Well since this thread has taken a turn, spend 3-hours watching this documentary to see the history of how we've managed to get ourselves so completely berkeleyed over the last 50+ years.
Well since this thread has taken a turn, spend 3-hours watching this documentary to see the history of how we've managed to get ourselves so completely berkeleyed over the last 50+ years.
In reply to AnthonyGS (Forum Supporter) :
Just when I wanted to start taking you seriously...
Pete Gossett (Forum Supporter) said:Well since this thread has taken a turn, spend 3-hours watching this documentary to see the history of how we've managed to get ourselves so completely berkeleyed over the last 50+ years.
Nobody has an attention span of 3 hours for a documentary anymore. Still, here's a counterpoint:
In reply to AAZCD-Jon (Forum Supporter) :
That's hilariously awesome.
To be fair, it's 3 separate episodes rolled into one 3-hour long piece, and I'm lazy & didn't want to link 3-separate vids. It's also a BBC production, so not uniquely oriented to the US, or necessarily even the west.
In reply to Pete Gossett (Forum Supporter) :
And nobody has a 3 hour attention span? Like him or not, Joe Rogan proves they do.
AAZCD-Jon (Forum Supporter) said:Pete Gossett (Forum Supporter) said:Well since this thread has taken a turn, spend 3-hours watching this documentary to see the history of how we've managed to get ourselves so completely berkeleyed over the last 50+ years.
Nobody has an attention span of 3 hours for a documentary anymore. Still, here's a counterpoint:
Sweet Baby Jesus that was awesome
Curtis73 (Forum Supporter) said:I love holding off reading these threads. I wait until it gets about 10 pages in and I read page 1 and the last page. Never fails. We started talking about a bank collapse, and now we're talking about Abraham Lincoln and slavery.
This is good E36 M3.
And I promise if you read the whole thing, your IQ will drop 10 whole points.
In reply to A 401 CJ :
I think it's like trying to time the market...
You might see some early gains, but you need to know when to pull out to avoid being part of the collapse.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20230319a.htm
Last time they did anything like this, was 2008....
Jay_W said:https://www.federalreserve.gov/newsevents/pressreleases/monetary20230319a.htm
Last time they did anything like this, was 2008....
We're boned
In reply to Javelin :
On the plus side, it seems like the USD is likely to remain the reserve currency of choice for awhile. So we've got that going for us, which is nice.
GIRTHQUAKE said:In reply to A 401 CJ :
And it's also now used as a smokescreen- this most recent culture war against trans/LGBT persons is to redirect from the fact that the GOP has basically done nothing to combat inflation or cracking infrastructure. They had 6 years of majority- 2 of supermajority- and they never produced a balanced budget or paid national debts.
NOHOME also has something I'd like to build upon- you've got government burocrats, just people, who get into office but also have serious debts from running to pay for the needed things to get their names out. Said people against millionaires/billionaires aren't gonna be capable of competing, when government workers still have to pay mortgages and for flight tickets and such. You need to have money AND Clout to be in these kinds of politics, and clout eventually runs out, so it's no wonder a lot of up-and-comers seem to fall in line. Just economics.
AnthonyGS (Forum Supporter) said:The fact that you venture off on ridiculous tangents
You literally just had a great point, only to claim at the last moment the American Civil War wasn't about slavery.
People are trying to explain to you, its not one or the other, they are the same party. You seem to infer the GOP is at fault for not passing a balanced budget but in reality we havent had a balanced budget in over 20 years, with multiple changes to the party in power. There is a reason people call it the uniparty, they get you all riled up and mad at the other guy and while you are distracted, these large spending bills are passed almost unanimously. If you dont believe me look to our current president, who when talking to rich donors said if you elect me nothing would fundamentally change.
Just a quick point, you said Anthony mentioned the civil war wasnt about slavery. He didnt actually bring up the civil war he brought up Lincolns assassination. Sure you can debate his point, but instead you just misattribute his words.
