***OFFICIAL*** Bank Failure/Crisis Thread (1 Viewer)

[General Malaise]

Take Your "Safe Money" Out of the Banks, We’re Facing Crisis Greater Than 1930s

"The economy is going to come to a standstill and worse because everything starts imploding," says Bert Dohmen, founder and president of Dohmen Capital Resea...

www.youtube.com

summary I read of this:

Macro Investor Bert Dohmen just issued a dire warning on the future of the US and global economy.​

​

In a new interview with Stansberry Research, the founder of Dohmen Capital Research says anyone who believes the banking crisis is over is engaged in wishful thinking.​

​

​

“We have three of the biggest banking failures in US history within six days and everybody’s pretending this is a one-off event that won’t happen again.​

​

This is the tip of the iceberg, and if you know about icebergs you know one-seventh of the iceberg is above water. That means six-sevenths of the iceberg is below water and that’s going to sink everybody else.​

​

Not only did we have these bank failures in the US, it was followed by the biggest bank failure in Switzerland ever. The biggest bank, Credit Suisse, 137 years old, went bankrupt overnight and had to be bailed out. This is going to be an international crisis.”​

​

Dohmen says decades of systemic risk has also built up in the derivatives market, which he believes is headed for a seismic crash.​

​

“There is about $1.6 quadrillion of derivatives outstanding internationally. That is such a staggering amount. No one can really imagine how big that number is, and it’s totally unregulated. The CFTC in 1999 tried to get derivatives regulated and was fought by the biggest names that you can imagine in the investment field because it would have stopped that whole game of playing with derivatives…​

​

Now nobody really knows exactly how big it is. The best guess is $1.6 quadrillion. It could be $2 quadrillion dollars of derivatives. When they start falling apart it’s going to be like dominoes.”​

​

Dohmen predicts the Fed will print trillions upon trillions of dollars to try to stabilize markets.​

​

He says he withdrew money from banks well in advance of the current crisis, and if US lawmakers don’t reverse course, he forecasts an economic collapse as bad or worse than the Great Depression.​

​

“In the beginning of 2020, so that’s three years ago now, we said this decade is going to be like the 1930’s because the cycle called for that. So that means a 10-year depression, but I said it will probably be much worse than the Great Depression and it all depends on what the government and the Federal Reserve does.​

​

We now see that we’re doing the same thing as the 1930’s where it was a 10-year depression. It could have been a two or three year recession but the policies of Washington really made it a Great Depression… spending up the wazoo, tax increases like you cannot believe.​

​

[President Biden wants] to double the capital gains rate tax from 20% to about 40%. This is a killer for the economy. It’s investors that make the economy. They create businesses and businesses create jobs. If nobody’s creating businesses you have no job creation and everything is done with giving away money and we saw what that caused.”​

​

Dohmen, who is not a believer in Bitcoin and crypto, says gold will be a safe haven – but only after a coming crash.​

​

“The first [gold] phase that we’re in right now is on the way to a top, an important top, and then a very strong correction in gold.​

​

So don’t be trapped when you read headlines that gold made a new record high. That would be a sell signal… Then you’re going to have a big drop and eventually you could have a great buying opportunity when the central banks step on the accelerator and create trillions and trillions of dollars of artificial money.”​

Interesting. I sort of stopped reading at the part that said Credit Suisse went bankrupt overnight. They’ve been in distress for years, but the Swiss govt kept propping them up behind the scenes.

He claims to have accurately predicted every bust and boom since the 70s or some such and I would be very wary of a newsletter writer who makes that claim. A guy that good doesn't need to depend on selling subscriptions to a newsletter. Not at his age. Not at any age.

Also, government spending is what took us out of the great depression. That and war. Does he think nobody knows our history? The New Deal put banking regulations in place and put people back to work building roads, and bridges and dams.

 

[General Malaise]

Take Your "Safe Money" Out of the Banks, We’re Facing Crisis Greater Than 1930s

"The economy is going to come to a standstill and worse because everything starts imploding," says Bert Dohmen, founder and president of Dohmen Capital Resea...

www.youtube.com

summary I read of this:

Macro Investor Bert Dohmen just issued a dire warning on the future of the US and global economy.​

​

In a new interview with Stansberry Research, the founder of Dohmen Capital Research says anyone who believes the banking crisis is over is engaged in wishful thinking.​

​

​

“We have three of the biggest banking failures in US history within six days and everybody’s pretending this is a one-off event that won’t happen again.​

​

This is the tip of the iceberg, and if you know about icebergs you know one-seventh of the iceberg is above water. That means six-sevenths of the iceberg is below water and that’s going to sink everybody else.​

​

Not only did we have these bank failures in the US, it was followed by the biggest bank failure in Switzerland ever. The biggest bank, Credit Suisse, 137 years old, went bankrupt overnight and had to be bailed out. This is going to be an international crisis.”​

​

Dohmen says decades of systemic risk has also built up in the derivatives market, which he believes is headed for a seismic crash.​

​

“There is about $1.6 quadrillion of derivatives outstanding internationally. That is such a staggering amount. No one can really imagine how big that number is, and it’s totally unregulated. The CFTC in 1999 tried to get derivatives regulated and was fought by the biggest names that you can imagine in the investment field because it would have stopped that whole game of playing with derivatives…​

