will25u said:

---

What does this mean?

---

that even though we still have inflation which means the Fed should keep raising rates

because now they are afraid of collapsing the economy they are going to go back to lowering rates

when WE STILL HAVE MASSIVE INFLATION

so everything they have done has not worked, and they have to stop trying to fix things because it's breaking OTHER things

get used to high inflation and stagflation

This must be what it felt like when my folks were paying damn near 20% on their home loan in the early 80s

LMCane said:

---

will25u said:

---

What does this mean?

---

that even though we still have inflation which means the Fed should keep raising rates

because now they are afraid of collapsing the economy they are going to go back to lowering rates

when WE STILL HAVE MASSIVE INFLATION

so everything they have done has not worked, and they have to stop trying to fix things because it's breaking OTHER things

get used to high inflation and stagflation

---

Thanks.

So they think the lesser of two evils is to help the banks but screw the normal people... Gotcha.

ETA: Well the bank have most of the normal peoples money... soo....

CM Trump Voter said:

---

I know very little about finance, but wouldn't a reversal of current monetary policy make the stock market go wild? Leading to more inflation?

---

EXACTLY

just like in 2018 when the Fed tried to raise rates only to have the markets collapses and then the Fed reversed course

they are having to reverse course AGAIN just 2 days after Powell claimed they would keep raising rates!

Russell 2000 index already down over 2% in 17 minutes

if only we lived in a world with that sort of discipline

cone said:

---

Quote:

---

I think the Fed may not be done with rate hikes.

---

i wish i shared your optimism

but the meme is already out there that the interest rate increases are tanking the banks and going to result in severe job losses (Senator Warren's rhetoric)

i could absolutely see them crying uncle here

---

The Feds historic pace may very well have played a role in the failures, but run away inflation and the debt services cost associated with long term high rates are a much bigger threat in the fed's eyes in my opinion.

LMCane said:

---

CM Trump Voter said:

---

I know very little about finance, but wouldn't a reversal of current monetary policy make the stock market go wild? Leading to more inflation?

---

EXACTLY

just like in 2018 when the Fed tried to raise rates only to have the markets collapses and then the Fed reversed course

they are having to reverse course AGAIN just 2 days after Powell claimed they would keep raising rates!

Russell 2000 index already down over 2% in 17 minutes

---

So should I buy more crypto, or nah?

Kidding... Kinda..

LMCane said:

---

CM Trump Voter said:

---

I know very little about finance, but wouldn't a reversal of current monetary policy make the stock market go wild? Leading to more inflation?

---

EXACTLY

just like in 2018 when the Fed tried to raise rates only to have the markets collapses and then the Fed reversed course

they are having to reverse course AGAIN just 2 days after Powell claimed they would keep raising rates!

Russell 2000 index already down over 2% in 17 minutes

---

It's going to be a wild day for all of this.

will25u said:

---

LMCane said:

---

will25u said:

---

What does this mean?

---

that even though we still have inflation which means the Fed should keep raising rates

because now they are afraid of collapsing the economy they are going to go back to lowering rates

when WE STILL HAVE MASSIVE INFLATION

so everything they have done has not worked, and they have to stop trying to fix things because it's breaking OTHER things

get used to high inflation and stagflation

---

Thanks.

So they think the lesser of two evils is to help the banks but screw the normal people... Gotcha.

ETA: Well the bank have most of the normal peoples money... soo....

---

It's not even the banks they are trying to help, they are very worried that if First Republic collapses today that ALL the banks will get hit

so it's not just the bankers, but the very foundations of the economy

which is the entire 2008-09 Bank Collapse Recession (obviously that was an order of magnitude greater so far and based on leveraged MBS)

but clearly the Fed prefers high inflation to bank collapse

Quote:

---

run away inflation and the debt services cost associated with long term high rates are a much bigger threat in the fed's eyes in my opinion.