Yellen when asked if the approach to SVB would be available to smaller regional banks, said it would only apply to banks large enough to pose systemic risk. I though we were over this "too big to fail" bullE36 M3.
Tell me again this is for the little guy.
I enjoy they always use the term depositor. The connotation of depositor, for most people, is a person. Probably wouldnt be as appetizing if they just said "large tech companies and our political donors." The little people will be insured under the FDIC limits.
Javelin said:Jay_W said:https://www.federalreserve.gov/newsevents/pressreleases/monetary20230319a.htm
Last time they did anything like this, was 2008....
We're boned
I don't know. It's bad banks got into this situation, but it's not the level of recklessness that led to the Great Recession. If the Federal Reserve backstop gives banks a change to take time to sell off some of their securities into a market that isn't in a full on panic, and the Fed gets their money back (fairly likely unless we have a 2 year long panic), then that's a good thing. Especially since the Fed kept rates low for too long, so even after they started raising them before Covid, there wasn't much distance to drop, dropped them again, and held them low for too long again, and cranked them up fast because they'd backed themselves into a corner.
In reply to tuna55 :
Paywall
In reply to Opti :
https://www.wsj.com/articles/what-gets-lost-when-you-rescue-markets-d5e4bc32?st=teni2pkytpqqytk&reflink=desktopwebshare_permalink
Not looking through every page to see if this has been posted yet. Just thought some levity was needed.
Damn, the WSJ article is behind a paywall. God I hate paywalls.
EDIT: Cool! Great article I honestly completely agree with, and it makes me think the similar things after the crash in 2008, if that "Too big to fail" wordings were just a broader setup to the same issues repeating down the line because we never removed or critically discussed the systems that led to their formation in the first place. People do things, even stupid things, for reasons and I always fear that aside from a handful of laws (that get repealed then replaced again) the blueprints are always there for another 2008 ponzi scheme- I remember hearing that there was a subprime auto loan crisis brewing too years ago.
Opti said:People are trying to explain to you, its not one or the other, they are the same party.[...]
No it's just you, and that statement has always been a cope by people who can't accept one is actually worse than a different, bad one. Since we're on the topic of culture wars, Here's Michael Knowles openly calling to "Eradicated transgenderism from public life entirely" at CPAC this month and Here's a new florida bill that would let you steal someone's kids because they're trans. But both sides amirite???? I'll go deep into the economics or actions too, if you'd like.
Just a quick point, you said Anthony mentioned the civil war wasnt about slavery. He didnt actually bring up the civil war he brought up Lincolns assassination. Sure you can debate his point, but instead you just misattribute his words.
Anyone that says anything positive about the Confederacy doesn't know anything about it, simple as.
... except for dying, THAT was a positive thing the confederacy did.
Don’t panic.
That’s the message financial regulators are sending—and it is barely working.
In the past week, U.S. authorities promised to back uninsured deposits at the failed Silicon Valley Bank and Signature Bank. They also created a new program to lend up to $25 billion to other banks with shaky balance sheets.
In response to these efforts to stem a potential panic, financial markets panicked. From March 9, when Silicon Valley Bank’s stock collapsed and depositors yanked their money out en masse, through March 15, regional-bank stocks lost more than 22%. Before a consortium of rivals helped rescue it on March 16, First Republic Bank had fallen over 80% in under six trading days.
Panic selling of bank stocks led to panic buying of U.S. Treasurys, leaving traders struggling to fill orders as prices swung wildly. By Wednesday the jitters jumped across the ocean to Europe. Credit Suisse’s stock price fell 24%, its worst daily drop ever, after investors feared it, too, might need to be rescued. The next day, it was, with a loan of up to $53 billion from the Swiss central bank.
Markets may be signaling that the long, cultlike reverence for regulators and central banks is finally fading.
The attempt to eradicate failure from the financial system, of course, is part of modern society’s broader push to make life itself riskless and idiot-proof, with indestructible baby strollers, child-resistant drug packaging, almost self-driving cars and shoe removal at airport security.
