[Disestablishmentarian]

Speaking of real estate, there is also a nightmare scenario for the U.S. economy: Many U.S. banks are allegedly upside down on the mortgages they sold in recent low-interest years.

Banking “Wisdom” is to borrow long-term when rates are low, and loan out short-term at higher rates.

The industry has done the reverse: borrowing short-term and loaning long term (mortgages) at very low rates, meaning bank capital is now being depleted rapidly as borrowings no longer allow a profitable interest rate spread.

U.S. consumer debt is also rising rapidly. Credit cards are financing groceries as well as mortgages. Not good.

[LonePalm]

This is what got Silicon Valley Bank in trouble.

They bought US Government securities when interest rates were low. When rates rose, the value of their securities fell. This meant that they couldn't meet their reserve requirements. They had to sell some securities at a loss and spiraled in from there.

WWG1WGA

Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)
LonePalm, le Républicain du verre cassé (The Broken Glass Republican)

[OldWarBaby]

The two local banks I use have all but stopped doing home loans. Most of what they’re carrying is low interest, left over from the liarloan years of Bush43. Throw that in with a whole bunch of over priced local real estate and I don’t blame them for holding back. When home loans hit 8%, and they’re going to, The local market, at least, will be dead-—just like it was after 2008. Few people can handle a mortgage over 8%. Saw it in the early 70’s and we’ll see it again soon. I still have a 2” stack of foreclosure notices from the 08-010 years when something like 2,000 homes went back to the bank.——just in my town.