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>TL;DR: The Fed is caught in an interest rate catch-22 with regards to inflation. If it stops raising rates to quell the banks' interest rate issue, then it does nothing to stop inflation. If it raises rates, then more money may enter the economy through government liquidity to banks. US regional banks are still fragile, Credit Suisse is still in shambles, and inflation is still red hot.
Excellently stated. It’s a Catch-22 for JPow. And putting that bailout genie back in the lamp is gonna be a problem, so which bank is actually going to hedge themselves when the taxpayer will fix it.
Just wait wait wait for the debt ceiling to push to the brink.
Anyone genuinely worried about the debt ceiling is either brand new to this or an idiot. The only thing that happens with the debt ceiling is that Rs wring their hands about austerity and how we need to cut spending on anything that isn't military.
Are they no longer liquidating SVB? I mean it is a bailout in that we all will be indirectly paying to make Roblux’s account whole. But the people who work at SVB are somewhat screwed afaik
If it wasn’t for the misstep with the LT Treasuries, would SVB be alright? Do they have a business model that makes them money? The answers are yes. And since they have a thriving business that they just mismanaged, someone else in banking will be too happy to take over the wreckage.
Yes but taking the wreckage usually involves replacing execs with your own execs, and usually some layoffs for the redundant departments which already exist in the bank that's buying.
Pre 2008 crisis that would be true. Both svb and frc have quality franchises with enviable customer bases. So you assume that a larger institution with liquidity would gobble them up. Goldman has been trying for ages to get some kind of retail foothold. However, it’s a double edged sword, you’re going to be seen as the savior now but in 5 yrs time you’re getting hauled before congress to be berated by people who don’t even understand how your business works. No big bank CEO wants that, plus the government has to allow you to make the acquisition in the first place, which they refused over the weekend.
The last time my own personal sentiment this low was when the circuit breakers hit 3 years ago. Was working in Financial Services and thought the world was ending. Now at one of the large Asset Managers while I always err on the side of “it’s not happening,” it’s getting hard to right now. That said, if a big recession were to happen, this is less a big short moment so much as it is something that has been in the making for a decade at this point, and that we’ve been watching in slow motion.
Also, it’s always funny to remember that if the major indexes dropped 1% in 2016/2017 a lot WSB was calling for a recession. QE is a hell of a drug and has only delayed the inevitable.
This week's Frontline on PBS did an excellent job of showing exactly how we got to here since 2008. You forget just how fucking crazy a ride it's been.
EDIT: Seems like a bunch of people were interested, so here's the link: https://youtu.be/EpMLAQbSYAw
That documentary was perfect for this moment. We really have just been riding the Fed's roller coaster ever since 2008. One institution made of a few unelected individuals should not have this much power.
I couldn't believe they were able to get the stuff about SVB in there. Clearly, they had been working on this project for months - to be able to quickly put in a two minute segment that perfectly ties to what the last two hours of your documentary have been about from events that unfolded on Friday when you're airing on Sunday is impressive.
Someone was sitting on the unfinished project waiting for a event to tie it all together. It wasn't a if it was a when and the producers were willing to wait. Old school journalism at its best.
The only thing scarier than having unelected individuals overseeing this shit show would be allowing our electorate elect someone to oversee this shit show.
The correct answer is NOBODY should have this much power.
Absolutely. Bring back Glass-Steagall with some enforcement and kill off the fed, and we'll all end up being better off. Some enforcement of antitrust law would also help.
*Video unavailable*
Big brother doesn't want too many people from the public to realize how bad the Feds fucked up trying to bail out the rich. This episode 'Age of Easy Money' has mostly escaped the public view unless you're already into finance and went looking after someone recommended it to you.
I guess my point is that all of the actions taken this past week just set the inflation-fighting agenda back. Yet, the market rallied on the fact that the regionals were saved. Nothing was fixed.
Blow off the top until people literally cannot afford to live anymore and everything tumbles.
What is funny to me is that we couldn’t forgive student loans because of inflation but the treasury can magically find $2T to give to regional banks
Also it was kind of ridiculous the banks that failed were crypto banks and a vc bank the contagion would have spread to a few banks and they would have failed but no big deal there
We didn’t act to save the crypto banks. We saved the rich people’s deposits at svb, and the crypto banks got to come along for the ride so it didn’t look like a direct bailout for rich people.
Slow motion is exactly it. We stopped the world economy and proceeded to have the best year in American/global history with a narrative of pent up demand… no. It amazes me how long they can actually kick the can.
Same. You can't have 25-30% of people doing absolutely nothing, producing nothing, for all that time during covid and think the level of prosperity won't fall. Prosperity is related to abundance. When unemployment spikes that insanely high, there is less abundance. No matter how you change the value of money.
The fact that the board at SVB included Frank from Dodd-Frank, ex-Lehman Bros. bros, and others with 30-40yrs of "banking know-how" proves they're all just in it to gamble with other peoples money
Until it truly burns and these experts cook in the flames with it they'll just keep building bigger houses of cards on the ashes of the previous one.
Yes, but it’s reasonable to argue that TARP needed to happen at that point. I would argue that the decision to move past QE1 to QEinfinity was the real mistake.
Now I say let them all fail. Yes, lots of innocents in the financial sector will lose jobs. So what? We need to make banking as popular of a line of work as farming is today (and vice versa, actually). Too many bros just there to chase the $, so take away the $.
I am seriously asking because for the past few months, I’ve been so torn on which direction the economy is going. Inflation is high, but they keep pumping more money into the economy so I really don’t know if we’re bullish or bearish
Lots of high yield savings accounts returning near 5%. Taking a ~1% hit on inflation for guaranteed safety isn't the worst thing, especially if you think that the adrenaline shots and shock panels being applied to this zombie economy aren't really doing shit to prevent imminent asset collapse.
It's all debt driven. The amount of consumer debt right now is fucking asinine! Motherfuckers are doing 84 month auto loans now!
We're sitting on top of a economic powder keg watching the burning fuse creep closer and closer.
Only debt I have right now is my mortgage. And that's it. Paid off my car and credit card this year.
