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Placeholder OP BFC already has a daily discussion thread although it's not often used.  pmchem posted:do you guys think BFC should have a new megathread just for general "Global economics and related current events" discussion? drk posted:Yes to current events megathread, there's a lot of stuff that doesnt really fit into current threads. Leperflesh posted:it'd be just as doomsy, but with more charts and graphs. also I think it'd be a business & finance thread without the careers part Strong Sauce posted:i would prefer a similar thread here that is a little less doomsy  rules: 1. no tweets, invokes doomscrolling 2. keep it BFC, other forums have their own threads 3. no doomerism, within reason 4. if you MUST post a relevant tweet 4. a. you must provide a supporting link (archive.is ad-free links encouraged) 4. b. you must provide two supporting graphs (via imgur or similar) as penance Somebody fucked around with this message at 19:19 on Mar 17, 2023 |
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Mar 17, 2023 04:54
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first reply so nobody is shy about postingdrk posted:Mods: where's our promised current events thread
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Mar 17, 2023 05:04
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Also in the news today: Cash pours into US money market funds as investors flee bank turmoilFT posted:Investors have funnelled cash to US money market funds over the past week amid concerns over the safety of some bank deposits after the collapse of two large lenders. 
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Mar 17, 2023 05:10
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drk posted:Also in the news today: Cash pours into US money market funds as investors flee bank turmoil Always kinda boggled me that people with a lot of cash wouldn't be in at least a money market.
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Mar 17, 2023 05:27
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Mr Hootington posted:I thought the bank wasn't a systemic risk so i guess if you do have millions either do a giannis or put all your money into the big banks. or just put them into big banks anyways because why risk it?
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Mar 17, 2023 08:13
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I like how the thread title is "anti-doomsday no tweet" and then you quoted a post from the doomsday thread with a tweet in it edit: and failed to post the supporting youtube link, and no graphs quote:4. if you MUST post a relevant tweet double edit: i'll do it for you https://www.youtube.com/watch?v=WVTmS4mM5zk&t=5718s Hadlock fucked around with this message at 08:22 on Mar 17, 2023 |
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Mar 17, 2023 08:19
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Meh, not sure how tweets encourage doomscrolling. Tweets are easier, especially since it has the direct clipped video. Exact video is much clearer than articles. Having these rules just seems weird to me. And just seems to derail it more talking about these restrictions. And quoting is just citing where I found it. I could have easily just taken the tweet but doesn't seem kosher to me. Anyways I'll bow out now.
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Mar 17, 2023 08:38
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That Yellen clip wasn't that bad. They really must be fearful of how interlinked everything is to reverse several months worth of QT and I'm not sure where they go from here.
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Mar 17, 2023 09:05
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First -- thanks, Hadlock for making a new thread!Strong Sauce posted:Having these rules just seems weird to me. And just seems to derail it more talking about these restrictions. I think Hadlock's OP is well-intentioned to prevent this thread from going the way of some other current events threads on the forums. A lot of people were concerned that a new thread like this would just get turned into a doomer thread. In the SAD forum, one admin even asked about stopping tweet embedding on SA because it was perceived to be counterproductive to quality of discourse some high traffic threads. So I'm willing to give Hadlock's guidelines a shot, as an experiment. In fact, one enterprising reader actually reported your first post because it didn't follow the OP's rules! But, as your post did not violate a general BFC forum rule it would seem rude to toss a probe without any reasonable expectation that was coming. I'll set those expectations. This thread will be modded more strictly than general BFC threads, for now. Everyone, please abide by the OP's rules. Also, subjects must be germane to BFC. It's a global economics / business / finance thread, not a celebrity news thread or general chat thread (Hadlock you may wanna make this more explicit in the OP). If anyone thinks the OP's rules need adjusting, please post in this thread, or PM me or Hadlock. Check the OP now and then in case it gets updated. But let's see how it goes for a bit before tinkering.
