Posted on 03/11/2023 9:30:01 AM PST by PJ-Comix
The chances of the McCarthy House printing a couple trillion nancybucks to bail out this bank are pretty slim.
On a lighter note, looks like Bankrun Harry & ME-gan & Oprah may be in the mix. Must be a racist plot.
They better not. Knuckleheaded bank head ignored good financial sense and went full on stupid
It just might usher it in. Enough mid-level banks go under leaving us with only the big banks...control
Eggs...
Basket...
Ground...
“I cannot imagine any systemic risk from this event.”
The economy of the country and the world are tied together at the hip.
Money is fungible.
What does that mean?
https://www.dictionary.com/browse/fungible
Let us run the scenario:
Company A had a few million in working capital in the failed bank. They may get it back some day after the bank’s assets are sold off in a lengthy and complex liquidation process.
Meanwhile Company A has to pay their payroll—now.
Company A has to pay their vendors—in the next few weeks.
Company A does not have enough cash to do it.
Company A declares bankruptcy.
So—no big deal—one company, one casualty.
But—remember that vendor that Company A couldn’t pay.
We will call the vendor Company B.
Company A owed Company B a lot of money.
Company B needs that money to pay its employees and its vendors....
etc etc etc....
It is a little more complicated than that in 2008.
There was a liquidity freeze.
Imagine if everyone who owed you money all refused to pay you at the same time—and now you have no cash coming in...
They owe you the money—everybody agrees on that—but they refuse to pay you now.
That means you have no cash—now.
Then you can’t pay people you owe—now.
In 2008 the big banks hit that liquidity freeze.
Accounting does not matter at that point.
What they needed was cash—now.
At the end of the day (after a couple of years) the banks did repay .gov in full.
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