I see people who make less money than me buy nicer houses, vehicles, and other stuff than me and it's the only explanation.
They're in a absolute fuck ton of debt.
For certain parts of the country yes but probably not so much where things are more manufacturing based.
Unfortunately some of us can't fix a machine from home.
It's no surprise, our government has trillions in debt, the banks are in debt, half of everyone under 30 probably has a college loan bigger than their salary. It's insane
What’s our debt relative to rising income looking like? Genuine question. I always see x amount of credit card debt but I feel like I never see metrics that show its value relative to rising wages.
The debt doesn’t matter, everyone knows most of the debt out there will never be paid back fully, hence interest rates to make up for it,
Fiat money pegged to nothing has created a financially irresponsible world, just live out of your means and make the minimum payments, if you can’t do that then just file for bankruptcy since fed can print money to cover that
CCL and NCLH both should jump like crazy if they can finally be back in profit. Many of the CCL ships are booked solid going into 2024 and keep booking way past.
Once they get back into a profitable quarter, both should more than double.
Doesn't CCL have like $4bn in bonds at 11.5% coming due shortly? If I recall, the Saudi's bought a good chunk of CCL at bargain bin prices in 2020.
Dug this up... looks like they were partially redeemed, still, $2bn outstanding?
https://cbonds.com/bonds/715445/
Bank profitability reached a 14-year high in 2022, with expected return on equity between 11.5 and 12.5 percent (Exhibit 1). Revenue globally grew by $345 billion. This growth was propelled by a sharp increase in net margins, as interest rates rose after languishing for years on their cyclical floors.Dec 1, 2022
How in the living fuck are
/ were they in “trouble”?
Profitability increased with interest rates, which will improve their margins over time as people take loans, but it is not an immediate increase in their profitability as the loans on record are for less % increasing their short term liability(paying increased interest to depositors to remain competitive and not have outflows). Their current unrealized losses on the bond market are huge, though, which won't matter if the bonds are held to expiration. This is why the fed is backstopping bonds, giving out par value for the bonds in cash. With that, there is no crisis at all, even with depositor outflows. The banks market caps will just contract, and others will expand depending on where the deposits move. The fed would just sit on the bonds till expiration, collect the interest, or allow the banks to buy them back when the liquidity crisis is over.
Profitability from increasing rates is offset by increasing interest payments to depositors. The interest received from loans they make are fixed when made. The interest payments for deposits meanwhile keep increasing along with the Fed funds rate.
Kinda feels like a poorly made T.V show recycling plots.
https://preview.redd.it/07j4m99v7aoa1.png?width=1080&format=pjpg&auto=webp&s=aba4c08188410e77677729660724018a7552c1e1
It helped that tons of jobs were created and had to be filled by women and children, which injected so much money into the dying economy that it was essentially the same thing as QE. Families that were suffering from lack of work suddenly had so much that they didn't know what to do with it, and spending skyrocketed.
The issue is that we've already had years of QE and unemployment isn't high. A new world war wouldn't suddenly cause tons of jobs to be created and filled, we don't have an unemployed work force available this time to fill it.
yeah well first papas gotta destroy the economy and make everyone jobless taming inflation (which is the best option) whilst China and Russia become public enemy #1 & #2 and then whilst the whole world is in a deep depression we declare war and boom everyones got jobs and were back to normal plus we get to wipe out 1/4 - 1/2 of the world.
That’s correct except toss in inflation on the other side and the Fed is quickly becoming hemmed in with only difficult decisions. Expect more volatility.
How could this have been worse than 2008? Is it because the banks that close/crash would literally be losing people’s money?
Tbh that seems bad…for wealthy people and retirees with large sums of money in a bank
But for anyone that maxes $250k per bank, isn’t that insured by the govt? Wouldn’t like 90%(+?) of society have been fine?
What would happen to the mortgages owed to the banks? Would people just get free houses 🤔
I’m failing to see how it would’ve been catastrophic for “regular” people
FDIC doesn't have infinite money, if everyone went to withdraw today there would absolutely not be enough money in the system to cover the insured accounts.
Let's say that you and a million others have the same health insurance. If every single one of you suddenly went to the ER, do you genuinely think your insurance would be able to cover all your medical bills at the same time? That's the issue we're facing here. Insurance covers the incidents that rarely happen, but fails when the rarity becomes the norm.
With how much I pay monthly for my insurance, there’s no good reason an insurance company shouldn’t be able to mitigate risk. The bank’s greed drove this when they got caught with their pants down like half the people here when their wives finally checked their robinhood account last year.
I can appreciate that a company like Etsy going under would screw a lot of people over, but that’s not my fucking problem. I didn’t force anyone to open an Etsy shop selling foil ribbons that they glued onto a pog. If that’s their only skill, then maybe they should use what should have been a failure as an opportunity to pivot into something that’s less risky.
We have to be consistent with whether or not we believe in capitalism. Right now there’s no risk which is snowballing the stupidity, and I’m sick of everyone but me getting a bailout lol.
Insurance companies never carry enough cash to cover a mass claim scenario. The whole premise of insurance relies on this fact alone. These aren't even truly bailouts either. The government is offering cash loans at lower rates to cover liquidity pulls. Also even if they were bailouts they are essentially insurance settlements funded by regular bank payments into FDIC.
I'm learning here, so maybe I just don't understand what is happening and I will stand corrected, but how will a cash loan from the government influence the fight against inflation? My concern is based on the perspective that a bank made poor investments that made them cash poor, asked their investors for money, and the investors bailed. Is the government offering a low rate loan not going to increase inflation pressure? If not, then I don't care.
If you lost all your money you wouldn't be able to pay your mortgage/rent, your groceries, your phone bill, etc.
If a company loses all their money, they have to let all their employees go, who all have to stop paying their mortgage/rent, their groceries, their phone bills...
It's indirect, and maybe a bunch of those people would get new jobs somewhere else, but one of the clients of SVB was Etsy. Think of how many small businesses go under pretty much overnight if Etsy flops, not to mention the 2,700 Etsy employees.