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Mar 17, 2023 14:13
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Strong Sauce posted:Meh, not sure how tweets encourage doomscrolling. Tweets are easier, especially since it has the direct clipped video. Exact video is much clearer than articles. Having these rules just seems weird to me. And just seems to derail it more talking about these restrictions. Tweets encourage doomscrolling because tweets are such small tidbits of information that it is extremely easy to build false narratives just using lots and lots of short clips and small quotes that can be devoid of context. (For example, see how LibsofTikTok has used Twitter to convince thousands of morons that doctors are trying to force kids to be trans or how public school teachers will happily give their students porn or whatever.) And while it can be easy to recognize this pattern when done by rear end in a top hat conservatives and Bitcoin maximalists and other people whose positions are far removed from your own, a lot of folks don't recognize this same pattern when done by accounts like Doomberg or others who share some of their politics.
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Mar 17, 2023 14:13
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Anyways, given the developments we've just heard about First Republic, I think it's interesting to see Levine's take on them from yesterday..."Matt Levine posted:SVB’s current share price is a mystery — the stock hasn’t traded since Thursday — but it is probably zero. The deal was launched with a stock price of $267.83, it was about to price at $95, but then the lawyers decided it couldn’t price without revealing more details about the bank run, which would presumably lead to a much lower price. The next day, the value of the stock was zero.
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Mar 17, 2023 14:25
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I think regulators (the Fed) and Treasury have handled this crisis poorly so far, outside of BTFP (the Bad Trader Funding Program) which seemed reasonable and good. In fact maybe it was too reasonable because banks are apparently using the fed discount window (which they HATE doing, but they shouldn't hate it-- according to Wray/Minsky) instead of BTFP. Yellen's testimony was very poor, the administration need to send someone more capable of delivering TV-friendly talk on their feet. She's not wrong, but a bank run is a crisis of confidence and she has no idea how to inspire confidence. I predict the fed does 25 bps next week and that's the last rate hike for 2023.
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Mar 17, 2023 15:28
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solving bank runs is playing the dont think about elephants game for keeps. you need to have elon do some whacky hijinks or kanye say some poo poo. the fact that yellen had an important testimony thing in the first place means they have already lost
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Mar 17, 2023 17:16
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bob dobbs is dead posted:solving bank runs is playing the dont think about elephants game for keeps. you need to have elon do some whacky hijinks or kanye say some poo poo. the fact that yellen had an important testimony thing in the first place means they have already lost
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Mar 17, 2023 17:21
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pmchem posted:I predict the fed does 25 bps next week and that's the last rate hike for 2023. For what its worth, thats what futures markets are predicting too. +25bp next week, holding through the May meeting, then cuts starting at the Jun meeting, ending the year at a 375-400 bp fed funds rate. Big big change from a week ago, which saw rates peaking above 5% and staying there until the December meeting. Personally I think cuts in 3 months isnt going happen absent inflation disappearing in Mar/Apr/May and/or more medium sized bank failures. The fed has been pretty clear they dont want to declare premature victory over inflation, so pausing for just a single meeting seems optimistic.
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Mar 17, 2023 17:26
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bits about money, from the bingo card creator guy posted:Over the weekend, the regulators made some calls and asked regional banks what deposit outflows looked like on Friday and how many wires were queued up for execution Monday morning. This was complicated by some banks finding it surprisingly difficult to add numbers quickly. You see, the core puts the queued wired requests in a different part of the system than Friday’s outflows. We have a report of Friday outflows, but it gets crunched by an ETL job which only finishes halfway through Saturday, and Cindy who understands all of this is on vacation, and… and eventually very serious people said Figure Addition The #*(%#( Out And Call Me Back Soonest.
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Mar 17, 2023 17:27
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bob please link source or describe source, trying to keep this thread a bit more tight than random doomer threads
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Mar 17, 2023 17:31
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source in quote block author bit if you want a link heres one https://www.bitsaboutmoney.com/archive/banking-in-very-uncertain-times/
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Mar 17, 2023 17:36
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pmchem posted:I think regulators (the Fed) and Treasury have handled this crisis poorly so far, outside of BTFP (the Bad Trader Funding Program) which seemed reasonable and good. In fact maybe it was too reasonable because banks are apparently using the fed discount window (which they HATE doing, but they shouldn't hate it-- according to Wray/Minsky) instead of BTFP. It seems to me the issue is that the gov and financial system is having to make moves to calm things in the short term but hasn't had the ability or willingness or time to figure out what those moves mean in the long term. As the clip pointed out, there's a special assessment on all banks now, big or small, to ensure that the bailout insurance system is solvent, but that insurance only applies to big depositors if they are at systemically important banks. At least based on current actions and Yellen's testimony. If this remains the case, any large depositor would be negligent in staying at a small bank. So long term what's the fix? Pass more bank regs and declare that you won't be bailing anyone out again in the future? That's what everyone said after 2008 and here we are again. Raise the FDIC limit so it covers millions or tens of millions per account rather than hundreds of thousands? Might keep small businesses and institutions safe at small banks, I'm guessing most sufficiently large organizations use bigger banks anyway but I could be wrong.