​

Now nobody really knows exactly how big it is. The best guess is $1.6 quadrillion. It could be $2 quadrillion dollars of derivatives. When they start falling apart it’s going to be like dominoes.”​

​

Dohmen predicts the Fed will print trillions upon trillions of dollars to try to stabilize markets.​

​

He says he withdrew money from banks well in advance of the current crisis, and if US lawmakers don’t reverse course, he forecasts an economic collapse as bad or worse than the Great Depression.​

​

“In the beginning of 2020, so that’s three years ago now, we said this decade is going to be like the 1930’s because the cycle called for that. So that means a 10-year depression, but I said it will probably be much worse than the Great Depression and it all depends on what the government and the Federal Reserve does.​

​

We now see that we’re doing the same thing as the 1930’s where it was a 10-year depression. It could have been a two or three year recession but the policies of Washington really made it a Great Depression… spending up the wazoo, tax increases like you cannot believe.​

​

[President Biden wants] to double the capital gains rate tax from 20% to about 40%. This is a killer for the economy. It’s investors that make the economy. They create businesses and businesses create jobs. If nobody’s creating businesses you have no job creation and everything is done with giving away money and we saw what that caused.”​

​

Dohmen, who is not a believer in Bitcoin and crypto, says gold will be a safe haven – but only after a coming crash.​

​

“The first [gold] phase that we’re in right now is on the way to a top, an important top, and then a very strong correction in gold.​

​

So don’t be trapped when you read headlines that gold made a new record high. That would be a sell signal… Then you’re going to have a big drop and eventually you could have a great buying opportunity when the central banks step on the accelerator and create trillions and trillions of dollars of artificial money.”​

This decade is probably going to be much worse than the great depression?

Yeah, I at that too. That said, I don't think a depression is out of question at this point.

There were myriad other factors contributing to our Great Depression that aren't present today. There are safety nets and regulations that came from the Depression. We learned a lot from that.

Recessions are a natural and sometimes necessary evil of all healthy economies but let's not forget that our unemployment rate is at or near a record low historically and unlike 2007, homeowners today have loans they more than qualified for and can largely afford. Most of us were smart and took advantage of low interest rate fixed mortgages. What on God's green earth is going to trigger foreclosures on homes this time around?

 

[Leeroy Jenkins]

Soooo, how is PNC Bank looking?

 

[BassNBrew]

Take Your "Safe Money" Out of the Banks, We’re Facing Crisis Greater Than 1930s

"The economy is going to come to a standstill and worse because everything starts imploding," says Bert Dohmen, founder and president of Dohmen Capital Resea...

www.youtube.com

summary I read of this:

Macro Investor Bert Dohmen just issued a dire warning on the future of the US and global economy.​

​

In a new interview with Stansberry Research, the founder of Dohmen Capital Research says anyone who believes the banking crisis is over is engaged in wishful thinking.​

​

​

“We have three of the biggest banking failures in US history within six days and everybody’s pretending this is a one-off event that won’t happen again.​

​

This is the tip of the iceberg, and if you know about icebergs you know one-seventh of the iceberg is above water. That means six-sevenths of the iceberg is below water and that’s going to sink everybody else.​

​

Not only did we have these bank failures in the US, it was followed by the biggest bank failure in Switzerland ever. The biggest bank, Credit Suisse, 137 years old, went bankrupt overnight and had to be bailed out. This is going to be an international crisis.”​

​

Dohmen says decades of systemic risk has also built up in the derivatives market, which he believes is headed for a seismic crash.​

​

“There is about $1.6 quadrillion of derivatives outstanding internationally. That is such a staggering amount. No one can really imagine how big that number is, and it’s totally unregulated. The CFTC in 1999 tried to get derivatives regulated and was fought by the biggest names that you can imagine in the investment field because it would have stopped that whole game of playing with derivatives…​

​

Now nobody really knows exactly how big it is. The best guess is $1.6 quadrillion. It could be $2 quadrillion dollars of derivatives. When they start falling apart it’s going to be like dominoes.”​

​

Dohmen predicts the Fed will print trillions upon trillions of dollars to try to stabilize markets.​

​

He says he withdrew money from banks well in advance of the current crisis, and if US lawmakers don’t reverse course, he forecasts an economic collapse as bad or worse than the Great Depression.​

​

“In the beginning of 2020, so that’s three years ago now, we said this decade is going to be like the 1930’s because the cycle called for that. So that means a 10-year depression, but I said it will probably be much worse than the Great Depression and it all depends on what the government and the Federal Reserve does.​

​

We now see that we’re doing the same thing as the 1930’s where it was a 10-year depression. It could have been a two or three year recession but the policies of Washington really made it a Great Depression… spending up the wazoo, tax increases like you cannot believe.​

​

[President Biden wants] to double the capital gains rate tax from 20% to about 40%. This is a killer for the economy. It’s investors that make the economy. They create businesses and businesses create jobs. If nobody’s creating businesses you have no job creation and everything is done with giving away money and we saw what that caused.”​

​

Dohmen, who is not a believer in Bitcoin and crypto, says gold will be a safe haven – but only after a coming crash.​

​

“The first [gold] phase that we’re in right now is on the way to a top, an important top, and then a very strong correction in gold.​

​

So don’t be trapped when you read headlines that gold made a new record high. That would be a sell signal… Then you’re going to have a big drop and eventually you could have a great buying opportunity when the central banks step on the accelerator and create trillions and trillions of dollars of artificial money.”​

This decade is probably going to be much worse than the great depression?

