economy. A long-term slump might lead to a net reduction in negative externalities, assuming there is a refocus on more efficient resource allocation in order to safeguard the…

That's an interesting thought. I prefer to use the word "de-globalization", which covers some of the same effects.

I would agree, with the caveat that even pre-globalized societies tend toward exploiting resources and people when there's a strong economy supporting a demand. It's hard to find a case of an increased demand leading to increased resource utilization that doesn't end in negative externality.

Re: U.S. bank lending slumps by most on record in final weeks of March

#70

Post by nickserv »

user3939382 wrote: post #42

It's interesting that many of us here are programmers and understand that debugging becomes exponentially more difficult as you add a number of variables beyond 1 to your deductive tests. Yet when it comes to the economy, which is the product of an unfathomable number of variables, from the same people there are consistently these confident assessments of why we see x, y, z and what will happen. It's worth discussing…

Right, but it's still possible to understand and debug incredibly complex programs, in the end it's still deterministic.

The problem with economics is that it's a social science, and that humans are non deterministic in their behavior. Not even seasoned economists can predict an outcome, the best they can do is understand what happened after the fact.

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