As my colleague Greg Ip pointed out in his 2015 book “Foolproof,” however, making an environment feel safer can lull many people into complacency and excessive risk-taking. It also tends to coalesce massive power into the hands of a few people at the pinnacle of the financial system.
Former Federal Reserve Chairman Alan Greenspan was known as “the Maestro” for orchestrating a long, smooth, lucrative decline in interest rates. After U.S. authorities intervened to help calm a series of financial crises in 1998, Time magazine christened Mr. Greenspan, then-Treasury Secretary Robert Rubin and then-Deputy Treasury Secretary Lawrence Summers the “Committee to Save the World.”
Over the past couple of decades, the Fed, the Treasury and other authorities have stepped in time after time to stabilize the financial markets, as if failure were no longer an option. Among the most notable interventions:
Unfortunately, having some sway over markets can delude regulators and policy makers into believing that they can foresee the future.
“We believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited,” then-Fed Chairman Ben Bernanke said in a speech in May 2007, “and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”
The spillovers turned out to be significant enough to cause the global financial crisis of 2008-09.
Top officials at the Fed contended that inflation was “expected to be transitory” as late as November 2021, months after the cost of living had hit its highest rates of increase in 13 years.
Only a few months later, inflation peaked at 9.1%—so far, anyway—and still has barely cooled off.
“We’re not thinking about raising [interest] rates,” Fed Chair Jerome Powell said on June 10, 2020. “We’re not even thinking about thinking about raising rates.”
Less than two years later, the Fed began raising rates—by 4.5 percentage points so far.
This all goes to illustrate an even bigger problem: Central authorities aren’t omniscient and omnipotent, and their efforts to wring risk out of the system may make it more dangerous, not less.
Even as rules have proliferated and bailouts multiplied, the U.S. stock market has suffered four crashes of least 20% since the year 2000.
The expectation that government authorities will rescue bankers and investors from their own reckless behavior may have become a self-fulfilling prophecy.
“The attempt to control risk by lowering interest rates reduces the cost of taking risk, and so ends up increasing the aggregate amount of risk in the system,” says financial historian and investment strategist Edward Chancellor, author of “The Price of Time,” a history of interest rates.
“Over the past 25 years or so,” he says, “each crisis has become more complex than the one that preceded it, each one has cost more in losses, each one has spread wider across industries and countries.”
Faith that governments can control the madness of markets is a relatively new idea, accelerated by the creation of the Federal Reserve Board in 1913 and the Federal Deposit Insurance Corp. in 1933. Both authorities were created in the aftermath of financial crises: the Fed after the banking panic of 1907, the FDIC after the Crash of 1929 and the bank failures that followed.
In the 19th century, investors and economists almost universally acknowledged that panics were inseparable from prosperity and an inevitable part of the business cycle.
Every decade, stockbroker DeCourcy Thom wrote in 1893, typically included “a few months to a few years” of panic.
Even though they were caused by people, panics were likened to earthquakes, whirlwinds, tornadoes, hurricanes, a roaring and raging sea: forces of nature beyond any hope of human control.
Without the modern magic of computers and complex formulas, earlier regulators were realistic about what they could achieve.
“It is scarcely to be expected…that a national bank can be saved from disaster by the occasional visits of an examiner,” the comptroller of the currency, John Jay Knox, wrote in his report to Congress in 1881.
Regulation relied more on individual responsibility. Back then, if a bank failed, its officers, directors—and shareholders—would not only suffer market losses on the value of their stock. They also faced double liability, a clawback of up to the par value of their shares, contributing to the reimbursement of depositors.
Banks still failed, of course—but not as many as you might think. Of the nation’s roughly 10,000 national banks between 1864 and 1913, 501 failed, with cumulative losses to depositors of only $44 million, somewhat more than $1 billion in today’s money.
That was less than 1% of U.S. gross domestic product, estimates Rutgers University economist Eugene White.