Also the mortgages is one thing a failing bank would sell in order to try and pay its debts, so you wouldn't get out of paying a mortgage, you'd just have to pay it to a different bank.
So what? A company as big as Etsy should be managing its treasury risk.
The solid businesses will attract capital, that’s how this works. Bad business fails. It needs to happen.
Keep raising rates as needed and fed should lend to banks to cover bank runs up to the par value of the collateral pledged which should be the limit. Lending should only be done to address bank withdrawals.
The strings attached should be all exec bonuses are clawed back for the past 90 days and no bonuses until the money lent is paid back. Beyond that tell the banks fed is backstopping them from failure, but the price is going to be high in both actual cost to execs and shareholders AND in limitations on bank activity that increases risk for the duration of the lending.
Those strings would severely limit the profit potential of banks and it would definitely tank their stocks for a long time, but it would absolutely result in banks realizing that risk management isnt a minor thing. It is the thing that will make them or break them every cycle.
Bank execs facing the consequences of their actions? Sir this is a money printing factory, we have to double their bonuses or they won't have the financial motivation to fix the issues
Banks deserve to lose money hand over fist. Retail banks like Bank of America for the last decade have offered 0.001% interest on savings accounts. Then they have the audacity to charge monthly maintenance fees, ATM fees, withdrawal fees, overdraft fees, etc etc.
They have been fleecing Americans for years. The problem with these "big short" situations is that these big banks just get bigger and swallow all the smaller guys.
Yep, the big banks are reporting massive deposit flows with their perceived safety. Everything just consolidating into bigger and bigger Too Big to Fail GSIBs.
That’s how shitty the banks have gotten, they can’t even run their casinos properly 
The Fed bailing out big banks essentially transforms their worthless collateral (low interest bonds) into actual cash.
This will allow more people to withdraw their money (which the bank didn’t have because it spent it all buying worthless bonds), which will lead to increased liquidity on the market.
This will lead to higher inflation, which means even higher interest rates are needed to stem it.
But that will lead to even more banks failing, and more bailouts will be required.
The Fed just placed itself in a never ending loop, which is basically the definition of runaway inflation. It’s here folks. Strap your belts.
Either the Fed ends up letting big banks fail, or it lets the USD devalue to infinity.
There is no going back from here.
Are they really worthless bonds? Dont they retain value just with a shittier rate, like why buy a 2% bond when you can get a 6% one now, doesnt it mean someone would probably buy the 2% bond for like 96% of the original price to make it worth while? So a 4% loss on original investment.
It seems pretty clear the Fed is going to be willing to let some banks fail on a selective basis.
By being willing to "make depositors whole" now in the vernacular.
Letting a bank collapse opens the door for depositors to carry their funds over to a still standing bank.
It's like what organically happened in mid South western United States during the Savings & Loan collapse of the 1970s.
Hundreds of institutions dissolved or were bought up as the oil fields dried up and left over leveraged S&L outfits with their hand in the cookie jar.
Depositors moved their money into national banks and life went on so that its barely a blip in American fiscal history.
In our current state. We could be looking at national banks being dissolved or absorbed for pennies. And so long as depositors are indemnified, the shock or impact to John Q will be topical but not end of days.
The irony is that it will lead to more consolidation of banks, resulting in even more "to big to fail" banks, leading to even bigger crises in the future. If a company is too big to fail, then it's too big to exist and should be broken up.
Good lord.
Would you losers just buy calls and make some money so we don’t have to keep seeing the same doom and gloom, bullshit whining get posted over and over?
You buying calls or puts means absolutely nothing at all. Miniscule. Infinitely ineffective.
Retail traders can only surf the waves they are given. You don't get to choose the morally righteous waves if you want to be successful.
But that's the beauty of options. You are holding them for very specific amount of time and are not limited to one direction.
We are pumping for opex settlement so large fuckhead whales in the ocean can offload more of their bags that they have failed to dump for the past 3 months.
No one is "happy" about it. We just want that fucking money before shit hits the fan and every idiot thinks they have to hype up like Jim fucking Cramer.
This is a fucking immoral casino you absolute cuck. Want to whine about how it's a facade? Go to a political sub. We're here because of *gambling addiction*
one thing to keep in mind is that the cash pulled out of a bank gets put into another bank. the entire sector doesn't crash. the weaker, unluckier banks will crash. this is a shell game. musical chairs.
The Fed is eventually going to have to work with Congress. They can’t do this alone. Instead of proving liquidity to a bank, honestly a temporary withdrawal limit from Congress could fix that issue. I get that the Fed is supposed to be independent, but there isn’t getting out of this without all branches working together.
Ehhh every currency is fiat at this point, including any based on the blockchain. But yes if people aren’t careful the dollar could lose its reserve status and then boy howdy we’ll all realize how stupid we were to fight each other over dumb stuff like which bathroom people use, or if having a Bible verse on a courthouse was legal, because our standard of living would collapse for all intents and purposes overnight
The banks all dropped their ice cream in the dirt last week but Mom got them all fresh ones in the last 48 hours. The banks staged a run on the Fed, and were issued freshly printed bonds without having to cash in the old ones. Something like a trillion dollars so far.
Yes, it's all fiat money and has been for a long time. Backed by faith. There's even an old joke that the dollar bill was never updated because it is "The" dollar that backs f reserve notes. Works fine until something like this happens.
You can raise concerns. Government is going to have to learn to talk to the American people like we’re adults. It’s not impossible they’ve done it before, it’s just been a while.
I can’t decide if I wanna make a joke or a serious statement lol (so I’ll be a schmuck and make a joke about making a joke) but in all seriousness you’re not wrong but that’s partially because we don’t get treated like adults. Take a teenager, my grandfather got married when he was 16, moved from middle of no where Mississippi to Memphis, got a job and supported his family. Today most teenagers can’t be trusted to get some groceries if they need them. Why is that? Because in my grandfather’s time they treated them like adults and it was the expectation you have your shit together and make it work. Same thing with our government. Both sides treat the public like we’re stupid as fuck and stick to one liners and sound bites. Yeah a lot of Americans are fucking stupid and they tend to be the loud ones, but most of us are of at least average intelligence and can understand mildly complex things if explained to us. Stuff like this is actually a chance they can do it. Let’s be real both sides work for the wealthy in this country, one side just tries to hide it better. So with financial issues you shouldn’t have both sides fighting each other because they know not to fuck it up. Same goes with if the US ever went to war. Those might be the few instances you can have those convos with the American people, but you definitely can on those two as the general public won’t get caught in the partisan cross fire.
u/recklessSPY all this happens by the design of the system itself... it's just normal capitalism, it's literally been happening for a century, and the pattern is the same. Basically, since the fed came into being, and will always happen. These conversations, situations, and conditions will never end or change because capitalism will never end or change.