Yeah, I at that too. That said, I don't think a depression is out of question at this point.

Looked at my 401k I'm already depressed.

 

[DA RAIDERS]

My fear is on the commercial RE side. high interest plus less tenants.

 

[Nathan R. Jessep]

Take Your "Safe Money" Out of the Banks, We’re Facing Crisis Greater Than 1930s

"The economy is going to come to a standstill and worse because everything starts imploding," says Bert Dohmen, founder and president of Dohmen Capital Resea...

www.youtube.com

summary I read of this:

Macro Investor Bert Dohmen just issued a dire warning on the future of the US and global economy.​

​

In a new interview with Stansberry Research, the founder of Dohmen Capital Research says anyone who believes the banking crisis is over is engaged in wishful thinking.​

​

​

“We have three of the biggest banking failures in US history within six days and everybody’s pretending this is a one-off event that won’t happen again.​

​

This is the tip of the iceberg, and if you know about icebergs you know one-seventh of the iceberg is above water. That means six-sevenths of the iceberg is below water and that’s going to sink everybody else.​

​

Not only did we have these bank failures in the US, it was followed by the biggest bank failure in Switzerland ever. The biggest bank, Credit Suisse, 137 years old, went bankrupt overnight and had to be bailed out. This is going to be an international crisis.”​

​

Dohmen says decades of systemic risk has also built up in the derivatives market, which he believes is headed for a seismic crash.​

​

“There is about $1.6 quadrillion of derivatives outstanding internationally. That is such a staggering amount. No one can really imagine how big that number is, and it’s totally unregulated. The CFTC in 1999 tried to get derivatives regulated and was fought by the biggest names that you can imagine in the investment field because it would have stopped that whole game of playing with derivatives…​

​

Now nobody really knows exactly how big it is. The best guess is $1.6 quadrillion. It could be $2 quadrillion dollars of derivatives. When they start falling apart it’s going to be like dominoes.”​

​

Dohmen predicts the Fed will print trillions upon trillions of dollars to try to stabilize markets.​

​

He says he withdrew money from banks well in advance of the current crisis, and if US lawmakers don’t reverse course, he forecasts an economic collapse as bad or worse than the Great Depression.​

​

“In the beginning of 2020, so that’s three years ago now, we said this decade is going to be like the 1930’s because the cycle called for that. So that means a 10-year depression, but I said it will probably be much worse than the Great Depression and it all depends on what the government and the Federal Reserve does.​

​

We now see that we’re doing the same thing as the 1930’s where it was a 10-year depression. It could have been a two or three year recession but the policies of Washington really made it a Great Depression… spending up the wazoo, tax increases like you cannot believe.​

​

[President Biden wants] to double the capital gains rate tax from 20% to about 40%. This is a killer for the economy. It’s investors that make the economy. They create businesses and businesses create jobs. If nobody’s creating businesses you have no job creation and everything is done with giving away money and we saw what that caused.”​

​

Dohmen, who is not a believer in Bitcoin and crypto, says gold will be a safe haven – but only after a coming crash.​

​

“The first [gold] phase that we’re in right now is on the way to a top, an important top, and then a very strong correction in gold.​

​

So don’t be trapped when you read headlines that gold made a new record high. That would be a sell signal… Then you’re going to have a big drop and eventually you could have a great buying opportunity when the central banks step on the accelerator and create trillions and trillions of dollars of artificial money.”​

This decade is probably going to be much worse than the great depression?

Yeah, I at that too. That said, I don't think a depression is out of question at this point.

Looked at my 401k I'm already depressed.

I quit looking at my quarterly statements. I'll check it again in 2-3 years.

 

[General Malaise]

My fear is on the commercial RE side. high interest plus less tenants.

Bingo. This scares me quite a bit.

 

[whoknew]

My fear is on the commercial RE side. high interest plus less tenants.

Office especially may be a bloodbath when all that short term debt comes due.

 

[Chadstroma]

Brace yourselves, the banking crisis is just getting started

 

[Chadstroma]

Three of the four largest bank collapses in U.S. history have occurred in the last 60 days.

 

[massraider]

Three of the four largest bank collapses in U.S. history have occurred in the last 60 days.

Holy ****

 

[General Malaise]

@Joe Bryant
is there a way to find an old thread from around '05 or '06 called "Roosters coming home to roost" or something similar? It was started by a FBG named @RedmondLonghorn who was at the time a portfolio manager for one of the largest hedge funds in the country.

It was a brilliant call made a tad early but ultimately utterly correct. I would LOVE to re-read that and see what was said then and by whom.