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Mar 17, 2023 17:37
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This was an interesting tale of startup banking that someone linked: https://mitchellh.com/writing/my-startup-banking-story TLDR: startup guy starts with a business bank account at their personal branch bank, and gets to a $35 million balance in it after subsequent seed rounds before they hire someone pointing out it’s a bad idea. (At which point the local branch is very bummed.)
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Mar 17, 2023 17:45
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thekeeshman posted:It seems to me the issue is that the gov and financial system is having to make moves to calm things in the short term but hasn't had the ability or willingness or time to figure out what those moves mean in the long term. As the clip pointed out, there's a special assessment on all banks now, big or small, to ensure that the bailout insurance system is solvent, but that insurance only applies to big depositors if they are at systemically important banks. At least based on current actions and Yellen's testimony. If this remains the case, any large depositor would be negligent in staying at a small bank. I mean, the main fix would just be having FDIC insurance cover all deposits with no limit. This is entirely possible solution, it's not very desirable for the banks because they don't want to pay the extra amount for their FDIC insurance premiums under such a system.
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Mar 17, 2023 17:48
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LanceHunter posted:I mean, the main fix would just be having FDIC insurance cover all deposits with no limit. This is entirely possible solution, it's not very desirable for the banks because they don't want to pay the extra amount for their FDIC insurance premiums under such a system. It's also politically unpalatable because it raises the specter of small, retail depositors getting wiped out in a bank collapse bad enough to swamp the FDIC. At the very least they'd have to get out ahead of that by spelling out that depositors will be paid out in order of the size of their deposits, smallest first, to avoid some VC firm walking out with a few hundred million while some working stiff with $10k in his checking account gets nuked.
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Mar 17, 2023 17:56
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bob dobbs is dead posted:solving bank runs is playing the dont think about elephants game for keeps. you need to have elon do some whacky hijinks or kanye say some poo poo. the fact that yellen had an important testimony thing in the first place means they have already lost ConocoPhillips is breathing a huge sigh of relief that the Willow decision came out early this week.
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Mar 17, 2023 17:57
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Really the tension is between what a bank deposit really is, and how the vast majority of normal people use their bank accounts. In reality it's a loan to the bank. You give them their money, and they pay interest on it. The only thing special about this loan is that it's revocable at any time. What basically everyone at the retail level uses them for is a glorified lockbox. It's a safe place to park your cash that isn't your mattress. It's not going to get stolen in a robbery, it's not going to disappear if your house burns down, and in our modern system you can carry cards that link to it so you don't even lose anything of value if you get mugged. The fact that most people just use it for security is why banks can get away with paying piss-all interest on typical savings accounts: the value the typical retail customer gets in exchange for their loan is security, not interest. After a certain point you've got to recognize that parking huge sums at your bank does in fact mean you're giving them a loan and, like any loan, it can be defaulted on. The $250k limit is a convenient way to split that difference and let Joe Retail have his checking account without worrying about bank solvency while forcing at least a little due diligence on a business that needs to park $25 million.