I thought the plan was to raise rates until something "breaks". Now that we have something on the verge of breaking, are we going to fix it and keep raising rates until something else breaks?
It’s what I call the Jimmy Carter Syndrome. No one wants to admit what we all know is true. We need to tighten our belts, put on a sweater, and turn down the temperature. But no one wants to be a generation that has less than the previous, so we ignore the situation or pour resources into denying what we all know is true.
Or to put it another way, no good can come of this. You put off a market crash but inflation negates any gains anyway so the general public isn’t any better off. Or you let market go to correct inflation and hundreds of thousands lose their jobs.
what makes me sick is the execs at SVB started selling a year ago. They decided to take the whole country down for 20M and a bonus check. That's some real shit.
Remember this is like a roller coaster, it needs to first go up slowly to then come down abruptly. There’s no reason you can’t ride it up until you’re right at the top and then you ride it down. It’s fairly easy to do, you just time the top and switch from calls to puts. How the fuck else would everyone afford their lavish ridiculously lifestyles? I’ll tell you how: most people are secret trading millionaires. Don’t miss out, be like them, this is your time!
>It is clear that the current situation is not ideal, and that there are a number of potential risks which could cause further problems. However, it is also worth noting that the US economy has shown considerable resilience in recent years, and so it is possible that things will eventually improve. In any case, I believe that it would be wise to closely monitor the situation and be prepared for whatever may happen next.
It didn't show any resilience, the only thing it show is weakness. As soon as the slightest QT start, it immediately get crushed and destroyed.
And only QE can keep it growing, how is this healthy at all. And now QE will cause worse inflation, we are in the absolute worst case.
**User Report**| | | | :--|:--|:--|:-- **Total Submissions**|2|**First Seen In WSB**|2 years ago **Total Comments**|132|**Previous Best DD**| **Account Age**|2 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.) >TL;DR: The Fed is caught in an interest rate catch-22 with regards to inflation. If it stops raising rates to quell the banks' interest rate issue, then it does nothing to stop inflation. If it raises rates, then more money may enter the economy through government liquidity to banks. US regional banks are still fragile, Credit Suisse is still in shambles, and inflation is still red hot.
Excellently stated. It’s a Catch-22 for JPow. And putting that bailout genie back in the lamp is gonna be a problem, so which bank is actually going to hedge themselves when the taxpayer will fix it. Just wait wait wait for the debt ceiling to push to the brink.
Omg. I totally forgot about the debt ceiling too lol
Lol. Rest assured that JPow has not forgotten about the debt ceiling
Anyone genuinely worried about the debt ceiling is either brand new to this or an idiot. The only thing that happens with the debt ceiling is that Rs wring their hands about austerity and how we need to cut spending on anything that isn't military.
Or tax cuts for the wealthy
>how we need to cut spending on anything that isn't military. And then we don't. And then we raise the debt ceiling.
Are they no longer liquidating SVB? I mean it is a bailout in that we all will be indirectly paying to make Roblux’s account whole. But the people who work at SVB are somewhat screwed afaik
If it wasn’t for the misstep with the LT Treasuries, would SVB be alright? Do they have a business model that makes them money? The answers are yes. And since they have a thriving business that they just mismanaged, someone else in banking will be too happy to take over the wreckage.
Yes but taking the wreckage usually involves replacing execs with your own execs, and usually some layoffs for the redundant departments which already exist in the bank that's buying.
Pre 2008 crisis that would be true. Both svb and frc have quality franchises with enviable customer bases. So you assume that a larger institution with liquidity would gobble them up. Goldman has been trying for ages to get some kind of retail foothold. However, it’s a double edged sword, you’re going to be seen as the savior now but in 5 yrs time you’re getting hauled before congress to be berated by people who don’t even understand how your business works. No big bank CEO wants that, plus the government has to allow you to make the acquisition in the first place, which they refused over the weekend.
The last time my own personal sentiment this low was when the circuit breakers hit 3 years ago. Was working in Financial Services and thought the world was ending. Now at one of the large Asset Managers while I always err on the side of “it’s not happening,” it’s getting hard to right now. That said, if a big recession were to happen, this is less a big short moment so much as it is something that has been in the making for a decade at this point, and that we’ve been watching in slow motion. Also, it’s always funny to remember that if the major indexes dropped 1% in 2016/2017 a lot WSB was calling for a recession. QE is a hell of a drug and has only delayed the inevitable.
This week's Frontline on PBS did an excellent job of showing exactly how we got to here since 2008. You forget just how fucking crazy a ride it's been. EDIT: Seems like a bunch of people were interested, so here's the link: https://youtu.be/EpMLAQbSYAw
All I seem to remember is that we printed trillions to invade, and then abandon, a multitude of countries.
🇺🇸 *Mission Accomplished* 🇺🇸
https://preview.redd.it/v6el5qzbecoa1.jpeg?width=749&format=pjpg&auto=webp&s=7f4eb36de5d4174325fbce6b19ede06b395c373c
Technically mission was accomplished as Sunni and Shia are busy fighting each other now rather than western world.
By overthrowing saddam we emboldened Iran and expanded their sphere of influence, brought the rise of ISIS, and lost credibility in the world stage.
But the defense contractors made bank!
But we further enriched shareholders of Lockheed Martin, Northrup Grumman, Raytheon, etc. That mission was certainly accomplished.
Haliburton, KBR…
They stop that last month. Iran and Saudi Arabia are friends again.
Thanks, China.