Wonder what his thoughts are today. As a former short selling dooms day gold bug I'm not feeling the panic right now. Maybe I should? I had my best day in years today in the market so maybe I'm blinded.

@RedmondLonghorn - holler!

 

[Joe Bryant]

@Joe Bryant
is there a way to find an old thread from around '05 or '06 called "Roosters coming home to roost" or something similar? It was started by a FBG named @RedmondLonghorn who was at the time a portfolio manager for one of the largest hedge funds in the country.

It was a brilliant call made a tad early but ultimately utterly correct. I would LOVE to re-read that and see what was said then and by whom.

Wonder what his thoughts are today. As a former short selling dooms day gold bug I'm not feeling the panic right now. Maybe I should? I had my best day in years today in the market so maybe I'm blinded.

@RedmondLonghorn - holler!

Hey GB. If it's not showing up in the search, I don't know of any other way. The search works well but not sure if it' goes that far back. Sorry.

 

[General Malaise]

@Joe Bryant
is there a way to find an old thread from around '05 or '06 called "Roosters coming home to roost" or something similar? It was started by a FBG named @RedmondLonghorn who was at the time a portfolio manager for one of the largest hedge funds in the country.

It was a brilliant call made a tad early but ultimately utterly correct. I would LOVE to re-read that and see what was said then and by whom.

Wonder what his thoughts are today. As a former short selling dooms day gold bug I'm not feeling the panic right now. Maybe I should? I had my best day in years today in the market so maybe I'm blinded.

@RedmondLonghorn - holler!

Hey GB. If it's not showing up in the search, I don't know of any other way. The search works well but not sure if it' goes that far back. Sorry.

All good, was just a whacky idea made way too late on a Fri eve.

 

[rockaction]

Red's gone. Changed his politics and the new conservative displacement really got to him and he adjusted his priors. Spoke with the zeal of the convert. GB, Red. Godspeed, man.

 

[Nathan R. Jessep]

Ran across this economist on Linked In a few weeks ago and he puts out some really good finance related content, IMO. Here's a post he published Friday. Pasting the text below in case the link doesn't work or requires LinkedIn account.

This is not normal

From: Bill Nelson <Bill.Nelson@BPI.

www.linkedin.com

Quick blurb:

On Thursday, the Federal Reserve announced that it was lending to the receivership formed when First Republic was closed, adding to its existing loans to the receiverships for SVB and Signature. The Fed is lending $228.2 billion, more than twice the peak amount of regular discount window credit provided in the GFC.​

​

This is not normal. There is an indemnity agreement between the Fed and the FDIC covering Fed loans to a bank that fails. The FDIC repays the loan up to the fair value of the Fed’s collateral and the Fed surrenders the collateral so that the FDIC can sell or otherwise resolve the bank. The FDIC repays the loans with proceeds from the resolution, with funds from the DIF, and then borrowing from Treasury if necessary. #federalreserve #fdic​

Spoiler: Click to read article

On Thursday, the Federal Reserve announced that it was lending to the receivership formed when First Republic was closed, adding to its existing loans to the receiverships for SVB and Signature. The receiver in all these cases is the FDIC, so the Fed is lending to the FDIC. The announcement took the form of a note at the top of the Fed’s weekly balance sheet report (the H.4.1, here) and in footnote 7 to “other credit extensions” on table 1 in that report. Other credit extensions grew $57.8 billion over the week ending Wednesday, May 4, 2023 and now stands at $228.2 billion. By way of comparison, primary credit (what people mean when they say “discount window lending”) peaked at $50.7 billion in the Covid crisis and $110.7 billion in the Global Financial crisis.

When California closed First Republic, the bank was borrowing $93.2 billion from the Federal Reserve (see the closure order here), so about $45 billion of that must have been repaid with the assets of the receivership. First Republic was borrowing $63.5 billion of primary credit and $13.8 billion of Bank Term Funding Program credit on March 31, 2023 (see p. 15 of their earnings release here). If, as seems likely, First Republic increased its primary credit borrowing and not its BTFP borrowing over the interval, that would indicate that it was borrowing $79.4 billion in primary credit and $13.8 billion in BTFP credit when it was closed. The H.4.1 reported that primary credit declined $68.5 billion and BTFP credit declined $5.5 billion last week, so lending under the programs appears likely to have been boosted by new loans to other depository institutions (about $10.9 billion primary credit and $8.3 billion in BTFP credit**) as well as being reduced by the extinction of the loans to First Republic.

This is not normal. As noted in Chapter 8 of the Fed’s accounting manual (Section 81.07 (3) c), there is an indemnity agreement between the Fed and the FDIC covering Fed loans to a bank that fails. The FDIC repays the loan up to the fair value of the Fed’s collateral and the Fed surrenders the collateral so that the FDIC can sell or otherwise resolve the bank. The FDIC repays the loans with proceeds from the resolution, using funds from the DIF, and then borrowing from Treasury if necessary. At the end of last year, the DIF equaled $128.2 billion (see here), so the Fed lending to the FDIC prevents it from having to drain the DIF and borrow about $100 billion from Treasury. As it happens, the FDIC is only authorized to borrow up to $100 billion from Treasury (see 12 USC 1824 here):

The Corporation is authorized to borrow from the Treasury, and the Secretary of the Treasury is authorized and directed to loan to the Corporation on such terms as may be fixed by the Corporation and the Secretary, such funds as in the judgment of the Board of Directors of the Corporation are from time to time required for insurance purposes, not exceeding in the aggregate $100,000,000,000 outstanding at any one time…

FDIC deposit guarantees are full-faith-and-credit, so the government will certainly make good on them, but I don’t know how the FDIC gets the necessary funds if it needs more than the DIF and the $100 billion loan from Treasury can cover.