---

completely agree

plus the whole dual mandate

but the pressure on Jay Powell has to be completely crushing

and i do think the political class thinks they can get people used to 6%

Sanders added that the US "cannot continue down the road of more socialism for the rich and rugged individualism for everyone else."

Bernie speaking truth?

this is a liquidity event

so the overleveraged regional banks fail and JPMorgan becomes a super mega outrageous bank. oh well.

but the fed losing momentum on the inflation fight is the primary concern.

Looks like Goldman may have bought all the underwater investments at SVB.

They may have just made a killing!

will25u said:

---

LMCane said:

---

CM Trump Voter said:

---

I know very little about finance, but wouldn't a reversal of current monetary policy make the stock market go wild? Leading to more inflation?

---

EXACTLY

just like in 2018 when the Fed tried to raise rates only to have the markets collapses and then the Fed reversed course

they are having to reverse course AGAIN just 2 days after Powell claimed they would keep raising rates!

Russell 2000 index already down over 2% in 17 minutes

---

So should I buy more crypto, or nah?

Kidding... Kinda..

---

Only if it's bitcoin that you're putting into self-custody.

did all of us just somehow miss Signature Bank failing yesterday?!

"The second-largest bank failure in the nation's history was followed barely 48 hours later by the third-largest bank failure ever seen. Signature Bank in New York similarly failed yesterday and was being seized by the Feds.

We dodged a bullet on a third failure when First Republic Bank announced that it had secured emergency funding from the Fed and JPMorgan Chase as it was teetering on the edge. After Janet Yellen had announced in no uncertain terms that SVB would not be receiving a bailout from the government (from the taxpayers, really),

the Treasury Department, Federal Reserve and FDIC said yesterday that all clients would be able to access their money, no matter how large their deposits may be. The difference between the current plan and a "bailout" isn't exactly clear."

seriously WTF is going on? there is no "bailout" but everyone still gets their money from collapsed banks?!?!

So, a crap on then jump on.

96ags said:

---

cone said:

---

Quote:

---

I think the Fed may not be done with rate hikes.

---

i wish i shared your optimism

but the meme is already out there that the interest rate increases are tanking the banks and going to result in severe job losses (Senator Warren's rhetoric)

i could absolutely see them crying uncle here

---

The Feds historic pace may very well have played a role in the failures, but run away inflation and the debt services cost associated with long term high rates are a much bigger threat in the fed's eyes in my opinion.

---

I think it was Beck or someone on his show who stated there was a 214 Billion dollar payment last month...

FOR INTEREST ON THE DEBT

214 BILLION DOLLARS just to pay your interest on your 31 trillion dollar debt!

cone said:

---

---

Welcome to the spring of death.

the Fed balance sheet is backstopped by God, clearly

feel free to disagree with me wherever you'd like

cone said:

---

Quote:

---

run away inflation and the debt services cost associated with long term high rates are a much bigger threat in the fed's eyes in my opinion.

---

completely agree

plus the whole dual mandate

but the pressure on Jay Powell has to be completely crushing

and i do think the political class thinks they can get people used to 6%

---

very well said, J Powell is in a situation where he gets to choose between a collapse now, or a collapse later; and will likely choose to delay pain.

5-6% inflation is here to stay; it's just low enough where the effects will be "smoke and mirrors" hidden for the majority of the population.

Forgive my ignorance. I only took a single class on west campus. Is there a post that summarizes this situation in layman terms? ....and who are we upset with?

Rapier108 said:

---

Anyone else remember that cone was one of the biggest pushers of Coronafear for 2 years?

Pepperidge Farm Remembers

---

I remember.

The disinformation bureau is alive and well, also.