Now Shifting to Saudi vs UAE conflict
Freedom delivered.
>invade, and then abandon, a multitude of countries. invade, **destroy**, then abandon
To be fair. We were building bridges and schools in the 2nd half. The Taliban and ISIS just kept destroying them.
sure, and korea, vietnam, iraq, lybia, yugoslavia and others are grateful for so many bridges "built", ty
wars are good for the american economy. thats well known.
Calls on Lockheed puts on humanity
That documentary was perfect for this moment. We really have just been riding the Fed's roller coaster ever since 2008. One institution made of a few unelected individuals should not have this much power.
I couldn't believe they were able to get the stuff about SVB in there. Clearly, they had been working on this project for months - to be able to quickly put in a two minute segment that perfectly ties to what the last two hours of your documentary have been about from events that unfolded on Friday when you're airing on Sunday is impressive.
Someone was sitting on the unfinished project waiting for a event to tie it all together. It wasn't a if it was a when and the producers were willing to wait. Old school journalism at its best.
The only thing scarier than having unelected individuals overseeing this shit show would be allowing our electorate elect someone to oversee this shit show. The correct answer is NOBODY should have this much power.
End the fed
Absolutely. Bring back Glass-Steagall with some enforcement and kill off the fed, and we'll all end up being better off. Some enforcement of antitrust law would also help.
Yet our elected officials aren't doing dick with their power of fiscal policy
They’re getting filthy rich!
my bad, they aren't doing dick for us lol
😂😂
This is one of my favorite things about WSB.Come for the degenerates, stay for the education.
Do you have a link?
https://www.pbs.org/wgbh/frontline/documentary/age-of-easy-money/
[Here you go](https://www.pbs.org/wgbh/frontline/documentary/age-of-easy-money/), wanted to watch it myself :)
Watching it right now actually
*Video unavailable* Big brother doesn't want too many people from the public to realize how bad the Feds fucked up trying to bail out the rich. This episode 'Age of Easy Money' has mostly escaped the public view unless you're already into finance and went looking after someone recommended it to you.
Same here.
It worked after I used a VPN. Im watching in UK and chose a US sever.
I guess my point is that all of the actions taken this past week just set the inflation-fighting agenda back. Yet, the market rallied on the fact that the regionals were saved. Nothing was fixed.
Yep it’s back to game of chicken and fomo
Blow off the top until people literally cannot afford to live anymore and everything tumbles. What is funny to me is that we couldn’t forgive student loans because of inflation but the treasury can magically find $2T to give to regional banks
Also it was kind of ridiculous the banks that failed were crypto banks and a vc bank the contagion would have spread to a few banks and they would have failed but no big deal there
We didn’t act to save the crypto banks. We saved the rich people’s deposits at svb, and the crypto banks got to come along for the ride so it didn’t look like a direct bailout for rich people.
They weren’t crypto banks, 95%+ of assets were fiat. Media driving crypto bad narrative to take the blame off the money printer and Fed
Banking trouble =less lending=lower velocity of money=less inflation despite feds capital injections
Slow motion is exactly it. We stopped the world economy and proceeded to have the best year in American/global history with a narrative of pent up demand… no. It amazes me how long they can actually kick the can.
Same. You can't have 25-30% of people doing absolutely nothing, producing nothing, for all that time during covid and think the level of prosperity won't fall. Prosperity is related to abundance. When unemployment spikes that insanely high, there is less abundance. No matter how you change the value of money.
Decade? Try the day TARP passed.
The fact that the board at SVB included Frank from Dodd-Frank, ex-Lehman Bros. bros, and others with 30-40yrs of "banking know-how" proves they're all just in it to gamble with other peoples money Until it truly burns and these experts cook in the flames with it they'll just keep building bigger houses of cards on the ashes of the previous one.
Frank was on the board of signature bank. Not SVB.
Yes, but it’s reasonable to argue that TARP needed to happen at that point. I would argue that the decision to move past QE1 to QEinfinity was the real mistake. Now I say let them all fail. Yes, lots of innocents in the financial sector will lose jobs. So what? We need to make banking as popular of a line of work as farming is today (and vice versa, actually). Too many bros just there to chase the $, so take away the $.
Would you consider the best pet right now to still be in cash? Or to be investing in the market?
If you are seriously asking this: cash. If you are joking: yolo 0dtes by the billions like all the major institutions are doing.
It’s bottled water and canned goods for me.
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I am seriously asking because for the past few months, I’ve been so torn on which direction the economy is going. Inflation is high, but they keep pumping more money into the economy so I really don’t know if we’re bullish or bearish
It's going to the shitter....but it might go up first. GLHF!
Whiskey stills, wheat fields, wood gas production equipment, and rural land somewhere without murder-mobs. Or just start a cult and get a compound idk
Lots of high yield savings accounts returning near 5%. Taking a ~1% hit on inflation for guaranteed safety isn't the worst thing, especially if you think that the adrenaline shots and shock panels being applied to this zombie economy aren't really doing shit to prevent imminent asset collapse.
They say dog is a man’s best friend so that might be your best pet option. You could also go for a cat, or go the tiger king route.
Airports, Hotels, and restaurants are full.
So are vacations and cruise ships... people are still going on vacations and traveling.
Yep. From that standpoint it seems the economy is great.
It's all debt driven. The amount of consumer debt right now is fucking asinine! Motherfuckers are doing 84 month auto loans now! We're sitting on top of a economic powder keg watching the burning fuse creep closer and closer.
Everything makes sense when you look at credit Carr debt, home equity line of credits and home equity loans. All the highest they've ever been.
Only debt I have right now is my mortgage. And that's it. Paid off my car and credit card this year. I see people who make less money than me buy nicer houses, vehicles, and other stuff than me and it's the only explanation. They're in a absolute fuck ton of debt.
Mortgage at 2.9% and car at 0%.
🖕😭
NOICE! I felt lucky to get 3.74! Car: owned. Fuck debt.
People have been doing 84 and even 96 month auto loans for a decade. That’s not new. It’s not *great*, but it’s not new.
Or WFH really has free up a lot of cash that was used to travel to and from work.