As discussed in a recent BPI note (“The Mysterious Footnote 7…”), the lack of transparency by the Fed about the terms of its loans to the FDIC is also not normal. Moreover, the Fed provided no information in the recently released minutes of the Board’s discount rate meetings through March 22, a period covering the initial loans to the FDIC (see here). The minutes have not in the past discussed lending under the Fed’s emergency lending authority (Federal Reserve Act 13(3)), but they did cover the Term Auction Facility, a discount window program operated during the GFC. For many reasons, the Fed’s lending to the FDIC cannot be authorized under 13(3). My guess is that the Fed authorized the lending using 13(13), it’s authority to lend against Treasury or agency collateral (including, presumably, a promise from the FDIC to repay the loan). I know of no previous instance that the Fed extended a loan under 13(13).

The Fed loans to the FDIC resulting from the failures of SVB and Signature started as loans to the bridge banks. I also know of no previous loans by the Fed to a bridge bank.

As noted in the BPI blog, FDIC borrowing from Treasury “…could implicate the debt limit.” If all these unprecedented actions by the Fed are being done in part to avoid implicating the debt limit, then that raises the question of what else the Fed would do.

For example, as I discussed at a Cato event in November 2021 (see the video here or the conference volume here), the Fed could use a variant on the deferred asset it is creating to cover its losses to provide Treasury some extra cash. The Fed started making losses in September 2022 and is losing a little more than $2 billion a week.*** Rather than report negative equity as the losses mount, the Fed is booking what it calls the “deferred asset” (a/k/a/ the “magic asset”) (see footnote 3, item q of the Fed’s annual report here). The deferred asset is “…the amount of net excess earnings the Reserve Banks will need to realize in the future before remittances to the Treasury resume.” That is, the Fed is borrowing from its future self and recording the loan as an asset.**** Since the Fed makes up its own accounting rules (see the accounting manual linked to above), it could change this one too. For instance, it could book as the deferred asset its projected losses over the upcoming year. It’s assets and equity would instantly go up by that amount, and the Fed would be obliged by law to turn that excess over to Treasury. This this is almost exactly the mechanism Ben Bernanke described in a Brookings note on how helicopter money would work – capitalize future seigniorage and hand it over to Treasury to finance new spending and a tax cut.

To be clear, this is a horrible, horrible option – the Fed would forever be entangled in federal financing.


**It’s notable that BTFP lending was at a 1-year fixed rate of 4.7 percent as of Friday and banks earn 5.15 percent on their deposits at the Fed, so a bank could earn the spread by borrowing from the BTFP and just leaving the proceeds of the loan on deposit at the Fed. The loans can be repaid early without penalty, so if the IORB rate fell below the BTFP rate, the bank could just repay its loan.

***If the Fed did nothing other than issue currency and invest in Treasury bills it would be earning about $2 billion a week, so from taxpayers’ perspective it is losing $4 billion a week.

****In reality, with its net interest income negative, the Fed is borrowing from banks (reserves) and money market mutual funds (ON RRPs) to finance its operations. When the Fed pays the contractors renovating the Eccles building and the new building it bought next door, the deferred asset goes up by the expense and either reserve balances or ON RRP goes up (the amount of currency does not go up because it is determined by the public’s demand for cash).

 

[Desert_Power]

Ran across this economist on Linked In a few weeks ago and he puts out some really good finance related content, IMO. Here's a post he published Friday.

Hadn't seen these pieces about the Fed lending to the FDIC perform. That is pretty unusual. Interesting how being close to the debt limit is probably impacting that.

Bill is always a great read/listen on how the Fed interacts with the markets and banks. How stuff like quantitative tightening or Check out some of his appearances on the Macro Musing podcasts over the years if you're interested in some of that.

He does work for something called the Bank Policy Institute though, which is exactly what it sounds like.

 

[Nathan R. Jessep]

Bill is always a great read/listen on how the Fed interacts with the markets and banks. How stuff like quantitative tightening or Check out some of his appearances on the Macro Musing podcasts over the years if you're interested in some of that.

He does work for something called the Bank Policy Institute though, which is exactly what it sounds like.

thanks, will do

And yeah, I noticed that also. I just started following him recently. He has had good and usually easy to understand explanations when Fed has made moves, etc.

 

[Nathan R. Jessep]

US Banking Turmoil Now Bigger Than 2008 Financial Crisis – But Real Storm Hasn’t Hit Yet: Economist Peter St Onge - The Daily Hodl

Economist Peter St Onge says the current banking crisis is already larger than the turmoil witnessed about 15 years ago – and it's far from over.

dailyhodl.com

“What’s scary here is that going by 2008, the early collapses are only the beginning, the screaming prelude to an extinction-level culling of banks crawling off to die.