Rep. Massie: DHS efforts are already underway to add censorship of "financial misinformation" to CISA's portfolio of "critical infrastructure" domains it can classify tweets as a cyber attack on, & thus censor. See, e.g., link below:https://t.co/M1FzQuUtv8 https://t.co/dPJQdpd7sf pic.twitter.com/37sy70744K

— Mike Benz (@MikeBenzCyber) March 13, 2023

I'm surer we will see what the latest Marxist-Democrat talking points, are by noon.

the biggest problem with persistent inflation like that is that the misery index stays pegged high and you get all sorts of political blowback that you don't expect/see

it's a populist politician's dream for the elites to settle on 6% as a new normal

high unemployment hits the working population hard. high inflation hits every person in America.

notex said:

---

Rapier108 said:

---

Anyone else remember that cone was one of the biggest pushers of Coronafear for 2 years?

Pepperidge Farm Remembers

---

I remember.

The disinformation bureau is alive and well, also.

Rep. Massie: DHS efforts are already underway to add censorship of "financial misinformation" to CISA's portfolio of "critical infrastructure" domains it can classify tweets as a cyber attack on, & thus censor. See, e.g., link below:https://t.co/M1FzQuUtv8 https://t.co/dPJQdpd7sf pic.twitter.com/37sy70744K

— Mike Benz (@MikeBenzCyber) March 13, 2023

I'm surer we will see what the latest Marxist-Democrat talking points, are by noon.

---

I am ashamed to be in the same business as CISA. What a joke.

agwrestler said:

---

Forgive my ignorance. I only took a single class on west campus. Is there a post that summarizes this situation in layman terms? ....and who are we upset with?

---

Pretty much the collusion of big finance and the government. The fed is trying to raise the interest rates to bring the economy back to reality after the sugar high of coronabucks and to fight against inflation.

When interest rates rise they put a damper on economic activity because money actually costs something to get, AND banks securities lose value because risk-free bonds offer a higher interest rate than the securities they had locked in at previous lower rates.

This came to the forefront when SVB, who had made lots of investments in start-ups was burning through cash as their customers could no longer access easy capital and started making more withdrawals than deposits. To secure liquidity SVB had to sell some of those securities but took a 1.8 billion dollar haircut doing so since the securities were unattractive given their lower interest rates. This caused a domino effect of bank runs after people realized "oh no these securities aren't worth much and banks might not have as much liquidity as we think".

the black swan event this time was the fed raising interest rates

Everyone paying attention? The US is now 3x more likely to default on its debt than Germany, and is priced more like Portugal and Spain, 2 of the European PIGS. pic.twitter.com/LfcPNArnxy

— James Lavish (@jameslavish) March 13, 2023

Greed continues to be the winner. These guys know they can win when they even lose. You have big money investors saying again, people will be held accountable, but they won't.

This is just another cog in the machine to turn America into something else. Keep making the education system worse, so we have a population of dumb people who will follow what rich people and government tell us.

Here is the best explanation I have read about what happened to SVB. The whole banking system just seems like a big pyramid scheme.

Quote:

---

Silicon Valley Bank (SVB) was thriving. Credit losses are fairly low. Its deposits TRIPLED from 2019 to '21.

How's that a problem? It sounds great, right?

1. When banks accept deposits from clients, they OWE the client that money. So deposits are liabilities to the bank. Liabilities cost money……"cost" both to serve those clients (branches, tellers etc ) and any interest the bank pays you on your checking account (deposit).

2. To pay for the cost of those liabs, banks turn them into assets: lending deposits as small business loans, mortgages, etc.
If a bank can't lend deposits responsibly, it often uses excess to BUY loans or "securities," like US Treasuries & Mortgage Backed Securities (MBS)

3. As mentioned above, from 2019-2021, the deposits tripled! SVB needed to take those funds & acquire "assets" to pay its costs.

4. Much of the $ was from VC-backed companies that needed a place to deposit the $ they raised. Those are big deposits.

5. Deposits were pouring in too fast to lend responsibly. SVB recognized that. Rather than make dumb loans, SVB bought assets guaranteed by the US government - Treasuries and MBS. BUT, it bought long duration. Often 10+ year bonds.

Mistake!

6. When rates rise, fixed income prices fall.
A general rule of thumb is for every one year of "duration," each 1% interest rate move impacts the price of the bond by:

1% x Duration

A 1% move on a 9 yr duration bond is ~9% +/- on the bond price.

