"If the end goal is to build a financial system that is resilient to shocks, we might just have to let it face one."
Must, not "might", as many times and however often it takes right down to the individual level. There should never have been any bailouts. Not even considered. At some point, one can't help but think (or realize?) it's just a long series of opportunity-scams from "Great Financial Crisis" to Covid to Official ScamCoin Currency printing to foreign military interventions. It all certainly does work out well only for those at the top. Oh well, just shut-up and pay "your fair share".
A decade ago, as a younger fellow, I was fairly skeptical of criticism of the GFC rescue package and the economic implications on wealth inequality. Now, with front row view to the latest crisis, my opinions have shifted considerably.
I would be interested in you thoughts on the following
WSJ is reporting "Borrowers in their 20s and 30s reached 90-day or more delinquency on credit-card debt and auto loans at a higher rate in the fourth quarter of 2022 than before the pandemic."
" In the fourth quarter, they fell behind on credit-card payments by 90 days or more at a rate similar to that in 2009, at the end of the financial crisis."
"... student-loan payments are expected to restart this summer after the Supreme Court acts on litigation challenging a Biden plan for mass student-debt cancellation."
I think that credit losses are becoming a larger issue, but also are also coming off a historically anomalous low rate through the pandemic. Nevertheless, this will tighten bank lending standards and put further pressure on banking balance sheets as we continue through the year.
“...it’s hard to see how suppressing price discovery leads to more efficient markets over the long run. Central bank intervention merely allows investment returns to be privatized while investment risk is socialized...”
They banks/i-banks have always done a great job of pulling the wool over the eyes of regulators, and it's impossible to find meaningful information about derivative/Contingent Liability exposures. Hopefully your hunch is right
I see leverage is now lower and this is good on the face of it. But how about if Contingent Liabilities are added in, and not with a net counterparty levels. Still plenty of risk in the banking system, just not in the same place. The problems are always there, and the I-banks/Banks will always outwork and outthink the Regulators
So True....Central bank intervention merely allows investment returns to be privatized while investment risk is socialized - a deeply regressive tax in the form of dollar dilution and dwindling spending power that benefits the richest among us."
Proves to me two things...1st Lesson is the FED is flying blind! & 2nd Lesson is those pesky "Beliefs," old ways never die, Adapt/Learn & Change your models/perspective. Data Metrics alone is a joke now...MOAR Revisions, MOAR JawBoning, Incompetent Politicians who still want to pick there own Winners...seeing beyond the tribalism & belief! Its' a squirt in your brain! Such a Dopamine Hit!
It certainly is a tough treadmill to get off - and it seems that unlike a decade ago, we have stopped trying. It will be interesting to see how the Fed manages these conflicts going forward, though I doubt we should expect a change to the status quo.
Your ability to explain complex financial concepts/issues/trends in simple (yet powerful IMO) terms is just amazing!
I'm glad the message resonates! I appreciate the kind words
"If the end goal is to build a financial system that is resilient to shocks, we might just have to let it face one. "
Great writing! 🤘🏽
Thanks Nick, thanks as always for reading :)
"If the end goal is to build a financial system that is resilient to shocks, we might just have to let it face one."
Must, not "might", as many times and however often it takes right down to the individual level. There should never have been any bailouts. Not even considered. At some point, one can't help but think (or realize?) it's just a long series of opportunity-scams from "Great Financial Crisis" to Covid to Official ScamCoin Currency printing to foreign military interventions. It all certainly does work out well only for those at the top. Oh well, just shut-up and pay "your fair share".
A decade ago, as a younger fellow, I was fairly skeptical of criticism of the GFC rescue package and the economic implications on wealth inequality. Now, with front row view to the latest crisis, my opinions have shifted considerably.
Reads like a good theme for a post. Best to you!
Thanks for another great read!
I would be interested in you thoughts on the following
WSJ is reporting "Borrowers in their 20s and 30s reached 90-day or more delinquency on credit-card debt and auto loans at a higher rate in the fourth quarter of 2022 than before the pandemic."
" In the fourth quarter, they fell behind on credit-card payments by 90 days or more at a rate similar to that in 2009, at the end of the financial crisis."
"... student-loan payments are expected to restart this summer after the Supreme Court acts on litigation challenging a Biden plan for mass student-debt cancellation."
I think that credit losses are becoming a larger issue, but also are also coming off a historically anomalous low rate through the pandemic. Nevertheless, this will tighten bank lending standards and put further pressure on banking balance sheets as we continue through the year.
“...it’s hard to see how suppressing price discovery leads to more efficient markets over the long run. Central bank intervention merely allows investment returns to be privatized while investment risk is socialized...”
Spot on! Thanks for sharing
Thanks for reading!
They banks/i-banks have always done a great job of pulling the wool over the eyes of regulators, and it's impossible to find meaningful information about derivative/Contingent Liability exposures. Hopefully your hunch is right
I see leverage is now lower and this is good on the face of it. But how about if Contingent Liabilities are added in, and not with a net counterparty levels. Still plenty of risk in the banking system, just not in the same place. The problems are always there, and the I-banks/Banks will always outwork and outthink the Regulators
I guess the question is whether there is more or less off balance sheet obligations than 2008? my hunch says not more.
But agree - this is an overly simplistic breakdown of the balance sheet
What a writing TLBS!! Easy to understand and full of knowledge. I cannot say more than thank you for these!
Your appreciation is always appreciated! Hope the sun shines for you today
Unfortunately not, this is Galicia my friend hahaha
So True....Central bank intervention merely allows investment returns to be privatized while investment risk is socialized - a deeply regressive tax in the form of dollar dilution and dwindling spending power that benefits the richest among us."
Proves to me two things...1st Lesson is the FED is flying blind! & 2nd Lesson is those pesky "Beliefs," old ways never die, Adapt/Learn & Change your models/perspective. Data Metrics alone is a joke now...MOAR Revisions, MOAR JawBoning, Incompetent Politicians who still want to pick there own Winners...seeing beyond the tribalism & belief! Its' a squirt in your brain! Such a Dopamine Hit!
It certainly is a tough treadmill to get off - and it seems that unlike a decade ago, we have stopped trying. It will be interesting to see how the Fed manages these conflicts going forward, though I doubt we should expect a change to the status quo.