Posted on 05/02/2023 9:34:54 AM PDT by CFW
The twin crashes in US commercial real estate and the US bond market have collided with $9 trillion uninsured deposits in the American banking system. Such deposits can vanish in an afternoon in the cyber age.
The second and third biggest bank failures in US history have followed in quick succession. The US Treasury and Federal Reserve would like us to believe that they are “idiosyncratic”. That is a dangerous evasion.
Almost half of America’s 4,800 banks have already burned through their capital buffers and are running on negative equity. They may not have to mark all losses to market under US accounting rules but that does not make them solvent. Somebody will take those losses.
“It’s spooky. Thousands of banks are underwater,” said Professor Amit Seru, a banking expert at Stanford University. “Let’s not pretend that this is just about Silicon Valley Bank and First Republic. A lot of the US banking system is potentially insolvent.”
(Excerpt) Read more at finance.yahoo.com ...
https://finance.yahoo.com/m/4e1bf348-1bbc-3abb-bf60-65613f089253/pacwest-other-regional-bank.html
"A day after JPMorgan Chase (ticker: JPM) agreed to take over First Republic Bank (FRC), other regional banks have found their stocks plummeting. It isn’t yet clear what is behind the selling."
The remainder of the article is behind a paywall but one regional bank referred to, PacWest Bancorp, is down over 25% in mid-day trading.
“Somebody will take those losses.”
Nope. If they can maintain a profit they can hold the securities till they return to par.
Gurgle, gurgle, gurgle.........................
There is a lot of idiocy in the business news reporting these days.
Had governments not intervened in a major way in the 2008 liquidity crisis, what’s the worst that could have happened anyway? Anyone have any learned insight into banking and financial matters regarding this?
Do you think 2023 so far, is a coincidental “clip” of idiosyncrasy in the markets or a harbinger of something much much different?
On the financial surface, it seems like banks long-term treasuries going into the red due to rapid interest rates combined with depositor withdrawals forcing banks to recognize their paper losses.
However, there is a harbinger, because all this is not happening in a vacuum. Consider BRICS+, with Mexico and rumblings of Germany joining in.
I see a harbinger of the end of the FED/MSM/Cabal petro fiat-dollar, and the ushering in of a PM-backed currency, with perhaps CBDC in the transition.
Think NESARA/GESARA.
And where can such a list of stressed banks be found?
Besides in the hands of leftist politicians?
There was a big run on First Republic because most of the deposits were not federally insured.
we have had rising interest rates in the past
the volcker increases in the 80s were much more dramatic
but the banks did not collapse
what is different this time?
I see a harbinger of the end of the FED/MSM/Cabal petro fiat-dollar, and the ushering in of a PM-backed currency, with perhaps CBDC in the transition.
———
PM and commodities based backing of cashless ( sovereign digital currency )-cash ( currency) will be history. People will rush into it when faced with losing savings, 401k’s, pensions. All other digital currencies ( Bitcoin etc) will be outlawed, governments hate competition.
or more likely come to term?
A lot of stuff in the decade of 2012 - 2021 (inclusive) went out at a premium. One thing to have 20 points of premium amortized over 30 years; its another thing entirely to have something valued at 109.5 on 12/31/21 get marked to 91.25 by 12/31/22. The 100 Par payable in 2035 is not such a great thing for the bank that bought it in 2017 when it was issued at 117.
Our company (its a smaller public finance underwriter) is on the list of places the FDIC sends out “we got shit to sell!” e-mails. A bond issued by Comal ISD, AAA paper backed by the Texas Permanent School Fund was sold by our company at 117 and a fraction in 2017. It matures in ‘38. Asking for 86. I saw bids for 65. AAA PAPER PAYING 4%!!! 65!!!!
Um, the market would have sorted things out. The government should have only intervened to see creditors were paid off in the correct order instead of socializing losses.
A lot of smart people that don’t understand the nature of regulatory capital too... The Stanford University Business School folks are not idiots.
Also, International Business Machines Corp expects to pause hiring for roles as roughly 7,800 jobs could be replaced by Artificial Intelligence (AI) in the coming years, CEO Arvind Krishna told Bloomberg News on Monday.
This time it may be different in that tech jobs may not return after upcoming lay-offs due to the jobs being replaced by AI.
We would still be sorting it out, with massive unemployment and the effects of a few years of negative growth to still handle had not the government made certain that cash remained liquid.
“get marked”
These assets don’t get marked to market.
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