For people who lived through 2007-2008 do you think the current times feel similar to how the last financial crisis unfolded?
Ask HN: Do you think this is the start of the new financial crisis?
1–10 of 226 posts
Re: Ask HN: Do you think this is the start of the new financial crisis?
#2The fact that lots of people are predicting absolute doom is kind of a contrarian indicator to me. If everyone was like meh no big deal it’d be more worrisome.
This isn’t just cynicism. It’s based on how markets work. If lots of people think there’s a possibility of major doom then (1) they are preparing now and (2) it’s likely at least somewhat priced into the market already.
Re: Ask HN: Do you think this is the start of the new financial crisis?
#3Yes. Not that it necessarily means it will be the same scale.
The biggest difference is that this will hit everything that was (knowingly or not) built for a near-zero-interest-rate environment, not just financial companies but speculative tech startups that need lots of VC patience, etc. So probably not as focused on just financial companies.
Re: Ask HN: Do you think this is the start of the new financial crisis?
#4As far as I can tell, the banks aren't misbehaving en masse like they were in 2007. The failures seem to stem from some unfortunate or boneheaded decisions that ignore likely future interest rates.
And TBH... market needs a little cooldown. I am no expert, but I dont like where P/E ratios and such are even after the last mini downturn.
Re: Ask HN: Do you think this is the start of the new financial crisis?
#5I've talked to a number of bankers over the last week and most of them don't seem to think so. The counter-argument to crisis is that most banks structured their investments differently (soundly) vs. how some banks (e.g. Silicon Valley Bank) structured theirs. There will be some more shakeout of banks with bad investments but not a broader crisis. Of course, take that how you will, but certainly doesn't feel like 2008.
Re: Ask HN: Do you think this is the start of the new financial crisis?
#6It doesn’t feel similar to me, so far it seems like it’s a known problem and everything has been working ok-ish to prevent it from getting worse - last time it seemed like only very few people were ringing alarm bells and no one cared to listen
Re: Ask HN: Do you think this is the start of the new financial crisis?
#7No, I remember 2007-2008 pretty clearly. That felt much more precarious. Right now it seems pretty clear that if your bank fails you're going to get your money.
That's not to say that this isn't the start of some kind of a financial crisis. But it could be very different from 2008. In this case I think the risk is more towards high inflation - for example, if enough banks were to fail (hypothetically - I doubt this will happen) and bunch of money essentially has to be printed up to make everyone whole, that's going to devalue money hence more inflation.
Re: Ask HN: Do you think this is the start of the new financial crisis?
#8The fact that lots of people are predicting absolute doom is kind of a contrarian indicator to me. If everyone was like meh no big deal it’d be more worrisome. This isn’t just cynicism. It’s based on how markets work. If lots of people think there’s a possibility of major doom then (1) they are preparing now and (2) it’s likely at least somewhat priced into the market already.
Well, I wasn't worried until I saw your comment ;)
Re: Ask HN: Do you think this is the start of the new financial crisis?
#9The vibes are similar to early 2008. But the financial structure is different. Banks are not overleveraged. Housing is not all adjustable rate.
That being said, easy to see weakness. Commercial real estate is a big one. I'm somewhat concerned about non-bank Financials. Some large foreign banks (CS(dead) , DB, HSBC) I'm skeptical of.
And a recession feels imminent (felt to me this way even before SVB).
To sum up, I don't think this is over. There's no telling how bad it might get - we might get off fairly easily, might be bad.
One thing that concerns me is that there is much less room for fiscal/monetary action given where inflation is.
Re: Ask HN: Do you think this is the start of the new financial crisis?
#10The fact that lots of people are predicting absolute doom is kind of a contrarian indicator to me. If everyone was like meh no big deal it’d be more worrisome. This isn’t just cynicism. It’s based on how markets work. If lots of people think there’s a possibility of major doom then (1) they are preparing now and (2) it’s likely at least somewhat priced into the market already.
[deleted]