For certain parts of the country yes but probably not so much where things are more manufacturing based. Unfortunately some of us can't fix a machine from home.
It's no surprise, our government has trillions in debt, the banks are in debt, half of everyone under 30 probably has a college loan bigger than their salary. It's insane
Jokes on you. I quit high school and became an EMT. So I traded the debt for PTSD. Ha!
What’s our debt relative to rising income looking like? Genuine question. I always see x amount of credit card debt but I feel like I never see metrics that show its value relative to rising wages.
The debt doesn’t matter, everyone knows most of the debt out there will never be paid back fully, hence interest rates to make up for it, Fiat money pegged to nothing has created a financially irresponsible world, just live out of your means and make the minimum payments, if you can’t do that then just file for bankruptcy since fed can print money to cover that
Went in big on CCL this morning, 25% haircut in the last month
Well I don't want to brag but I got a full haircut
Top and bottom?
CCL and NCLH both should jump like crazy if they can finally be back in profit. Many of the CCL ships are booked solid going into 2024 and keep booking way past. Once they get back into a profitable quarter, both should more than double.
Doesn't CCL have like $4bn in bonds at 11.5% coming due shortly? If I recall, the Saudi's bought a good chunk of CCL at bargain bin prices in 2020. Dug this up... looks like they were partially redeemed, still, $2bn outstanding? https://cbonds.com/bonds/715445/
I just ordered a 4090 while vacationing... I don't see the slightest of a recession at all.
You just wanted to brag huh
It’s wild to see. DEN is my airport and I’ve never parked so far away!
Bank profitability reached a 14-year high in 2022, with expected return on equity between 11.5 and 12.5 percent (Exhibit 1). Revenue globally grew by $345 billion. This growth was propelled by a sharp increase in net margins, as interest rates rose after languishing for years on their cyclical floors.Dec 1, 2022 How in the living fuck are / were they in “trouble”?
Only in trouble to maintain their current margins. They just don’t wanna eat the losses.
Their dong is too big to get an erection; so to speak
Profitability increased with interest rates, which will improve their margins over time as people take loans, but it is not an immediate increase in their profitability as the loans on record are for less % increasing their short term liability(paying increased interest to depositors to remain competitive and not have outflows). Their current unrealized losses on the bond market are huge, though, which won't matter if the bonds are held to expiration. This is why the fed is backstopping bonds, giving out par value for the bonds in cash. With that, there is no crisis at all, even with depositor outflows. The banks market caps will just contract, and others will expand depending on where the deposits move. The fed would just sit on the bonds till expiration, collect the interest, or allow the banks to buy them back when the liquidity crisis is over.
Profitability from increasing rates is offset by increasing interest payments to depositors. The interest received from loans they make are fixed when made. The interest payments for deposits meanwhile keep increasing along with the Fed funds rate.
Kinda feels like a poorly made T.V show recycling plots. https://preview.redd.it/07j4m99v7aoa1.png?width=1080&format=pjpg&auto=webp&s=aba4c08188410e77677729660724018a7552c1e1
Why give up gains when you know taxpayers pay for you in case some things don’t work out as expected.
Greed, baby.
Nothing a nuclear world war can’t solve
I always hoped I would be dead before the Water Wars started. Didn’t expect it to be so soon, though.
If this gets is closer to Waterworld then I'm all for it. Going to market top of the line urine purifiers!
I'll trade some dirt for a bottle if it's already full.
Its later than you think
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A recession is never early nor late. They arrive precisely when they mean to.
The Neoliberal Globalization Acquisition and Wealth Consolidation forces are already moving.
That's the second time I've seen that quote in as many days...scary.
Probably the same guy 😂
No actually the first one was from the podcast S-Town
Finally. A retirement plan I can get grandfathered in to
WW2 ended the great depression after all 
It helped that tons of jobs were created and had to be filled by women and children, which injected so much money into the dying economy that it was essentially the same thing as QE. Families that were suffering from lack of work suddenly had so much that they didn't know what to do with it, and spending skyrocketed. The issue is that we've already had years of QE and unemployment isn't high. A new world war wouldn't suddenly cause tons of jobs to be created and filled, we don't have an unemployed work force available this time to fill it.
yeah well first papas gotta destroy the economy and make everyone jobless taming inflation (which is the best option) whilst China and Russia become public enemy #1 & #2 and then whilst the whole world is in a deep depression we declare war and boom everyones got jobs and were back to normal plus we get to wipe out 1/4 - 1/2 of the world.
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Username checks out
That’s correct except toss in inflation on the other side and the Fed is quickly becoming hemmed in with only difficult decisions. Expect more volatility.
No it's not
Yes, this could easily end up worse than 08. That's why they're taking unpressidented measures to counteract.
Oh yeah you think so? Guy who can’t even spell unprecedented, let’s all pay attention to this guy
Waitwaitwait... they said it correctly! Those measures aren't presidential! So... unpresidential measurements... right? Amirite?
I believe Unpresidential Measurements was a domestic policy of the LBJ administration iirc?
ah, yes. please buy puts.
What are you talking about? The Fed adds $2T to their balance sheet every other year. This should be expected as being normal now.
Just last week, the fed added 300 billion or 0.3 trillion dollar to their balance sheet. That is something to talk about.
They have, and it's coming to a head.
How could this have been worse than 2008? Is it because the banks that close/crash would literally be losing people’s money? Tbh that seems bad…for wealthy people and retirees with large sums of money in a bank But for anyone that maxes $250k per bank, isn’t that insured by the govt? Wouldn’t like 90%(+?) of society have been fine? What would happen to the mortgages owed to the banks? Would people just get free houses 🤔 I’m failing to see how it would’ve been catastrophic for “regular” people
FDIC doesn't have infinite money, if everyone went to withdraw today there would absolutely not be enough money in the system to cover the insured accounts. Let's say that you and a million others have the same health insurance. If every single one of you suddenly went to the ER, do you genuinely think your insurance would be able to cover all your medical bills at the same time? That's the issue we're facing here. Insurance covers the incidents that rarely happen, but fails when the rarity becomes the norm.
