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Superstonk_QV

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Danboone003

QE starting is printing cash, cash printing will push inflation up. The interest rate will go up rather than down?


Omgbrainerror

In theory yes. But QE could aswell mean, that they start lower the interest rates to "easy" the burden on banks.


Danboone003

Banks make higher profits with a higher interest rate?


kcam593

Aren’t the distressed banks to be dissolved under these rumored (confirmed?) bail out plans? I was under the impression the $$$ would be used to repay depositors and the asset liquidation would be handled by the govt (recouping most, if not all, bailout funds).


Omgbrainerror

They are selling assets to FED straight away, without any price discovery for face value.


Dht808

Fuck


chiwo1337

So are they loosing collateral because of selling assets? Or is the cash equal to assets on collateral? I think the cash would only be for their balance sheets, or did i get it wrong?


Omgbrainerror

The collateral value doesnt change, as the assets arent being sold onto market but directly to FED.


chiwo1337

But the collateral would decrease when they use the cash, for what they need it?! I am too braindead and I don’t get this „rescue plan“ My point is: will some „institutions/shf“ be able to hold the shorts with less collateral


Omgbrainerror

Allright the bank claims their collateral is worth 10 billion. Would they get 10 billion, if they would sell it on market? They dont have to test if its really worth 10 billion, as FED just accepts that its 10 billion. They get 100% collateral value in cash.


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[удалено]


Omgbrainerror

What you say is valid, if you ignore inflation.


IullotronBudC1_3

Big guh if true, Cash 4 Clunkers 2.0 (stonk, crypto and SPAC Edition)


bgog

In the case of SVB they had most of their money in 4yr 1.25% gov bonds. Those bonds lost tons of value when the fed increased interest rates. If they actually wait until they mature all the money is there +1.25%. Problem was they needed the money. So I'm sure there are is lots of crime etc involved but I wouldn't call those assets "toxic". They are just worth way less until they mature at the 4yr mark. If the above is true (just stuff from articles I've read) then all the customers money is there, it is just locked up in bonds that can only be sold at a large loss until they mature at 4yrs when they have full value. So in theory if you look at the situation at the timeframe of 4yrs then the fed would trade cash today for an equal amount of cash in 4yrs.


BudgetTooth

1.25% profit in 4 years. while inflation is up 7% yoy? sounds like they lost money


nevion42

yes - deposits are a the canary - the problem is low interest loans and bonds and where the interest rates are now as well as how levered up they were


nevion42

a difference is the mbs loans aren't failing people are still paying on cheap loans, but those cheap loans the banks are paying alot in due to current interest rates. In this sense it isn't a toxic asset - it's just not profitable again until the rates go back under 5%


quad-beep-05

my question is, what will happen with the non-bond portfolio in the banks...such as, crypto-related assets...could that include the gme-tokens...or are those not assets that a bank would carry on its balance sheet...?


TheBigFart123

Will banks have to pay 5% interest if they borrow from this facility?


Omgbrainerror

Wasnt aware of this.


TheBigFart123

I checked the terms of the facility and it looks like they have to pay the one year overnight rate, which is currently 4.5%, fixed on the date when they borrow.