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What tools are left to stave off a full-on crash and depression?
Posted on 3/13/23 at 8:51 am
Posted on 3/13/23 at 8:51 am
After years of free money and kicking the can down the road, not many tools are left to stave off the inevitable it seems.
No way the FDIC can do for every bank what they are doing for SVD and SBNY. Winners and losers will be picked by the FDIC it seems.
The Fed is now in a really tight spot trying to stop inflation but also making bonds bought over the past few years even more worthless. Many here last week called people panicking about SVB stupid for not realizing it's a business-only bank and said that it would isolated. The truth is that many banks are exposed to bonds that are now worth pennies on the dollar.
If the Fed keeps raising rates, those bonds become just paper at some point. If they don't raise rates, then inflation becomes an uncontrollable monster.
What is left? Just let it all crash and rebuild? Is there a way out? Will this be worse than 2008?
No way the FDIC can do for every bank what they are doing for SVD and SBNY. Winners and losers will be picked by the FDIC it seems.
The Fed is now in a really tight spot trying to stop inflation but also making bonds bought over the past few years even more worthless. Many here last week called people panicking about SVB stupid for not realizing it's a business-only bank and said that it would isolated. The truth is that many banks are exposed to bonds that are now worth pennies on the dollar.
If the Fed keeps raising rates, those bonds become just paper at some point. If they don't raise rates, then inflation becomes an uncontrollable monster.
What is left? Just let it all crash and rebuild? Is there a way out? Will this be worse than 2008?
This post was edited on 3/13/23 at 8:57 am
13
Posted on 3/13/23 at 8:57 am to stout
Yes, because this time, there will also be massive inflation and food shortages.
The war in Ukraine has disrupted both the global grain export market as well as the global market for fertilizer. This will cause the third world’s crop yields to be cut by more than 1/3. As such, the third world will starve and be forced to import food from the developed world. This situation will inevitably drive up prices in the U.S. The U.S. won’t starve due to our wealth, but shortages of staples and products will be commonplace.
The best thing to do is let the f$&ker collapse. Everything else just prolongs the pain.
The war in Ukraine has disrupted both the global grain export market as well as the global market for fertilizer. This will cause the third world’s crop yields to be cut by more than 1/3. As such, the third world will starve and be forced to import food from the developed world. This situation will inevitably drive up prices in the U.S. The U.S. won’t starve due to our wealth, but shortages of staples and products will be commonplace.
The best thing to do is let the f$&ker collapse. Everything else just prolongs the pain.
This post was edited on 3/13/23 at 9:01 am
Posted on 3/13/23 at 8:58 am to stout
quote:
Just let it all crash and rebuild? I
This would be like the fall of Rome. The worldwide rebuild would be in terms of centuries, not months.
This post was edited on 3/13/23 at 8:59 am
Posted on 3/13/23 at 8:59 am to kingbob
Posted on 3/13/23 at 9:01 am to SlowFlowPro
quote:
This would be like the fall of Rome
What is the way out? I am seriously asking for those here way smarter than me. Seems like either way we go, there is going to be some major pain. Lose on bonds which can crash huge banks, hedge funds, etc, or let inflation run it's course.
Posted on 3/13/23 at 9:03 am to stout
quote:
What is the way out?
Way back when I said 2008 may be the peak of civilization.
We're going to have to accept a decreasing quality of life over a period of time. The best plan would be for this to happen very slowly.
The problem is this would be exacerbated everywhere else in the world b/c they rely so much on our production and buying and sustaining our QOL.
For the US, decreasing energy costs is our only trigger we have left.
quote:
Seems like either way we go, there is going to be some major pain.
100%
Why our strategy post-2008 didn't actually fix anything
Posted on 3/13/23 at 9:05 am to stout
Fed was going to raise rates till something broke. Something broke.
Posted on 3/13/23 at 9:05 am to stout
What is it good for?
Posted on 3/13/23 at 9:05 am to stout
quote:
it all crash and rebuild
Well...
quote:
The Great Reset
quote:
Build Back Better
They have been telling this to us these past few years. Why is everyone so surprised?
Posted on 3/13/23 at 9:06 am to stout
quote:I'm less familiar with the NY bank. But once assets are processed, SVB could end up as a minimal (or no loss) loss affair
No way the FDIC can do for every bank what they are doing for SVD and SBNY
Posted on 3/13/23 at 9:06 am to SlowFlowPro
quote:
For the US, decreasing energy costs is our only trigger we have left.
Which creates a whole other set of problems
Posted on 3/13/23 at 9:06 am to the_truman_shitshow
quote:
They have been telling this to us these past few years. Why is everyone so surprised?
Then why did "they" "bail out" SVB?
Posted on 3/13/23 at 9:07 am to stout
SVB was stupid. It held way too much longterm treasury paper in the form of 10 year bonds that they tried to sell to raise funds, but then sold at a loss to the tune of 1.8 billion. Also not enough out in the form of loans. Way too heavy on deposits just sitting there doing nothing. All this was known to people associated with the bank.
Becker made the mistake of saying all is well.
Becker made the mistake of saying all is well.
Posted on 3/13/23 at 9:08 am to NC_Tigah
quote:
But once assets are processed, SVB could end up as a minimal (or no loss) loss affair
Maybe but would every bank that has exposure be in a similar situation?
Also, bank consolidation has been happening for years and is not good for the average consumer. This speeds that up as the big 4 will snap up smaller banks at a faster rate and deep discounts now.
Posted on 3/13/23 at 9:08 am to KiwiHead
They probably did that because they believed their risky behaviors would lead to a bailout if things didn’t pan out.
Posted on 3/13/23 at 9:08 am to SlowFlowPro
quote:have to eat bugs, huh blind world order
We're going to have to accept a decreasing quality of life over a period of time.
Posted on 3/13/23 at 9:10 am to NC_Tigah
I think Signature had other problems different from SVB. Crypto heavy.
Posted on 3/13/23 at 9:10 am to KiwiHead
quote:
It held way too much longterm treasury paper in the form of 10 year bonds
And they aren't the only one exposed like this from what we are seeing this morning. A few more seem to be set up the same and their stocks are tanking this morning.
Western Alliance Bancorporation down 62%
First Republic Bank down 64%
PacWest Bancorp down 42%
Posted on 3/13/23 at 9:11 am to JJJimmyJimJames
quote:
have to eat bugs, huh blind world order
No it's to avoid that, actually.
Posted on 3/13/23 at 9:11 am to stout
quote:
Western Alliance Bancorporation down 62%
First Republic Bank down 64%
PacWest Bancorp down 42%
When I was looking at short-term CDs this weekend, I ruled out every bank from CA
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