But banks are levered…

7. Remember: banks generally acquire assets by using deposits (liabilities) as the capital source.

And banks like SVB are levered 10:1 or more: owing $10+ for every $1 of shareholder equity.

If you're levered 10x, a 10% loss on assets is a 100% wipeout.

8. So SVB bought high quality assets, but it bought tons of them with LONG duration at LOW interest rates.

When the Fed raised rates, those assets declined in value…

…1% x Duration.

Those losses, multiplied through the leverage at SVB, caused a big problem!

9. SVB now has a mark-to-market hole in its balance sheet. It's "just" mark-to-market: as long as its liabilities are sticky (ie, depositors leave their money SVB), it will ultimately be fine.
But that's a big "if."

10. Technically, if all the depositors ask for their $ back at once, SVB needs to sell those bonds at the mark-to-market value, crystallizing what could have been a temporary loss. And if those losses are big enough, it may not have enough money to pay out all depositors.

11. But that situation rarely happens. However, once it starts, game theory kicks in: NOBODY wants to be the last depositor at a bank.

12. Which brings us to today. SVB has large depositors. Large depositors aren't fully insured by the FDIC - they have an incentive to find HIGHLY sound banks. Once a whiff of issue pops up, large depositors run…"bank run."

13. As a bank's deposits go in reverse, it has to sell assets. The FHLB steps in to help turn its less liquid assets into more liquid.

---

LMCane said:

---

did all of us just somehow miss Signature Bank failing yesterday?!

"The second-largest bank failure in the nation's history was followed barely 48 hours later by the third-largest bank failure ever seen. Signature Bank in New York similarly failed yesterday and was being seized by the Feds.

We dodged a bullet on a third failure when First Republic Bank announced that it had secured emergency funding from the Fed and JPMorgan Chase as it was teetering on the edge. After Janet Yellen had announced in no uncertain terms that SVB would not be receiving a bailout from the government (from the taxpayers, really),

the Treasury Department, Federal Reserve and FDIC said yesterday that all clients would be able to access their money, no matter how large their deposits may be. The difference between the current plan and a "bailout" isn't exactly clear."

seriously WTF is going on? there is no "bailout" but everyone still gets their money from collapsed banks?!?!

---

Really, what did you expect? The financial system and Biden are on the same life supporting drugs. Pump them full and parade them out to fool the masses.

The speed at which they reacted (emergency Sunday night actions) should tell everyone just how late in the game we are.

This weeks headlines are going to be scary but FED buying up everything behind the scenes will ultimately result in markets recovering.

Don't worry folks, the big crash is postponed for a few months....

Zergling Rush said:

---

LMCane said:

---

did all of us just somehow miss Signature Bank failing yesterday?!

"The second-largest bank failure in the nation's history was followed barely 48 hours later by the third-largest bank failure ever seen. Signature Bank in New York similarly failed yesterday and was being seized by the Feds.

We dodged a bullet on a third failure when First Republic Bank announced that it had secured emergency funding from the Fed and JPMorgan Chase as it was teetering on the edge. After Janet Yellen had announced in no uncertain terms that SVB would not be receiving a bailout from the government (from the taxpayers, really),

the Treasury Department, Federal Reserve and FDIC said yesterday that all clients would be able to access their money, no matter how large their deposits may be. The difference between the current plan and a "bailout" isn't exactly clear."

seriously WTF is going on? there is no "bailout" but everyone still gets their money from collapsed banks?!?!

---

Really, what did you expect? The financial system and Biden are on the same life supporting drugs. Pump them full and parade them out to fool the masses.

The speed at which they reacted (emergency Sunday night actions) should tell everyone just how late in the game we are.

This weeks headlines are going to be scary but FED buying up everything behind the scenes will ultimately result in markets recovering.

Don't worry folks, the big crash is postponed for a few months....

---

Good - this gives me more time to move to the Caymans.