In later banking crises, when modern regulators were on the case, losses were much greater: Prof. White estimates that the cost of the savings-and-loan and banking failures of the 1980s was at least 3.4% of GDP, and the losses from the 2008-09 crisis may have exceeded 7% of GDP.
The role of government as the markets’ guardian angel has gotten a lot more complicated. Social media accelerates and amplifies fear, and smartphones are instantaneous ATMs. In a matter of seconds, alarmed depositors can—and did—pull their cash out of a bank besieged by rumor and fear.
Once regulators hold themselves out as the guarantors of stability in such a hair-trigger atmosphere, they have little choice but to intervene.
“Capitalism without failure is like religion without hell,” Berkshire Hathaway Inc. Vice Chairman Charlie Munger has said, paraphrasing the late economist Allan Meltzer.
This week, however, Mr. Munger struck a much more serious tone when he told me: “I’d prefer to live in a world where nobody did anything undisciplined or stupid and so forth, but we don’t live in that kind of a world. And therefore the decisions have to be made for the way the world is, not the way we’d like it to be.”
He added: “The way the world is, the government had no alternative but to back all deposits. Or we would have had the biggest goddamn bunch of bank runs you ever saw.”
The misplaced faith in the omniscience of regulators has created another problem: It’s become harder for them to change course.
To fight inflation credibly, says Carmen Reinhart, an economist at Harvard University’s John F. Kennedy School of Government, “you need time consistency: avoiding unplanned reversals.” Amid this latest banking crisis, the Fed may no longer be able to raise interest rates as aggressively as it had planned.
The ultimate legacy of excess belief in the boundless brainpower of regulators is overconfidence: too many people thinking their money is safer than it really is and taking bigger risks than they should.
“If everybody thinks there’s a rich uncle who will bail them out whenever they make mistakes, it will lead to more risky decisions,” says Mary Ellen Stanek, co-chief investment officer at Baird Advisors in Milwaukee, which manages more than $115 billion.
“How do you roll that back?” she asks. “It becomes ingrained and then expected.”
Write to Jason Zweig at intelligentinvestor@wsj.com
In reply to tuna55 :
Thanks! Edited my comment above, didn't see the better link in time.
Also, I always wonder about the utility of telling people to Don't Panic! at times like these- like panicking would obviously make our current semi-maybe-kinda recession worse, so we all have a vested interest in basically propaganda here, but I also HATE the idea of using such a tool on my own statesmen.
GIRTHQUAKE said:Damn, the WSJ article is behind a paywall. God I hate paywalls.
EDIT: Cool! Great article I honestly completely agree with, and it makes me think the similar things after the crash in 2008, if that "Too big to fail" wordings were just a broader setup to the same issues repeating down the line because we never removed or critically discussed the systems that led to their formation in the first place. People do things, even stupid things, for reasons and I always fear that aside from a handful of laws (that get repealed then replaced again) the blueprints are always there for another 2008 ponzi scheme- I remember hearing that there was a subprime auto loan crisis brewing too years ago.
Opti said:People are trying to explain to you, its not one or the other, they are the same party.[...]
No it's just you, and that statement has always been a cope by people who can't accept one is actually worse than a different, bad one. Since we're on the topic of culture wars, Here's Michael Knowles openly calling to "Eradicated transgenderism from public life entirely" at CPAC this month and Here's a new florida bill that would let you steal someone's kids because they're trans. But both sides amirite???? I'll go deep into the economics or actions too, if you'd like.
Just a quick point, you said Anthony mentioned the civil war wasnt about slavery. He didnt actually bring up the civil war he brought up Lincolns assassination. Sure you can debate his point, but instead you just misattribute his words.
Anyone that says anything positive about the Confederacy doesn't know anything about it, simple as.
... except for dying, THAT was a positive thing the confederacy did.
