The fact that they publish this in the first place, is worrying, to say the least.
It's also quite true - the banking crisis won't be a repeat of 2008.
But, unlike 2008 which was fairly limited to (arguably huge) banking and residential mortgage sectors, this crisis will hit hard everywhere - valuations are still insane, the % of zombie companies is off the charts, inflation is everywhere, FED and governments have much less room to manoeuvre (contrary to what the article claims).
In the past 3 weeks, 3 fairly big US banks were seized by regulators, and a 166 year old Suisse bank was rescued.
My personal indicator for when the shit is really hitting the fan, is when Warren Buffett starts buying stuff.
Global oil prices have been steadily declining for months, electricity is much cheaper again in Europe and many supply chain bottlenecks have been resolved. This will put a strong break on inflation going forward
This isn't a banking crisis. This is an economic attack and the intent seems to be so the banking sector can consolidate further. Its being done with the tacit approval of the fed.
Every action taken in the last 50 years has been to slowly but surely move the banking sector to consolidate banking in the smallest number of hands to consolidate power.
2008 provided the perfect excuse for them to pass legislation that prevented new banks from being chartered. If you look at the requirements, the only way you can charter a bank is to accept personal liability for all outcomes of your board decisions and you are prohibited from receiving any compensation for it. If you can't find people for your board, you can't charter a bank, and you can't pay them for their time or risk. The only reasonable people that would charter banks are the people that lie, if they have no credibility why would you ever give them your money.
Worse, the stock market has a mechanic that allows any exposed company to be at the mercy of faceless entities even if they are in perfect financial health and follow good practices. Synthetic shares.
FRC was a most recent example of this. They had conveniently timed media packages and youtube videos posted in feeds that were edited showing bank runs on a Sunday, and the reflected window text was the wrong direction.
Worse, inflation is out of control, and the data and measures for it have been corrupted to show significantly lower percentages, and there are collusive options and shorted shares are being used to induce volatility halts when the price might exceed a resistance level, its very algorithmic.
The SEC is toothless, the currency will hyper-inflate, and we will be the next Argentina. Its what the Fed wants.
OK, I undestand what you read, but would like some more clarity.
Why is the Fed trying to move the banking sectors to consolidate banking for the last 50 years?
The President of the United States nominates the members of the board of directors. The US Senate confirms those choices.
No two governors may come from the same Fed District. They are 14 year terms and staggered. No board member can be re-appointed.
You would have to have the entire US presidents from Nixon to Biden in on it. All 100 Senators (or the majority) would have to be in on it. Every Fed governor would have to be in on it. All the people around those decisions - POTUS staff, Senators' staff, everyone working at the Fed - all working in unison and no one talking for 50 years - no books written that they want to put all small banks out of the way. It's easy to say "The Fed" but the current members are Jerome Powell, Michael Barr, Michelle Bowman, Lisa Cook, Philip Jefferson, and Christopher Waller. What can you tell me about each of them? Why would they be in lockstep? Have they all been told that they would be assassinated by the CIA if they didn't follow orders from some shadowy group? Who exactly is this shadowy group that will assassinate them. Please name names instead of saying "shadowy group." I only use this term because I don't know what their names are and if they have an actual group name.
And most importantly, who and why would someone want to have us be the next Argentina? Why does - not the fed - but Jerome Powell, Michael Barr, Michelle Bowman, Lisa Cook, Philip Jefferson, and Christopher Waller want to destroy the USA? Why does every single president and every single Senator every single Fed Member, and all of their staffs, for the last 50 years, want to destroy the USA? I'd love to know this. If you could list every single member of Senate and all the Fed Board members, by name (Senators and Fed board members and their staffs), and tell me why each and every single one of them want the destruction the USA, I'd love to hear it. I also assume since the USA is destroyed, it would also take out Western Europe and most countries around the world - like, almost all of them.
I am curious, but with all the national debt in western economies, will higher inflation help service that debt going forwards? I mean, prices rarely ever come back down... Combined with higher tax incomes, seems like a kinda win-win for the governments? Or is this a follow on from recent currency wars, if that is appropriate phrasing? I dont know much about world finance, at least not enough to have sold CS in time. I never imagined such a long standing institution, in such a conservative country could have fallen. That will teach me to avoid the news! (apart from this site of course!)
> I am curious, with all the national debt, will higher inflation help service that debt going forwards?
The simple answer is no it wont. The liabilities that matter the most have COLA so when inflation goes up so do payments.
The only thing it actually does is make worthless any existing bonds so anyone holding them is out the money with special corrupt deals for critical infrastructure that might have exposure (i.e. blackrock having 1% bonds being swapped for current interest rate bonds). That would primarily be China, and the Saudis. I'd imagine that is what prompted segmenting the bond market with TIPS vs non-TIPS bonds.
The burden of inflation is placed on the populace, and when people are unable to afford basic necessities, and have to work as slaves (because currency is no longer a store of value and the crown of shadow government in effect seized property), unrest inevitably occurs.
The Fed is a private institution, not an actual branch of government, but they are seizing money from every wage-earner through inflation, and government does the same since percentages increase the basis amount taxed.
Its unfortunate but all the historic factors are slowly lining up with many of the same conditions previously seen between 1767-1776.
Don't get me wrong, this is beyond stupid, but I've come to realize the people in the positions that could stop this simply have no interest in doing so. Its more profitable for them to allow this to progress because "what are you going to do about it".
10% inflation on government bonds that were trending at near-zero interest rates is definitely half a win. Even very long duration bonds had very low rates. It does require salaries and therefore the tax base to keep up with inflation.
> Or is this a follow on from recent currency wars
What currency wars? The "gas wars" are far more significant.
> with all the national debt in western economies, will higher inflation help service that debt going forwards?
To the extent that the debt is denominated in the national currency (for example, US debt is denominated in dollars), yes. Historically this has been the main way that the US has dealt with its debt--by inflating the currency to decrease the actual real value of past debts.
> unlike 2008 which was fairly limited to (arguably huge) banking...this crisis will hit hard everywhere
I think it's clear that it won't hit "everywhere" specifically because... it will not hit huge banking. After 2008 every huge bank was required to hold much more massive amounts of cash on hand specifically to fend off bank runs. And that's working.
But I very much agree with you -- and with Chase bank -- that this will not in any way be a repeat of 2008.
I wish people would simply call things by the commonly known words that describe them. QE is money printing, and the trap of money printing is that eventually you run into issues where you inevitably have either a deflation spiral, or a hyper-inflation spiral once the store of value is no longer accepted for trade.
Most of the value from the pandemic pump has already been dumped. Some valuations are already too low.
In terms of companies, term sheets have already been halved in many cases or withdrawn. As always the scrappy and research and development focused companies will win.
The slowdown will probably keep going for a while due to the bigger reason, geopolitical market and trade changes. The funding inflows and outflows have changed dramatically and companies that relied on sometimes foreign authoritarian money will be hurting the most, that was the risk and it is present. Though this is also increasing investment in markets and manufacturing in the West. Long term growth will be immense. The market is almost falsely being held down at this moment due to these influence/attack/change vectors.
It's also quite true - the banking crisis won't be a repeat of 2008.
But, unlike 2008 which was fairly limited to (arguably huge) banking and residential mortgage sectors, this crisis will hit hard everywhere - valuations are still insane, the % of zombie companies is off the charts, inflation is everywhere, FED and governments have much less room to manoeuvre (contrary to what the article claims).
In the past 3 weeks, 3 fairly big US banks were seized by regulators, and a 166 year old Suisse bank was rescued.
My personal indicator for when the shit is really hitting the fan, is when Warren Buffett starts buying stuff.