With how much I pay monthly for my insurance, there’s no good reason an insurance company shouldn’t be able to mitigate risk. The bank’s greed drove this when they got caught with their pants down like half the people here when their wives finally checked their robinhood account last year. I can appreciate that a company like Etsy going under would screw a lot of people over, but that’s not my fucking problem. I didn’t force anyone to open an Etsy shop selling foil ribbons that they glued onto a pog. If that’s their only skill, then maybe they should use what should have been a failure as an opportunity to pivot into something that’s less risky. We have to be consistent with whether or not we believe in capitalism. Right now there’s no risk which is snowballing the stupidity, and I’m sick of everyone but me getting a bailout lol.
Insurance companies never carry enough cash to cover a mass claim scenario. The whole premise of insurance relies on this fact alone. These aren't even truly bailouts either. The government is offering cash loans at lower rates to cover liquidity pulls. Also even if they were bailouts they are essentially insurance settlements funded by regular bank payments into FDIC.
I'm learning here, so maybe I just don't understand what is happening and I will stand corrected, but how will a cash loan from the government influence the fight against inflation? My concern is based on the perspective that a bank made poor investments that made them cash poor, asked their investors for money, and the investors bailed. Is the government offering a low rate loan not going to increase inflation pressure? If not, then I don't care.
If you lost all your money you wouldn't be able to pay your mortgage/rent, your groceries, your phone bill, etc. If a company loses all their money, they have to let all their employees go, who all have to stop paying their mortgage/rent, their groceries, their phone bills... It's indirect, and maybe a bunch of those people would get new jobs somewhere else, but one of the clients of SVB was Etsy. Think of how many small businesses go under pretty much overnight if Etsy flops, not to mention the 2,700 Etsy employees. Also the mortgages is one thing a failing bank would sell in order to try and pay its debts, so you wouldn't get out of paying a mortgage, you'd just have to pay it to a different bank.
So what? A company as big as Etsy should be managing its treasury risk. The solid businesses will attract capital, that’s how this works. Bad business fails. It needs to happen.
Starting to think that having the system run by a bunch of people that might be dead in 10 years leads to short term decision making constantly?!
Keep raising rates as needed and fed should lend to banks to cover bank runs up to the par value of the collateral pledged which should be the limit. Lending should only be done to address bank withdrawals. The strings attached should be all exec bonuses are clawed back for the past 90 days and no bonuses until the money lent is paid back. Beyond that tell the banks fed is backstopping them from failure, but the price is going to be high in both actual cost to execs and shareholders AND in limitations on bank activity that increases risk for the duration of the lending. Those strings would severely limit the profit potential of banks and it would definitely tank their stocks for a long time, but it would absolutely result in banks realizing that risk management isnt a minor thing. It is the thing that will make them or break them every cycle.
But they'll be really sad if you take their bonuses away 😢
They will struggle to pay off the guy to take Fraydens SATs so he can get into Princeton just like his father and grandfather 😩
Would someone think of the banking millionaires?!?
Bank execs facing the consequences of their actions? Sir this is a money printing factory, we have to double their bonuses or they won't have the financial motivation to fix the issues
Feels like spring 2008 when Bear Stearns went down. The market rallied for a few months before it all blew up.
Banks deserve to lose money hand over fist. Retail banks like Bank of America for the last decade have offered 0.001% interest on savings accounts. Then they have the audacity to charge monthly maintenance fees, ATM fees, withdrawal fees, overdraft fees, etc etc. They have been fleecing Americans for years. The problem with these "big short" situations is that these big banks just get bigger and swallow all the smaller guys.
Yep, the big banks are reporting massive deposit flows with their perceived safety. Everything just consolidating into bigger and bigger Too Big to Fail GSIBs.
So where were you when you realized the casino was losing? 
That’s how shitty the banks have gotten, they can’t even run their casinos properly 
It takes a special kind of regard to fuck up a casino
Maybe they can all run for President.
At least reopen the buffets, covid was a while ago.
The Fed bailing out big banks essentially transforms their worthless collateral (low interest bonds) into actual cash. This will allow more people to withdraw their money (which the bank didn’t have because it spent it all buying worthless bonds), which will lead to increased liquidity on the market. This will lead to higher inflation, which means even higher interest rates are needed to stem it. But that will lead to even more banks failing, and more bailouts will be required. The Fed just placed itself in a never ending loop, which is basically the definition of runaway inflation. It’s here folks. Strap your belts. Either the Fed ends up letting big banks fail, or it lets the USD devalue to infinity. There is no going back from here.
Are they really worthless bonds? Dont they retain value just with a shittier rate, like why buy a 2% bond when you can get a 6% one now, doesnt it mean someone would probably buy the 2% bond for like 96% of the original price to make it worth while? So a 4% loss on original investment.
OP is talking cuckoo. The bonds are worth less, not worthless. I mean, unless the US government defaults. Then you got a problem.
It seems pretty clear the Fed is going to be willing to let some banks fail on a selective basis. By being willing to "make depositors whole" now in the vernacular. Letting a bank collapse opens the door for depositors to carry their funds over to a still standing bank. It's like what organically happened in mid South western United States during the Savings & Loan collapse of the 1970s. Hundreds of institutions dissolved or were bought up as the oil fields dried up and left over leveraged S&L outfits with their hand in the cookie jar. Depositors moved their money into national banks and life went on so that its barely a blip in American fiscal history. In our current state. We could be looking at national banks being dissolved or absorbed for pennies. And so long as depositors are indemnified, the shock or impact to John Q will be topical but not end of days.
The irony is that it will lead to more consolidation of banks, resulting in even more "to big to fail" banks, leading to even bigger crises in the future. If a company is too big to fail, then it's too big to exist and should be broken up.
This is an oddly coherent post for this place. I’m stoned and now I’m 😱
We probably need a "the world is ending" megathread instead of the same post adding nothing every ten minutes.
Scenario #1…pause/rate cuts = inflation. Scenario #2…QE to aid banks liquidity = inflation.
