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465 of those failed during the Great Recession, which would have been worse than the Great Depression if not for the actions of the Fed and the government.Quick question: How many banks have failed since 2007?
Answer: 536 and we have no depression.
The Too Big To Fail banks became much bigger after the 2008 crash. They are bigger than ever. I've often said they are now Too Big To Save. If they fail, there is nothing anyone can do, not even the Fed.Now, watch as the fed makes large banks whole and lets small banks fail in order to consolidate to a small number of large banks in a desperation attempt. It doesn't matter though. The world financial system is about to ultimately fail and a one world type of currency will arise.
Each succeeding crisis is larger than the last for this exact reason.This sums it, IMO. We may escape from this banking wobble, but central banks have set the stage for what could turn out to be the mother of all financial crises in the future. When it happens is anyone's guess, but there are different scenarios for this to go sideways.
The market indices are still overpriced, IMO. You wouldn't know that there's inflation or that we just had a small banking crisis by the way that investors are behaving, and that's because they are expecting central banks to continue backstopping their risk.
This won't end well.
ZIRP was the Fed's way of bailing out the zombie banks at the expense of everyone else. It became pointless for savers to save, and it caused investors to have to invest on massive economies of scale and to invest in incredibly risky products.the ZIRP policy is only intended to be a short term policy, not one that runs for many years as it did currently. Bankers were aware of that, but just didn't give a shit, they can count on bailouts and let taxpayers eat the losses.
Each succeeding crisis is larger than the last for this exact reason.
It all started with the Fed saving a bank in Cleveland, IIRC. Then it was LTCM. Then it was 2008, picking the winners and losers.
Now they are doing it again.
Sooner or later, Too Big To Save, and then we are all fucked.
It all depends on how diversified a bank's bond holdings are. I used half just as an illustration.My question is, how underwater is underwater?
Surely not close to half....right?
See that chart in post 2.The dow was spooked today more by Yellen saying that depositors would not be bailed out more than the FDIC allows than the .25 basis point increase.
U.S. Treasury Secretary Janet Yellen is not considering covering all uninsured deposits at U.S. banks while ruling out the need for a broad boost in deposit insurance, she told members of the Senate's Appropriations Subcommittee on Financial Services and General Government on Wednesday.
YearsI've been warning about this for months.
Consumer expenditures rose to an all time high after the pandemic.No it didn’t. Show me on a chart where demand spiked.
Crazy how paying people not to produce ends up with more money to buy non-existent things.Yep. Demand exploded, global supply chains immediately buckled, and here we are.
I would change "jack up spending" to "jack up borrowing".It's weird but since they already went into ZIRP Land it made sense to jack up spending a lot while the interest rates were effectively negative. Many Foreigners were desperate to park money in the U.S. dollar before the COVID thing, so the bonds sold well. Japan did the same thing.
Exactly right.Wrong. Depositors are lenders; they're lending their money to the bank. Banks are borrowing money short term to buy long term debts and make long term loans. They always fail sooner or later, unless they get bailed out or their debtors don't default. When there is a run on the bank they lose deposit margins, their lending stops while their obligations continue. If they made solid loans they can weather it; if they made bad loans their revenue ceases at precisely the time they need revenue the most. Some get lucky, most need to be rescued sooner or later.
Remember how Silicon Valley Bank had a lot of depositors whose accounts were a gajillion dollars over the FDIC insured amount?
Well, the US government made those depositors whole anyway.
I am referring to the giant spike at the Fed discount window. A whole lot of banks are borrowing a fuck ton of money from the Fed.Several times you mentioned that “something really bad is going on”
What are you referring to?
On one side of the ledger, the Fed is doing a good job, as you say.I think Powell and the Fed are doing a good job. No pearl clutching, they got this.
They started a little late, but other than that, the economy seems to be slowing gradually.
One more .25 in May and then a pause to see how inflation is doing.
In 2024 I'm betting that the Fed will be lowering rates if inflation isn't rising.
That should help Joe Biden get re-elected.
Our banking system is not going to be nationalized.How nice. And we know who those depositors are! Last year, many took out hundreds of millions (billions?) of dollars (a huge amount) from SVB all approved by the bank despite the fact that the bank already knew they were going insolvent! And guess who is going to pay for that now? The other banks will--- that is to say YOU will, in higher fees and such as other banks now tighten their loaning habits to small business and average people.
One more step in the nationalization of our banking system.