LOL Barney Frank (of Dodd-Frank fame) is part of the management of Signature Bank and lobbied to weaken regulation on his own bank in 2018 (he was successful). He also attacked Bernie as "financially illiterate" in the 2016 Dem primary.
Yep, it's not like he personally lost money as a result. If SB's situation was at all like SVB's, he probably made a lot off of the failure
Barney Frank looked disgusting--nipples protruding--in his blue shirt before Congress. Very very disrespectful.
haha cool
maybe the working class will realize its a sham this time. probably not :shrug-outta-hecks:
We could get an influx of angry libertarian fascists who only learned how to break things.
Why does raising interest rates cause bank runs? Sorry I don't really understand interest rates. :blob-no-thoughts:
A lot of investments aren’t as good as they were thought to be and were only kept afloat by virtually zero interest loans. The fed has kept a pump of cheap money pouring into the economy since the 08 crash and especially in response to covid. This is where the “money printer goes brrr” meme got its legs. Now that the cheap money tap is running dry a lot of those companies that have never turned a profit, those dangerous speculative markets (crypto), and the zombie firms that have just continued on via momentum are hitting a wall. The bank run on SVB was caused by an SVB report of a $1.8 billion loss on investments. Honestly I think these rate hikes will actually keep capitalism afloat longer by pulling the slack out of the system and calling bullshit on these firms that have been kept afloat with Monopoly money. This will surely cause a recession but triggering that now before a larger meltdown occurs is honestly smart. Of course labor is not involved in the decision making process so the expectation will be that the workers take it on the nose
The entire US financial system is more fragile than initially thought.
I mean, this is pretty much exactly how fragile I thought it was after the post-08 mismanagement (not to mention pre-08 factors as well).
The last bank failure was a hugely radicalized moment for me.
If they wanted to bail out thr banks it would have been more efficient to give people money to give to the banks. That is what econ textbooks predict. Bonus, people get money to spend which raises the GDP. There is no liberal reason to not do that. Any representative that proposed the give people money bill would have been crazy popular. My child liberal brain couldn't process it all.
It really is wild how little of any of this actually needs to be a problem
Same energy as giving employers PPE 'loans' to pay their employees when it wouldve make infinitely more sense to just give the people money directly
Of course, there are some who argue that the government should stand back and simply let these banks fail – especially since in many cases it was their bad decisions that helped create the crisis in the first place. But whether we like it or not, history has repeatedly shown that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months – years of low growth, low job creation, and low investment that cost those nations far more than a course of bold, upfront action. And although there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks – "where's our bailout?," they ask – the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.
Obama’s Remarks on the Economy in April 2009
What happened? We had a decade of low growth, low job creation, and low investment, because the money multiplier is fucking not a real thing that exists. The money multiplier dropped like a rock. The federal reserve doesn't maintain this anymore because it's not fucking real. It's an artifact of the fact that the federal reserve will almost always create reserves to back lending and creating reserves doesn't create lending. Nobody wakes up, compelled to go to the bank and borrow decades of their salary because reserves were created. In case anyone looks at this, they changed how M1 is measured in 2020 and that's why it jumped up, there was no miracle. Of course left wing economists have had this right for many decades.
Sure, and they can also make loans without it. Loans create an asset (the loan) and a liability (the deposit) for the bank. And those things are also liability and asset for the borrower. They need to have a certain amount of reserves and a solvent bank can always obtain them. What they actually did gave banks reserves without the liabilities, and banks use excess reserves to buy assets like bonds, treasuries, mortgage backed securities, the things they can sell to get reserves without raising their savings rate.
Hard to tell, if it does then it's not at obvious right now what that would be.
Each of us should all be prepared for something unexpected to come along and upend the current order, or the system grinding to a halt suddenly. It's definitely possible.
It's more of a "facing the inevitably of death" prepared than a "i will whether the storm" prepared.
The article runs through the usual suspects in order with the Ponzi schemes upfront (crypto), then the vaporware firms (speculative tech companies that have never turned a profit), but the missing element are the zombie firms. This is the scary one for me. The fed itself ballparks it at something like 10% of top firms are zombie firms. These are mostly massive retail and manufacturing companies that have hit their complexity curve limit and are only being kept up by cheap loans to cover expenses (and often other debt obligations). If/when these start to go the meltdown could be massive and I’m not entirely sure the fed knows how big of a bite it’s taking here (tho ofc they have much more funding and expertise than my dumbass, I just assume when all things are equal the capitalist with act with maximum malfeasance and lack of future thinking in pursuit of profit). I’d love to hear JPow’s logic beyond class war here. You don’t liquidate banks on accident in pursuit of collaterally punishing the workers. They’re killing flies with a bazooka if that’s really all they’re trying to do here
I don’t think so, at least not as big as 2008. SVB was a mostly local bank although the services that their customers provided are long reaching so it could be impacted.
The only way to solve this is by bailing out the millionaires who kept their money there
:brainworms:
I mean they could have started swapping t10 into 3months when fed kept raising rates, they just kept watching their treasure position decrease into “margin” call. 200 billion is a lot of money, but you can unwind them over a year
We've had like 35-40% inflation since then so idk how that effects the numbers
Oh well yeah with the rest of the context my comment doesn't make sense but I wasn't given that information before lol
Bloomberg and CNBC were talking about this yesterday.
I think the better question might be how long until they forget about it.
