[Doomsday Economics] Home of Kirbeh's FREE SLICE ($25 delivery fee)

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(Thread IKs: skooma512)

Pepe Silvia Browne: Jan 1, 2007

forkboy84 posted:

It's just such a good summary of the braindead neoliberalism, it's the logical extension of "too big to fail". Now it's too big to fail so we have to guarantee their dumb & dumber risks.

The way to deal with too big to fail is to just prove them wrong & let them fail. We're hosed either way, might as well get the pain over now

it's a cabinet with windowed doors you just keep shut all the time because you can see that the dishes inside have all fallen over and you know opening it will result in some breaking

# ? Mar 16, 2023 13:39

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# ? May 25, 2024 16:12

Horseshoe theory: Mar 7, 2005

forkboy84 posted:

It's just such a good summary of the braindead neoliberalism, it's the logical extension of "too big to fail". Now it's too big to fail so we have to guarantee their dumb & dumber risks.

The way to deal with too big to fail is to just prove them wrong & let them fail. We're hosed either way, might as well get the pain over now

Counterpoint: Herbert Hoover didn't get re-elected after he let Andrew Mellon do that. :v:

# ? Mar 16, 2023 13:44

Frosted Flake: Sep 13, 2011; Semper Shitpost Ubique

dk2m posted:

the way to understand what�s happening right now is not at all what orthodox economics wants to tell you. this is sort of an effort post.

I�m completely simple terms - this is the consequence of Obama and Geithners policy in 2008. when the banks blew up back then, we had a choice - do we as a society protect the creditor or protect the debtor? the answer came clearly down to protecting the creditor - the banks.

the main reason for that is that is because we were in the midst of a revolution - the free trade agreements and de-industrialization policies of Clinton staring with NAFTA and the admittance of China to the WTO in 2001 were turbocharging the equity and bond market.

with labor being squeezed and eventually collapsing by moving overseas, the main enemy of neoliberalism was conquered. unions fell apart and factories shut down, but because of the rise in technology coinciding with dirt cheap foreign labor costs, productivity went through the roof. around the same time, business schools were churning out MBAs that based their framework around finance instead of industrial engineering - older schools like GMI in Flint (now Kettering University) which trained executives to think in terms of industry were giving way to Stanford and Harvard MBAs who prioritized the CFO led model of prioritizing the stockholder.

these coinciding factors led to executives gutting their companies to shutter factories, move them overseas, and largely focus on financial engineering to boost their share price. a characteristic of finance that separates it from a real economy is that financial returns compound while a real economy looks like an S curve - a financial economy simply grows unbounded.

that�s because finance is debt based. banks create debt and make claims on assets. their source comes from thin air - when you apply for a mortgage, they simply push a button and come up with a the money. in theory, they are required to keep a reserve to cover deposits - with deregulation, it has given them less and less to cover on hand, to now virtually guaranteed risk-free government backed bailouts.

i also think it�s important to understand what exactly a bank does. let�s say you deposit some money into one. from a banks balance sheet perspective, your deposit is a liability in an accounting sense. this means that they package the liability, your deposit, into an asset via an exchange on the market.

because a banks primary product is making claims on real assets, they naturally are rent seeking institutions. in order for them to grow and make money, they need 2 things - an ever larger pool of assets to lay claims on and a source of easy credit to lever their claims on to increase their rate of return. the first part is done via privatization - by moving assets from the public domain, such as land or healthcare or education, to the private one, they force the entire population to take on loans, which gives the banks their pool of assets to lay claims on.

the second piece comes from the availability of a Bank themselves to get short term loans. a bank is a special institution under financial capitalism that can enter a repo market with its central bank, the fed. they can collateralize and obtain credit from the central bank and can use that same credit to cover their liabilities (aka deposits) or go into the financial markets and buy stocks, bonds and products.

banks pre 2008 were making extremely risky bets by tapping into the largest debt pool of all - mortgages. because everyone has a mortgage, which pays interest, investment banks began committing outright fraud by packaging garbage loans and making it appear golden and the commercial banks lended loans to anyone with a pulse. this skyrocketed returns across the board as the combination of derivatives and interest bearing loans compounded and grew far beyond the growth of the real economy. in 2008 when it finally collapsed, Obama decided that he would protect the creditors and the only way to do this was to re-inflate the prices of both real estate and the stock market.