In raw numbers, the 25 US banks that collapsed in 2008 were followed by a drum beat totaling 440 banks in the following four years. That’s a 110 (banks) per year, compared to two per year pre-crisis. So we haven’t even begun to see what’s coming.

Interest rate hikes typically take 12-18 months to really hit the economy, and we’re barely six months in. So lining up against the 2008 crisis implies the real storm is not even hitting for another year. These are the first breezes of a coming hurricane.”

 

[Bankerguy]

Everything is fine. I swear

 

[Chadstroma]

CPI slightly better than expectations.
I think the Fed stays put but that will only speed up/increase the downward slide when everything hits the fan. I saw one prediction from a source that is pretty good at their guesses that they Fed would hang tight for the next couple of meetings and then we would see 50 bps drops consecutively for the next few meetings after. I have to pretty much agree.

 

[Schmeabs]

CPI slightly better than expectations.
I think the Fed stays put but that will only speed up/increase the downward slide when everything hits the fan. I saw one prediction from a source that is pretty good at their guesses that they Fed would hang tight for the next couple of meetings and then we would see 50 bps drops consecutively for the next few meetings after. I have to pretty much agree.

I would be shocked if the Fed lowered rates this year. I think they likely pause but I think there is a greater chance of them raising rates next meeting than lowering this year.

 

[fruity pebbles]

CPI slightly better than expectations.
I think the Fed stays put but that will only speed up/increase the downward slide when everything hits the fan. I saw one prediction from a source that is pretty good at their guesses that they Fed would hang tight for the next couple of meetings and then we would see 50 bps drops consecutively for the next few meetings after. I have to pretty much agree.

Don’t see them lowering rates this year. Didn’t the CPI pretty much stay stagnant? Core (which the Fed says they pay closest attention to) at 5.5%, same as the last report.

 

[Chadstroma]

CPI slightly better than expectations.
I think the Fed stays put but that will only speed up/increase the downward slide when everything hits the fan. I saw one prediction from a source that is pretty good at their guesses that they Fed would hang tight for the next couple of meetings and then we would see 50 bps drops consecutively for the next few meetings after. I have to pretty much agree.

Don’t see them lowering rates this year. Didn’t the CPI pretty much stay stagnant? Core (which the Fed says they pay closest attention to) at 5.5%, same as the last report.

I dont disagree but on the downside.... it will drop like a rock.

 

[fruity pebbles]

CPI slightly better than expectations.
I think the Fed stays put but that will only speed up/increase the downward slide when everything hits the fan. I saw one prediction from a source that is pretty good at their guesses that they Fed would hang tight for the next couple of meetings and then we would see 50 bps drops consecutively for the next few meetings after. I have to pretty much agree.

Don’t see them lowering rates this year. Didn’t the CPI pretty much stay stagnant? Core (which the Fed says they pay closest attention to) at 5.5%, same as the last report.

I dont disagree but on the downside.... it will drop like a rock.

Honestly hope you’re right but I think they sit here awhile, atleast until the labor market starts to crack.

 

[Chadstroma]

CPI slightly better than expectations.
I think the Fed stays put but that will only speed up/increase the downward slide when everything hits the fan. I saw one prediction from a source that is pretty good at their guesses that they Fed would hang tight for the next couple of meetings and then we would see 50 bps drops consecutively for the next few meetings after. I have to pretty much agree.

Don’t see them lowering rates this year. Didn’t the CPI pretty much stay stagnant? Core (which the Fed says they pay closest attention to) at 5.5%, same as the last report.

I dont disagree but on the downside.... it will drop like a rock.

Honestly hope you’re right but I think they sit here awhile, atleast until the labor market starts to crack.

Yea, things are going to get rough soon, they will have no choice.

 

[Chadstroma]

Initial Claims 264K
Expected 245K
highest since Oct 2021

 

[Poke_4_Life]

PacWest will probably soon become a part of one of the big banks.

Regionals continue to topple one by one.

 

[FairWarning]

CPI slightly better than expectations.
I think the Fed stays put but that will only speed up/increase the downward slide when everything hits the fan. I saw one prediction from a source that is pretty good at their guesses that they Fed would hang tight for the next couple of meetings and then we would see 50 bps drops consecutively for the next few meetings after. I have to pretty much agree.

Don’t see them lowering rates this year. Didn’t the CPI pretty much stay stagnant? Core (which the Fed says they pay closest attention to) at 5.5%, same as the last report.

I dont disagree but on the downside.... it will drop like a rock.

Honestly hope you’re right but I think they sit here awhile, atleast until the labor market starts to crack.

Yea, things are going to get rough soon, they will have no choice.

In what way will it get rough?

 

[STEADYMOBBIN 22]

So how does this all affect the average person?

 

[Chadstroma]

PacWest will probably soon become a part of one of the big banks.

Regionals continue to topple one by one.

I heard they lost 10% of their deposits... normally that is a bank killer but they got a large infusion of cash to keep them going but if the rest of their deposits get spooked.... yup.... who wants to get bigger and who rapes the FDIC the least wins.