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Mar 17, 2023 18:03
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If even the madoff "investors" can be made 100% whole, I'm pretty sure we can guarantee everyone. All the intervention in 2008 supposedly ended up making money. In a doomsday worse-than-2008 scenario, yes the wheels fall off, but the wheels would fall off anyways. And of course that means that there needs to be more regulation and oversight. Maybe banks that don't even allow cash accounts over a certain amount can pay (a lot) less in insurance fees. Scale your fees up with the amount of exposure you have. There is definitely a solution here. Saying "you aren't covered unless your deposits are in a bank big enough for us to care about" is just dumb as poo poo. The rest of the government has been pushing anti-trust for the last year+ (mostly ineptly as well), and this is going exactly against that. Just flailing around. I sincerely though this was all going to be over last friday at 8AM, but here we are more than a week later and things aren't really much better. Feels like we're just waiting to see which small banks are next.
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Mar 17, 2023 18:08
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Baddog posted:
Oh yeah, not arguing that at all. The response is moronic from what I can see. My personal not-an-economist idiot suggestion is to pay out small depositors first. In a normal bank failure the FDIC will have plenty to make everyone whole, including the whales, even if that means raising insurance rates for the banks. If the whole loving thing melts down everyone, as you said, is hosed but at least a small depositors first rule would protect people who were just trying to have a safe place to stick their grocery money.
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Mar 17, 2023 18:13
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Cyrano4747 posted:It's also politically unpalatable because it raises the specter of small, retail depositors getting wiped out in a bank collapse bad enough to swamp the FDIC. The entire point is to fund the FDIC sufficient to cover a bank collapse, inclusive of all depositors, so this is basically claiming that the FDIC would not collect enough money via the putatively raised insurance rates to cover the worst-case scenario bank run. However, the insurance itself discourages bank runs by reassuring depositors. Actuary science is not perfect, but if the government then backed/guaranteed the FDIC's insurance program, that'd do it. Bail the FDIC out if necessary, then raise the FDIC insurance premiums, and banks in the future pay for the errors of banks of the past. The too big to fail thing is to me a separate issue, one that is still pressing and important. There's also a sort of parallel to the tragedy of the commons going on, where individual banks can offload part of their risk essentially onto all the other banks, so each individual bank has an incentive to collect more profits by taking bigger unhedged risks; but it is against the interest of all the banks collectively to have this happening, because their insurance costs will go up. The insurer therefore must pressure banks, via their insurance premiums, from taking unwarranted risks. Similar to how your auto insurer raises your rates if you buy a fast sports car vs. driving a minivan. The FDIC's rates should not just be a blind fixed amount per dollar deposited; if your balance sheet shows you have a huge unhedged interest rate risk, the FDIC should jack up your loving insurance rates. Leperflesh fucked around with this message at 18:21 on Mar 17, 2023 |
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Mar 17, 2023 18:17
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Leperflesh posted:The FDIC's rates should not just be a blind fixed amount per dollar deposited; if your balance sheet shows you have a huge unhedged interest rate risk, the FDIC should jack up your loving insurance rates. FDIC rates are already tiered by risk: https://www.fdic.gov/deposit/insurance/assessments/proposed.html Its not clear that this actually is effective in getting banks to take less risk, but its there.
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Mar 17, 2023 18:28
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lmao
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Mar 17, 2023 18:29
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leave it to BFC to gentrify a forum thread (USER WAS PUT ON PROBATION FOR THIS POST)
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Mar 17, 2023 18:34
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the banks are strong and stable
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Mar 17, 2023 18:38
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drk posted:FDIC rates are already tiered by risk: https://www.fdic.gov/deposit/insurance/assessments/proposed.html At this point FDIC (and other fed actions) basically mean that deposits in effect have unlimited coverage. The only difference that would come from making it official is that 1) there would be a reduced anxiety and 2) banks would have to actually pay out higher premiums for the higher coverage. EDIT: (Also, it looks like we made it less than a page before the brigading started...)
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Mar 17, 2023 18:39
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Insurance companies rely heavily on reinsurance companies to be able to conduct business. Where's the FDIC going to get equivalent service?
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Mar 17, 2023 18:49
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lloyds, like everyone else? its 120 billion fdic vs 700 billion lloyds, so underwriters would be sweatin but they could do it
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Mar 17, 2023 18:55
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LanceHunter posted:At this point FDIC (and other fed actions) basically mean that deposits in effect have unlimited coverage. The only difference that would come from making it official is that 1) there would be a reduced anxiety and 2) banks would have to actually pay out higher premiums for the higher coverage. Let's just continue without arguing about subforums. To each their own topics of interest. I think there are legal hurdles in making any sort of unlimited FDIC coverage "official". I'm sure it will come up on weekend talk shows.