this is where the regime of 0 interest rate credit came into play. as money became basically free, banks gave the government all of their toxic bonds and derivatives and in return got free money from the federal reserve to chase returns again. stock buybacks, VC money, institutional housing buybacks, healthcare, insurance, and arbitraging were all turbocharged with QE. this led to an equity and bond market boom as the federal reserve gave the banks enough loans to spread throughout the system to make sure all the distressed houses they had on the balance sheet were not only propped up again, but would eventually far outpace the book value of the homes itself.

as the rally grew, and the economy became more polarized, the creditors and financial class inflated the stock market to obscene levels, but needed more and more assets to lay their credit claims on. this only further impoverished the rest of us, as housing, education and healthcare costs spiraled out of control. rather than see these as the driving costs for what we now call �inflation�, the fed simply doubled down on this regime and left it at near 0 well after the initial recession ended. the small financial class enjoyed unparalleled wealth that had never really been seen before in american history.

what eventually burst this bubble was covid. since we deinsturalized, we faced sudden shortages that caused massive supply/demand imbalances. these causes prices for some goods to spiral, cars for example. in response, the fed dropped another 9 trillion QE regime in which the main intent was to inflate the stock and bond market. this led to the absolutely asinine situation of a soaring stock market amidst collapsing employment.

as covid ended and labor had new gained power to negotiate wages in 2022, the idea of inflation started to really become a mainstream topic in financial news. inflation is really a euphemism for rising wages and employment, but an overall increase of wages would sharply threaten financial returns for all the now CFO led companies and startups. to curb this, the fed decided to raise interest rates.

the problem is that they have flooded the market, since 2008, with low interest rate credit. as companies became flush with cash, especially the tech sector, they parked their money into treasury bonds. most banks barely pay any interest on savings or CDs, something like less than .05%, so wealth individuals and cash plush companies would rather invest in long term t-bonds which were only interrupted after labor suddenly had some negotiation power due to covid.

this whole situation is a consequence of gutting the country of industry and focusing on finance as the primary growth driver. the problem is that now, we have so much credit that has been used to indebt the rest of us, and nearly every bank has underwater bonds as they invested in �safe� treasury bonds, that the system has nowhere to go. the individual actions of banks, such as bailouts, are less of a moral hazard than the overall structure of the economy basically resembling the Soviet Union, but financially rather than via fake production quotas. as the Soviet Union was obsessed with production to to point of it becoming farcical, so we are with finance to the point of it now it being largely fiction as we cannot QE as that would counter act the rate hikes, and we cannot continue the rate hikes as that would collapse more banks. we have to come to the conclusion that banks and creditors ARE the problem, and let them collapse and bring back a goods and consumer spending based economy rather than a fictitious debt based one.

Great post

# ? Mar 16, 2023 13:44

forkboy84: Jun 13, 2012; Corgis love bread. And Puro

Horseshoe theory posted:

Counterpoint: Herbert Hoover didn't get re-elected after he let Andrew Mellon do that.

Perfect thing to do in your 2nd term

# ? Mar 16, 2023 13:45

Rectal Death Adept: Jun 20, 2018; by Fluffdaddy

woke up to the fed printing another 2 trillion.

I will now buy number because number must rise.

Good profits to you all. Buy TSLA.

# ? Mar 16, 2023 13:48

Woke Mind Virus: Aug 22, 2005

Mr Hootington posted:

I think what is really cool about all this is every bank made a lot of stupid moves and are relying on the peons to deposit money so the banks can service unservicable debt that is compounding.

If Joe gives me my 600 bones he owes me I would gladly deposit it at a nice bank

# ? Mar 16, 2023 13:49

shrike82: Jun 11, 2005

https://twitter.com/YahooFinance/status/1636249295027314688?s=20

# ? Mar 16, 2023 13:53

spacemang_spliff: Nov 29, 2014; wide pickle

forkboy84 posted:

It's just such a good summary of the braindead neoliberalism, it's the logical extension of "too big to fail". Now it's too big to fail so we have to guarantee their dumb & dumber risks.

The way to deal with too big to fail is to just prove them wrong & let them fail. We're hosed either way, might as well get the pain over now

it's not the word I hate I guess it's the people who use it unironically

# ? Mar 16, 2023 13:54

Pepe Silvia Browne: Jan 1, 2007

shrike82 posted:

https://twitter.com/YahooFinance/status/1636249295027314688?s=20

really hope i'm placed in his technofiefdom and not elon musk's

# ? Mar 16, 2023 13:55

sullat: Jan 9, 2012

coelomate posted:

I agree. I think 0.25% is the base case, and I keep hoping Jerome goes hard and does 0.5% anyway just because him doing something surprising would be funny.