 

[Chadstroma]

CPI slightly better than expectations.
I think the Fed stays put but that will only speed up/increase the downward slide when everything hits the fan. I saw one prediction from a source that is pretty good at their guesses that they Fed would hang tight for the next couple of meetings and then we would see 50 bps drops consecutively for the next few meetings after. I have to pretty much agree.

Don’t see them lowering rates this year. Didn’t the CPI pretty much stay stagnant? Core (which the Fed says they pay closest attention to) at 5.5%, same as the last report.

I dont disagree but on the downside.... it will drop like a rock.

Honestly hope you’re right but I think they sit here awhile, atleast until the labor market starts to crack.

Yea, things are going to get rough soon, they will have no choice.

In what way will it get rough?

The economy is going to go to poo. They will have to swing to loosening things up again to help revive it.

 

[Chadstroma]

So how does this all affect the average person?

The economy basically. It is headed dowwwwwwwwwwwwwwn.

 

[fruity pebbles]

CPI slightly better than expectations.
I think the Fed stays put but that will only speed up/increase the downward slide when everything hits the fan. I saw one prediction from a source that is pretty good at their guesses that they Fed would hang tight for the next couple of meetings and then we would see 50 bps drops consecutively for the next few meetings after. I have to pretty much agree.

Don’t see them lowering rates this year. Didn’t the CPI pretty much stay stagnant? Core (which the Fed says they pay closest attention to) at 5.5%, same as the last report.

I dont disagree but on the downside.... it will drop like a rock.

Honestly hope you’re right but I think they sit here awhile, atleast until the labor market starts to crack.

Yea, things are going to get rough soon, they will have no choice.

In what way will it get rough?

The economy is going to go to poo. They will have to swing to loosening things up again to help revive it.

I gotcha now. So you think they cut rates for basically the bad reasons? Not because inflation has been tamed to a sufficient level but instead emergently because the economy has tanked, unemployment explodes and the banking system is waivering?

 

[The Z Machine]

because the economy has tanked, unemployment explodes and the banking system is waivering

Maybe the banking system wavering causes the economy to tank and the unemployment explodes, but thus far it seems the other two are fairly resilient to regional banks getting eaten by big banks and the FDIC backstopping depositor losses.

 

[Nathan R. Jessep]

start hiding... money?

 

[Chadstroma]

CPI slightly better than expectations.
I think the Fed stays put but that will only speed up/increase the downward slide when everything hits the fan. I saw one prediction from a source that is pretty good at their guesses that they Fed would hang tight for the next couple of meetings and then we would see 50 bps drops consecutively for the next few meetings after. I have to pretty much agree.

Don’t see them lowering rates this year. Didn’t the CPI pretty much stay stagnant? Core (which the Fed says they pay closest attention to) at 5.5%, same as the last report.

I dont disagree but on the downside.... it will drop like a rock.

Honestly hope you’re right but I think they sit here awhile, atleast until the labor market starts to crack.

Yea, things are going to get rough soon, they will have no choice.

In what way will it get rough?

The economy is going to go to poo. They will have to swing to loosening things up again to help revive it.

I gotcha now. So you think they cut rates for basically the bad reasons? Not because inflation has been tamed to a sufficient level but instead emergently because the economy has tanked, unemployment explodes and the banking system is waivering?

There is evidence that people are already not spending because of inflation is growing. Unemployment is rising. Banks are under pressure so credit will be available less. Inflation is slowly going down as the previous cuts work through the system. When you break down what areas have gone down and what have gone up- many key driving areas of inflation have gone down drastically while those that typically follow are the ones still going up- these are the areas that consumers are pushing back on with inflation fatigue.

They don't say this because it would be bad to hear and people would freak but the whole point of raising interest rates is to kill the economy. That is how you control inflation. Of course, their goal is a 'soft landing' but that doesn't really work. They over react and then over react to their over reactions and there we go.

I am not seeing things being fun in the not too distant future.

 

[Chadstroma]

because the economy has tanked, unemployment explodes and the banking system is waivering

Maybe the banking system wavering causes the economy to tank and the unemployment explodes, but thus far it seems the other two are fairly resilient to regional banks getting eaten by big banks and the FDIC backstopping depositor losses.

It isn't just about the banks that fail.... it is the banks that don't want to be the next bank to fail.... how do they do that? Start tightening their lending standards which means less people are able to get loans approved which means less money in the economy which means the economy goes to poo

 

[The Z Machine]

because the economy has tanked, unemployment explodes and the banking system is waivering

Maybe the banking system wavering causes the economy to tank and the unemployment explodes, but thus far it seems the other two are fairly resilient to regional banks getting eaten by big banks and the FDIC backstopping depositor losses.

It isn't just about the banks that fail.... it is the banks that don't want to be the next bank to fail.... how do they do that? Start tightening their lending standards which means less people are able to get loans approved which means less money in the economy which means the economy goes to poo

What's your prediction on how much it goes to poo? What's the low point in GDP retraction and the high point in unemployment?