This is what I mean by tangents. You are crying about the Civil War, Confederates and LGBTQ+ issues. All of that while failing to acknowlegde both parties created this financial mess over a very long period of time. I'd argue it goes back to post Civil War when there was talking of using that event to create a 3rd Federal Bank. Once that horrible period in history was over, a group wanted desperately to move onto the next horrible decision and make another Fed. So instead of looking at history in a continuous timeline, you choose what parts you want to use to attack me to paint a picture that I'm some sort of boogey man. That's why I often say there are no serious people on this site. And then of course you claim you can't take me seriously. Well OF COURSE you can't. You are not a serious person. You just spew whatever talking points the idiots on TV tell you to.
President Garfield was a man of few words. Maybe you can figure out what quote he is attributed to about money and then maybe you can use snopes or some other talking points approved site to debunk it. However anyone with a few extra brain cells they can rub together knows Garfield was 100% right. The USA had already broken up and disbanded 2 US Federal banks before Lincoln was assassinated or Garfield made his statement. Maybe those old guys were a lot smarter than we give them credit for. I guarantee today's society is a whole lot stupider than anyone will admit. In 60 years man went from barely able to fly to the moon. In the past 60 years, decline has been observed. We literally have a large group of people that think if we don't raise taxes and give more money to complete morons the entire planet is going to die from climate change. No the entire planet will die because of stupid people long before the environment boogey man gets us.
I will be 100% honest, as people collectively get dumber I find I like people less and less. My desire to teach people, help others, care for my fellow man, and concern for future generations has limits. I'm hoping to never know them, but it's a challenge.
I literally cannot for the life of me understand why no one cares about the economic future of anyone younger than themselves. Literally, nearly everyone in this thread is saying F you to my kids, their kids, my future grandkids, their future grandkids and all future generations economically. And no one cares. For what? So we can make sure some silicon valley rich guys stay rich? So we can bomb some more poor people in some foreign country no one cares about because some rich guys want more? Why do you literally hate everyone but yourself so much? Why is your social status on a this website more important than your descendants, mine and all future generations? Aren't we supposed to try and leave the world in a better place? How will all this division, debt and death do that?
Let me guess...... it's all my fault right? Please explain.
Arguing with people that can't define simple things like inflation
nderwater said:AnthonyGS (Forum Supporter) said:And today I was listening to actual numbers and doing quick math in my head. That makes this ever more pathetic. SVB apparently had $180 billion in assets. They went under due to a $42 million dollar bank run. Let's translate that to something we can all understand.
$180,000,000,000 and $42,000,000..... let's just lop off zeros.
Let's say you have $180,000 in assets (lop off 6 zeros). They couldn't make a $42 call...... that's insane.
The bank run was $42 BILLION, not million. $42 billion cash withdrawals against $180 billion total liquid+illiquid assets is what caused the collapse.
That makes a lot more sense. Having to cover over 25% of their assets giving how much banks are leveraged is something no bank would likely survive. The podcast I was listening too had a "000" error and stated million. That's why it didn't make sense to me. Having to cover $42,000 on assets of $180,000 could be problematic for many.
The article I just read stated that after the $42 billion dollar call, SVB had a balance of -$1 billion though. What was the issue with the remaining $138 billion in assets? Since most withdrawals were electronic bank to bank, how was this an issue? Enron the balance sheet?
In reply to AnthonyGS (Forum Supporter) :
Makes you wonder where you get your information from doesn't it?
AnthonyGS (Forum Supporter) said:I literally cannot for the life of me understand why no one cares about the economic future of anyone younger than themselves. Literally, nearly everyone in this thread is saying F you to my kids, their kids, my future grandkids, their future grandkids and all future generations economically. And no one cares. For what? So we can make sure some silicon valley rich guys stay rich? So we can bomb some more poor people in some foreign country no one cares about because some rich guys want more? Why do you literally hate everyone but yourself so much? Why is your social status on a this website more important than your descendants, mine and all future generations? Aren't we supposed to try and leave the world in a better place? How will all this division, debt and death do that?
What in the actual berkeley are you talking about? Who is defending debt, bailouts, or bombing foreign countries in this thread? I guess it's easy to call everyone idiots when you're putting words in their mouths.
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