This one debatably not all that surprising even, given his comments at Congress just before banks started failing.

Do not, my friends, grow addicted to low interest rates. It will take hold of you, and you will resent its absence.

# ? Mar 16, 2023 13:57

SKULL.GIF: Jan 20, 2017

forkboy84 posted:

My favourite term I've learned since the Doomsday Economics threads begun is moral hazard

I'm still angry about "excess savings".

# ? Mar 16, 2023 13:59

FUCK COREY PERRY: Apr 19, 2008

I was promised bank death not bailouts :mad:

# ? Mar 16, 2023 13:59

super sweet best pal: Nov 18, 2009

gently caress COREY PERRY posted:

I was promised bank death not bailouts

https://www.youtube.com/watch?v=mF7VcLQ0o6U

# ? Mar 16, 2023 14:03

spacemang_spliff: Nov 29, 2014; wide pickle

SKULL.GIF posted:

I'm still angry about "excess savings".

# ? Mar 16, 2023 14:03

Red Baron: Mar 9, 2007; ty slumfrog

gently caress COREY PERRY posted:

I was promised bank death not bailouts

but that�s what happens when banks die, their amazing J-POW triggers go off and they are immediately reborn, more beautiful, resplendent, and rich than ever before!

isn�t the monetary cycle just magical?

# ? Mar 16, 2023 14:05

webcams for christ: Nov 2, 2005

10 minutes until the ECB interest rate decision

# ? Mar 16, 2023 14:05

HallelujahLee: May 3, 2009

excess farts

# ? Mar 16, 2023 14:06

Mr Hootington: Jul 24, 2008; I'M HAVING A HOOT EATING CORNETTE THE LONG WAY

Ah the the $2trillion (not qe) is theoretical. If all the bonds currently on the books as a loss are traded in then it is a $2trillion injection.
https://twitter.com/EpsilonTheory/status/1636347265752133633?t=LLoYiR9rrotvVJYjT079Hg&s=19

I honestly don't see how someone buying a $1 bond, having it drop to $.80 in value, then trading it back for $1 isn't just willing into existence $.20

# ? Mar 16, 2023 14:10

Rectal Death Adept: Jun 20, 2018; by Fluffdaddy

gently caress COREY PERRY posted:

I was promised bank death not bailouts

if it makes you feel any better steering from infinite money glitch -> raising rates -> infinite money glitch so fast means it's going to work less well this time. We got around 3 years out of the infinite money glitch but still hadn't drained all of the excess money from the economy before we started mass printing trillions again

They are honestly threatening the concept of currency at this point. If the 2020 printing wasn't enough we are now feeling 20%+ inflation they are lying about and pretending is 7% while the printer needs turned back on meaning we need to raise rates higher but banks are already collapsing due to the rates. So they need to print to bail out more banks but that causes inflation so they need to raise rates.

Not sure how much time this print cycle buys us but it's obvious no one in charge of the economy has any idea what they are doing so who knows.

# ? Mar 16, 2023 14:11

Weka: May 5, 2019; That child totally had it coming. Nobody should be able to be out at dusk except cars.

Red Baron posted:

but that�s what happens when banks die, their amazing J-POW triggers go off and they are immediately reborn, more beautiful, resplendent, and rich than ever before!

isn�t the monetary cycle just magical?

Bankdalf the white.

# ? Mar 16, 2023 14:12

webcams for christ: Nov 2, 2005

Mr Hootington posted:

Ah the the $2trillion (not qe) is theoretical. If all the bonds currently on the books as a loss are traded in then it is a $2trillion injection.

well yeah the original tweet read "JP MORGAN: FEDERAL RESERVE�S EMERGENCY LOAN PROGRAM MAY INJECT AS MUCH AS $2 TRILLION OF FUNDS INTO THE US BANKING SYSTEM AND EASE THE LIQUIDITY CRUNCH""

# ? Mar 16, 2023 14:12

19 o'clock: Sep 9, 2004; Excelsior!!!