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Mar 17, 2023 18:57
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pmchem posted:I think there are legal hurdles in making any sort of unlimited FDIC coverage "official". I'm sure it will come up on weekend talk shows. Whether or not the FDIC could do it entirely as a regulatory change or if they would need a law passed is an interesting question. If it did come down to passing a law, then the whole thing is likely off the table. Small-to-mid-sized banks have car dealership-levels of political influence, in that they are often one of the biggest concerns that any individual congressional representative will have in their district. And, of course, those are the banks that would least like their FDIC premiums to go up.
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Mar 17, 2023 19:11
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LanceHunter posted:At this point FDIC (and other fed actions) basically mean that deposits in effect have unlimited coverage. The only difference that would come from making it official is that 1) there would be a reduced anxiety and 2) banks would have to actually pay out higher premiums for the higher coverage. If you make a dumb thread people on the forums will hunt it down and make fun of it wherever it is. Considering we don't have up/downvotes in this community and the thread hasn't been gassed yet, i dont think its appropriate to call people walking into this thread and commenting on it "brigading" You're overstating what the FDIC did while understating the implications of what you are suggesting. The FDIC has traditionally limited deposit insurance for a reason. We very clearly can't print unlimited money with no consequence and bank failure is supposed to be a thing we want banks to avoid. If the FDIC is willing to be a parachute for every bank every bank is gonna jump off the cliff on responsible decisionmaking. While there are certainly no shortage of coked out bankers ready to tell you how the fed has unlimited money, yellen has indicated differently. At this point regional bank depositors outside of what has already been announced still shouldnt expect insured deposits Edit: fwiw i dont think the FDIC should insure a single loving dollar over 250k for anyone, we are long overdue for an economic realignment in this country and i don't see the benefit in dragging this out for months and months. I also dont see the benefit on changing the rules or the system to accomodate the banking class. The working and middle class will suffer but we are already suffering. Without drastic failure and drastic reform the system is unlikely to improve. (USER WAS PUT ON PROBATION FOR THIS POST) Mirthless fucked around with this message at 19:52 on Mar 17, 2023 |
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Mar 17, 2023 19:40
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If the solution involves the federal government covering all deposits at all banks and the way to implement that is through bank assessments that ultimately are passed off to everyone that uses banks (so p much everyone) aren’t we just socializing losses so individual banks can gamble for private gains? If FDIC is going to blanket cover everything then shouldn’t we just nationalize the banks directly?
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Mar 17, 2023 20:10
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PoundSand posted:If the solution involves the federal government covering all deposits at all banks and the way to implement that is through bank assessments that ultimately are passed off to everyone that uses banks (so p much everyone) aren’t we just socializing losses so individual banks can gamble for private gains? If FDIC is going to blanket cover everything then shouldn’t we just nationalize the banks directly? That would be the logical and probably best course of action. Of course, since thats not how the world we live in tends to work we are going to have to hope that a workable solution thats not absolutely horrible is what we get. Which is probably going to be more bailouts for the wealthy while the rest of us just hope to maintain some form of the status quo.
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Mar 17, 2023 20:15
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DapperDraculaDeer posted:That would be the logical and probably best course of action. Of course, since thats not how the world we live in tends to work we are going to have to hope that a workable solution thats not absolutely horrible is what we get. Which is probably going to be more bailouts for the wealthy while the rest of us just hope to maintain some form of the status quo. In discussing this, I think it's important to keep in perspective who is taking those "private gains" and who is taking the losses. FDIC covers depositors, that is, average folk just needing a place to store their paycheck or savings. Or yes, the wealthy or big businesses who also need a place to store their money, up to $250k (although they should be using cash sweeps and short-term bills instead of just bank deposits... see endless comments elsewhere on that point). FDIC does not protect shareholders, bondholders, or bank executives. In fact, when SVB was seized, the stock stopped trading (it's a zero) and the execs were all fired. No bailout for shareholders or lovely execs.
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Mar 17, 2023 20:26
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