 

[Chadstroma]

because the economy has tanked, unemployment explodes and the banking system is waivering

Maybe the banking system wavering causes the economy to tank and the unemployment explodes, but thus far it seems the other two are fairly resilient to regional banks getting eaten by big banks and the FDIC backstopping depositor losses.

It isn't just about the banks that fail.... it is the banks that don't want to be the next bank to fail.... how do they do that? Start tightening their lending standards which means less people are able to get loans approved which means less money in the economy which means the economy goes to poo

What's your prediction on how much it goes to poo? What's the low point in GDP retraction and the high point in unemployment?

Damn good questions and I am not that smart to have a real good answer. If you forced me to... my guess (more of a feel to be honest) is 7ish for unemployment and 1%ish for retraction.

That guess thrown out there.... though I expected a recession leading into 2008.... I had no clue it would end up as deep and long as it was. I was thinking more along the lines of the early 90's... which was rougher than my guess above. I am thinking this one is going to be somewhere between 2008 and the early 2000's recessions. So..... not nearly as bad as most recent memory but things ain't gonna be pretty either.

 

[Bankerguy]

In all seriousness.

US bank regulations need a serious overhaul. I would strongly suggest reviewing Canadian policies as a guide.

 

[Desert_Power]

In all seriousness.

US bank regulations need a serious overhaul. I would strongly suggest reviewing Canadian policies as a guide.

So consolidate down into a smaller number of even larger banks? Sounds like the path we're on...

 

[DA RAIDERS]

In all seriousness.

US bank regulations need a serious overhaul. I would strongly suggest reviewing Canadian policies as a guide.

username checks out

 

[The Z Machine]

In all seriousness.

US bank regulations need a serious overhaul. I would strongly suggest reviewing Canadian policies as a guide.

Do small, local banks exist in Canada?

 

[Poke_4_Life]

In all seriousness.

US bank regulations need a serious overhaul. I would strongly suggest reviewing Canadian policies as a guide.

Would like to hear more details on this. As others have said, we are on that path of a smaller number of banks already.

Also, regulators were somewhat gutted under the prior administration. Not saying that would have prevented anything going on now, but the pendulum is now swinging the other way.

 

[Juxtatarot]

because the economy has tanked, unemployment explodes and the banking system is waivering

Maybe the banking system wavering causes the economy to tank and the unemployment explodes, but thus far it seems the other two are fairly resilient to regional banks getting eaten by big banks and the FDIC backstopping depositor losses.

It isn't just about the banks that fail.... it is the banks that don't want to be the next bank to fail.... how do they do that? Start tightening their lending standards which means less people are able to get loans approved which means less money in the economy which means the economy goes to poo

What's your prediction on how much it goes to poo? What's the low point in GDP retraction and the high point in unemployment?

Damn good questions and I am not that smart to have a real good answer. If you forced me to... my guess (more of a feel to be honest) is 7ish for unemployment and 1%ish for retraction.

That guess thrown out there.... though I expected a recession leading into 2008.... I had no clue it would end up as deep and long as it was. I was thinking more along the lines of the early 90's... which was rougher than my guess above. I am thinking this one is going to be somewhere between 2008 and the early 2000's recessions. So..... not nearly as bad as most recent memory but things ain't gonna be pretty either.

I wouldn’t call a 1% retraction in GDP going to poo.

 

[culdeus]

In all seriousness.

US bank regulations need a serious overhaul. I would strongly suggest reviewing Canadian policies as a guide.

Do small, local banks exist in Canada?

I mean honestly do we need HOT Milf Credit Union of Peoria?

I wonder a lot who the **** uses some of these tiny banks and why

 

[Runkle]

In all seriousness.

US bank regulations need a serious overhaul. I would strongly suggest reviewing Canadian policies as a guide.

Do small, local banks exist in Canada?

Do they take beaver pelts as deposits?

 

[Chadstroma]

In all seriousness.

US bank regulations need a serious overhaul. I would strongly suggest reviewing Canadian policies as a guide.

I know nothing about Canadian regulation

 

[Chadstroma]

because the economy has tanked, unemployment explodes and the banking system is waivering

Maybe the banking system wavering causes the economy to tank and the unemployment explodes, but thus far it seems the other two are fairly resilient to regional banks getting eaten by big banks and the FDIC backstopping depositor losses.

It isn't just about the banks that fail.... it is the banks that don't want to be the next bank to fail.... how do they do that? Start tightening their lending standards which means less people are able to get loans approved which means less money in the economy which means the economy goes to poo

What's your prediction on how much it goes to poo? What's the low point in GDP retraction and the high point in unemployment?

Damn good questions and I am not that smart to have a real good answer. If you forced me to... my guess (more of a feel to be honest) is 7ish for unemployment and 1%ish for retraction.

That guess thrown out there.... though I expected a recession leading into 2008.... I had no clue it would end up as deep and long as it was. I was thinking more along the lines of the early 90's... which was rougher than my guess above. I am thinking this one is going to be somewhere between 2008 and the early 2000's recessions. So..... not nearly as bad as most recent memory but things ain't gonna be pretty either.

I wouldn’t call a 1% retraction in GDP going to poo.

Poo enough. I am likely being optimistic here too. I am confident it won't be 2008 all over again but it isn't going to be painless.