Edgar Allan Pwned posted:

idk why but today feels more doomer than usual

https://www.youtube.com/watch?v=QnNbgaFtzS8

# ? Mar 16, 2023 14:13

Red Baron: Mar 9, 2007; ty slumfrog

webcams for christ posted:

well yeah the original tweet read "JP MORGAN: FEDERAL RESERVE�S EMERGENCY LOAN PROGRAM MAY INJECT AS MUCH AS $2 TRILLION OF FUNDS INTO THE US BANKING SYSTEM AND EASE THE LIQUIDITY CRUNCH""

yea but now that they know how much they could get do you think they�ll really be happy with anything less than that?

have they ever been happy with everything?

# ? Mar 16, 2023 14:14

Horseshoe theory: Mar 7, 2005

First Republic Bank is down 1/3 premarket... :eyepop:

# ? Mar 16, 2023 14:15

super sweet best pal: Nov 18, 2009

https://www.youtube.com/watch?v=9o2Oc2g-vTk

# ? Mar 16, 2023 14:16

webcams for christ: Nov 2, 2005

50bps hike from ECB!

# ? Mar 16, 2023 14:16

Spoondick: Jun 9, 2000

first repossessed bank

# ? Mar 16, 2023 14:17

shrike82: Jun 11, 2005

https://twitter.com/BusinessInsider/status/1636238613036822528?s=20

# ? Mar 16, 2023 14:19

HallelujahLee: May 3, 2009

what if we just gave everyone some hyperinflation who cares if some dumbo has to pay $500 to buy 1 egg i the amazing titan of industry still have my 900 trillion

# ? Mar 16, 2023 14:20

forkboy84: Jun 13, 2012; Corgis love bread. And Puro

European Stocks go down (they are green for the day on the Euro Stoxx 50 but it's dropped 30 points in 3 minutes)

# ? Mar 16, 2023 14:20

forkboy84: Jun 13, 2012; Corgis love bread. And Puro

forkboy84 posted:

European Stocks go down (they are green for the day on the Euro Stoxx 50 but it's dropped 30 points in 3 minutes)

Oh wait, make that dropped 45 points in 5 minutes. Rules

# ? Mar 16, 2023 14:21

webcams for christ: Nov 2, 2005

https://twitter.com/DeItaone/status/1636356054610063362

https://twitter.com/financialjuice/status/1636356598258888706

# ? Mar 16, 2023 14:23

Mr Hootington: Jul 24, 2008; I'M HAVING A HOOT EATING CORNETTE THE LONG WAY

webcams for christ posted:

50bps hike from ECB!

Small possibility this could blow up credit suisse even with the injection lol

The speech will be "dovish"

# ? Mar 16, 2023 14:24

Nothus: Feb 22, 2001; Buglord

Number is going to be mad that it didn't get a pause or pivot

# ? Mar 16, 2023 14:24

HallelujahLee: May 3, 2009

but it said in my magical ball that it was going to be paused

# ? Mar 16, 2023 14:26

webcams for christ: Nov 2, 2005

Mr Hootington posted:

Small possibility this could blow up credit suisse even with the injection lol

I agree with JPMorgan on this prediction, but skeptical of UBS:

https://twitter.com/FirstSquawk/status/1636262823742386178

I think they'll have to carve CS up into smaller bits

Mr Hootington posted:

The speech will be "dovish"

Full ECB Statement

# ? Mar 16, 2023 14:27

Cpt_Obvious: Jun 18, 2007

How are they going to print their way out of this mess without lowering interest rates?

# ? Mar 16, 2023 14:28

Mr Hootington: Jul 24, 2008; I'M HAVING A HOOT EATING CORNETTE THE LONG WAY

"ECB has credibility restored."- cnbc contributer goldfish finance advisor clap trugdeon

# ? Mar 16, 2023 14:29

forkboy84: Jun 13, 2012; Corgis love bread. And Puro

Mr Hootington posted:

Small possibility this could blow up credit suisse even with the injection lol

The speech will be "dovish"

Sitting on investing dot com waiting for this poo poo to update. So far the most recent CS price is from before the ECB announcement.

# ? Mar 16, 2023 14:29

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# ? May 25, 2024 16:12

Mr Hootington: Jul 24, 2008; I'M HAVING A HOOT EATING CORNETTE THE LONG WAY

webcams for christ posted:

I agree with JPMorgan on this prediction, but skeptical of UBS:

https://twitter.com/FirstSquawk/status/1636262823742386178

I think they'll have to carve CS up into smaller bits

Full ECB Statement

The hope now is they can hold CS together until the takeover is finalized.

# ? Mar 16, 2023 14:31

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