problems with American bank

[jennyjj01]

Jesus also said "woe to the rich" and "it is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of heaven".

Jeezus H Ch****.
Have we drifted a teensy bit off topic?
Now we have the politics of religion in a topic on US Banking crisis.

Are you OK you seem very tense at the moment, maybe try some deep breathing and let the mods do THEIR job.

Well spotted. Thank you for your concern.
No. I'm not OK. Yes I am tense, but that's a topic for Facebook.

Happy to let the mods do their job.

[jansman]

Mods doing job! Me and Vitamin C were having a joke ( I HAVE TO!) , As for the comment by Captain Serious about the bible… only to be expected!

So from now on ,only current information about a cr*p industry please.Also a sense of humour is quite acceptable.

[Frnc]

Trouble is, economics is no more provable than religion. Freedman reckoned Keynes was wrong, so Britain and America comletely changed their economic models around the start of the 80s. And now we are here. I don't know whether the economists (and politicians) have decided which was best. I know Nouriel Roubini predicted the 2006 crash, but he's got stuff wrong since then. The other one to come out is MMT which is very radical but it might be mumbo jumbo for all I know. I think it's more like Keynes on steroids.

Anyway, it does look like raising interest rates caused the collapse of SVB (as its investments were a bet on low interest rates). BoE rate went up again the other day.

Oh, Financial Times says:
"Keynes v Friedman: both can claim victory", headline, but article is behind a paywall. But that was from 2006. Is by Martin Wolf, chief economics commentator at the Financial Times. Everything is paywall so I've followed him on twitter so see what I can see.

I did find an article not behind a paywall by him, June 2022
https://www.ft.com/content/df62d58c-e86 ... 87e8ef1667

"We have now moved into a third epoch in the history of the postwar global economic order. The first went from the late 1940s to the 1970s and was characterised by liberalisation.... From the 1980s ... more radical forms of economic liberalism, known as “neoliberalism”, spread across the world."

We are now moving into a new era of world disorder..."

"This new epoch of the world is creating huge challenges. It is possible — perhaps even probable — that the world system will shatter. In such a world, billions of people will lose hope of a better future and shared global challenges will remain unmet. "

[jennyjj01]

Trouble is, economics is no more provable than religion.

Fair point. I reckon one doctrine or another can be fine, but that switching doctrines is what breaks things. It's usually uncertainty that shakes confidence that then causes a death spiral. Even in a downward market, some investors prosper.

Anyway, it does look like raising interest rates caused the collapse of SVB (as its investments were a bet on low interest rates).

Or, conversely, betting on continuing low rates caused the collapse If SVP had better governance, it would have seen and hedged the risk. The oiks in charge would have taken their bonuses if things had worked out better. They probably did anyway.

[Frnc]

Or, conversely, betting on continuing low rates caused the collapse

Of course, two sides of the coin. They had over half their investments in bonds that lost value when interest rates went up.

Yes, a lot of people make money when things crash, as they bet both ways.

Another thing I learned in 2008 was about the derivatives industry, which is bigger than global GDP. This was where the sub-prime debt was hidden.

[Frnc]

Hmm.. I clicked on my own link and it was paywall again. I still had it open and readable in another tab. Must let you have a quick read every now and then.

[jennyjj01]

Or, conversely, betting on continuing low rates caused the collapse

Of course, two sides of the coin. They had over half their investments in bonds that lost value when interest rates went up.

Yes, a lot of people make money when things crash, as they bet both ways.

Another thing I learned in 2008 was about the derivatives industry, which is bigger than global GDP. This was where the sub-prime debt was hidden.

Bonds: One of my private pensions is heavy in Bonds and took a hammering.

Oh yes. Derivatives: The tail that wags the dog. Originally a low cost way of hedging long term positions, they're now the favoured route of adding risk for the chance of added reward. Who wants to buy actual businesses that plod along making steady profits when they can make BETS about what will happen in the next half hour.
Was there ever a financial crash that was not caused by over-extended 'positions' supported by bets on derivatives.
When pension funds and MASSIVE banks (Household names) take these huge leveraged bets, they will occasionally fail in such spectacular fashion. Then who picks up the pieces? Not those Oiks* on the board of directors or on the trading floor.

I hope no-one is offended by the term Oik but it's the best I could think of that didn't reference cocaine

[Frnc]

There was another headline I saw by Martin Wolf

"Banks are designed to fail"

That's reassuring.

[jansman]

Or, conversely, betting on continuing low rates caused the collapse

Of course, two sides of the coin. They had over half their investments in bonds that lost value when interest rates went up.

Yes, a lot of people make money when things crash, as they bet both ways.

Another thing I learned in 2008 was about the derivatives industry, which is bigger than global GDP. This was where the sub-prime debt was hidden.

Bonds: One of my private pensions is heavy in Bonds and took a hammering.

Oh yes. Derivatives: The tail that wags the dog. Originally a low cost way of hedging long term positions, they're now the favoured route of adding risk for the chance of added reward. Who wants to buy actual businesses that plod along making steady profits when they can make BETS about what will happen in the next half hour.
Was there ever a financial crash that was not caused by over-extended 'positions' supported by bets on derivatives.
When pension funds and MASSIVE banks (Household names) take these huge leveraged bets, they will occasionally fail in such spectacular fashion. Then who picks up the pieces? Not those Oiks* on the board of directors or on the trading floor.

I hope no-one is offended by the term Oik but it's the best I could think of that didn't reference cocaine

No problem with Oik

[Vitamin c]

https://news.sky.com/story/sense-of-cri ... t-12866172

Yet another American bank in trouble with over 100 billion withdrawn recently.