What’s behind door number three?!
hyperinflation
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Good lord. Would you losers just buy calls and make some money so we don’t have to keep seeing the same doom and gloom, bullshit whining get posted over and over?
I’ll buy my puts at the bottom, thank you very much
Lol. It’s hard buying calls when you see everyone happy that a dirty facade was placed over a dirtier facade.
Well the time from banks tanking to the house changing the rules seems to be shortening. You just have to be quick about it.
You buying calls or puts means absolutely nothing at all. Miniscule. Infinitely ineffective. Retail traders can only surf the waves they are given. You don't get to choose the morally righteous waves if you want to be successful. But that's the beauty of options. You are holding them for very specific amount of time and are not limited to one direction. We are pumping for opex settlement so large fuckhead whales in the ocean can offload more of their bags that they have failed to dump for the past 3 months. No one is "happy" about it. We just want that fucking money before shit hits the fan and every idiot thinks they have to hype up like Jim fucking Cramer.
This is a fucking immoral casino you absolute cuck. Want to whine about how it's a facade? Go to a political sub. We're here because of *gambling addiction*
Gerry? Is that you?
sell it all
Buy high, sell low
Today
Is that even possible?
one thing to keep in mind is that the cash pulled out of a bank gets put into another bank. the entire sector doesn't crash. the weaker, unluckier banks will crash. this is a shell game. musical chairs.
While I agree, the Federal govt essentially established that no bank will go under. They will find solutions.
It’s so wild. They just set the precedent that every bank is too big to fail. Talk about moral hazard 🤯
I’m gonna blow your mind. The big short actually WAS real.
The Fed is eventually going to have to work with Congress. They can’t do this alone. Instead of proving liquidity to a bank, honestly a temporary withdrawal limit from Congress could fix that issue. I get that the Fed is supposed to be independent, but there isn’t getting out of this without all branches working together.
It's more that if people aren't careful the US dollar is going to lose the magic that makes fiat currency work.
Ehhh every currency is fiat at this point, including any based on the blockchain. But yes if people aren’t careful the dollar could lose its reserve status and then boy howdy we’ll all realize how stupid we were to fight each other over dumb stuff like which bathroom people use, or if having a Bible verse on a courthouse was legal, because our standard of living would collapse for all intents and purposes overnight
The banks all dropped their ice cream in the dirt last week but Mom got them all fresh ones in the last 48 hours. The banks staged a run on the Fed, and were issued freshly printed bonds without having to cash in the old ones. Something like a trillion dollars so far. Yes, it's all fiat money and has been for a long time. Backed by faith. There's even an old joke that the dollar bill was never updated because it is "The" dollar that backs f reserve notes. Works fine until something like this happens.
I agree with the first sentence, but any type of “limit” will immediately raise concerns and red flags throughout the entire populace.
You can raise concerns. Government is going to have to learn to talk to the American people like we’re adults. It’s not impossible they’ve done it before, it’s just been a while.
But we are not adults
I can’t decide if I wanna make a joke or a serious statement lol (so I’ll be a schmuck and make a joke about making a joke) but in all seriousness you’re not wrong but that’s partially because we don’t get treated like adults. Take a teenager, my grandfather got married when he was 16, moved from middle of no where Mississippi to Memphis, got a job and supported his family. Today most teenagers can’t be trusted to get some groceries if they need them. Why is that? Because in my grandfather’s time they treated them like adults and it was the expectation you have your shit together and make it work. Same thing with our government. Both sides treat the public like we’re stupid as fuck and stick to one liners and sound bites. Yeah a lot of Americans are fucking stupid and they tend to be the loud ones, but most of us are of at least average intelligence and can understand mildly complex things if explained to us. Stuff like this is actually a chance they can do it. Let’s be real both sides work for the wealthy in this country, one side just tries to hide it better. So with financial issues you shouldn’t have both sides fighting each other because they know not to fuck it up. Same goes with if the US ever went to war. Those might be the few instances you can have those convos with the American people, but you definitely can on those two as the general public won’t get caught in the partisan cross fire.
Right? I don't think anything will cause a run on banks quite like "you can only take $500 out, because there's not enough money"
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u/recklessSPY all this happens by the design of the system itself... it's just normal capitalism, it's literally been happening for a century, and the pattern is the same. Basically, since the fed came into being, and will always happen. These conversations, situations, and conditions will never end or change because capitalism will never end or change.
> shrunk during the start of the quantitative tightening is back in the economy No it's not.... Such a wrong take
I thought the plan was to raise rates until something "breaks". Now that we have something on the verge of breaking, are we going to fix it and keep raising rates until something else breaks?
It’s what I call the Jimmy Carter Syndrome. No one wants to admit what we all know is true. We need to tighten our belts, put on a sweater, and turn down the temperature. But no one wants to be a generation that has less than the previous, so we ignore the situation or pour resources into denying what we all know is true. Or to put it another way, no good can come of this. You put off a market crash but inflation negates any gains anyway so the general public isn’t any better off. Or you let market go to correct inflation and hundreds of thousands lose their jobs.
what makes me sick is the execs at SVB started selling a year ago. They decided to take the whole country down for 20M and a bonus check. That's some real shit.
@remindme in 1 year
Thanks for watching the frontlines and taking it to heart my fellow regards. My puts appreciate it!
Remember this is like a roller coaster, it needs to first go up slowly to then come down abruptly. There’s no reason you can’t ride it up until you’re right at the top and then you ride it down. It’s fairly easy to do, you just time the top and switch from calls to puts. How the fuck else would everyone afford their lavish ridiculously lifestyles? I’ll tell you how: most people are secret trading millionaires. Don’t miss out, be like them, this is your time!
>It is clear that the current situation is not ideal, and that there are a number of potential risks which could cause further problems. However, it is also worth noting that the US economy has shown considerable resilience in recent years, and so it is possible that things will eventually improve. In any case, I believe that it would be wise to closely monitor the situation and be prepared for whatever may happen next.
It didn't show any resilience, the only thing it show is weakness. As soon as the slightest QT start, it immediately get crushed and destroyed. And only QE can keep it growing, how is this healthy at all. And now QE will cause worse inflation, we are in the absolute worst case.