Armstrong Economics- The Banking Crisis is Global – Not Confined to the USA
This is a warning to all small banks. Understand the REAL trend or you will NOT survive. Major capital is fleeing the long-term and rising into the short-term because they see rates are rising and any long-term bond investment during a period of war is going to be a major losing trade. Do not get trapped by the yield curve and understand that this trend is in play into 2025.
Armstrong Economics- The Unfolding Bank Crisis
I will offer this recommendation (publicly) for my ear is turning red from all the phone calls. As for the Biden Administration, if they DO NOT heed my warning, our forecast will be devastating. The Biden Administration MUST stand behind ALL deposits – not the $250,000 FDIC limit. If they do not, small businesses will pul; excess cash from banks, switch to 30-day T-Bills at a brokerage house, and say screw the FDIC and the Biden Administration’s anti-rich (small business which employs 70% of the workforce).
Canada is in the best of hands…
*Update: More than 30 banks have been placed under trading halts.
Wrong Armstrong. Small businesses need to learn to invest prudently and not blindly plunk it down in some bank.
If government guarantees all deposits, why even have private banks. Sounds marxist. It is not like the deposits are ‘gone’ rather it will be so many cents on the dollar. If the regulator isn’t completely worthless it will be ninety something cents on the dollar. Let them take a small haircut and grow up.
In a fiat system with no effective floor under the rate of interest, there is no way for the saver to remove their capital from the system and act as a brake on imprudent investments. Because what we call money today cannot be redeemed for a commodity (gold) everyone is forced into a closed loop system in which all are creditors to the central bank. Fiat systems are like a huge domino set. A few small haircuts will just cascade if not stopped.
What’s going to stop this in the short term is for the Fed to put short term rates back to zero. That will make “borrow shot to lend long” profitable once again. But that just resurrects the whole destructive cycle.
Leave the rate alone.
Abolish the fed.
Ease to 4.5, min at 3.5 over about 2 years.
All these CBDCs being developed and nowhere for them to play, so let’s make a crisis with them as a ‘ready to go’ solution.
Watch for the pivot, it will start coming out over the next days…
“closely monitoring” coming from Freeland means ZERO. But the twitchy midget will come out today for sure with some ‘strong’ statement, assuring Canadians that they work & continue to work/hard-work…
I think all statements coming from this gov should be prefaced with a warning “you are about to see PTSD/stress-inducing/offensive stuff – it insults viewer’s intelligence”.
These guys are losing money selling pot in the inner city.
Money is a TRAP.
https://www.youtube.com/watch?v=N57LcW01wU0
Lot of talk about deposits. Not much talk about the value of the common shares of these banks. Lots of money disappearing from California during the past few days regardless.
I suspect many of them will not maintain their par value of $0.01 per share
The non-bailout doesn’t cover stocks so you can see why a lot of bank stocks are getting hammered today.
Biden said that he won’t back investors and that they won’t be made while. That’s great and all but neither should the money in the accounts over $250k be made while if we are playing by the rules.
Does Armstrong know how many “small businesses” used SVB, because it looks like it’s mostly tech bros who think they are SMRT and connected and want to make sure that the government is willing to socialize risk, while privately keeping the profits…
Christia is dragging out her old Russian Literature text books right now to help her lead all of us unwashed through this time of crises.
Le Dauphin will comfort us by expressing his concerns through the medium of interpretive dance
If you’re in commercial real estate, in any way, get out.
Why? Serious question.
Canadians need to be worried about the f***** government not only freezing their accounts but also inflating the money they have worked for and saved. CANADIANS ARE SO STUPID THEY DO NOT DESERVE TO LIVE. Now call me, no don’t, when the government screws you into the ground and you beg for mercy. When they screw me into the ground because of your stupidity, I hope to take at least one of these evil ba*tar* with me.
SVB seems to prove that there isn’t always a buyer when there is a seller, given that they couldn’t find a buyer for their $1.5 billion offering to shore up their balance sheet.
Two years ago, I, someone with a 12th Grade education (albeit from 1983), with one entire economics credit, wrote this, and haven’t had to change much of it. Although, with the anniversary of the “Oscar slap”, maybe needs a twig or two.
Something tells me not to trust banking to the the same twats who said:
1) there is no threat of inflation due to the government borrowing then “spending” a trillion dollars
2) there is no inflation, like we said
3) there is some inflation, but not everywhere, and its not bad, so point 1 stands, please ignore point 2
4) there is some inflation in some minor areas such as fuel, housing and food, but its manageable
5) its only for a short time, just like two weeks to flatten the COVID curve, remember then?
6) inflation is actually good, Colbert says so, and who would know better than a celebrity millionaire?
7) the government has a plan for inflation if it ever really becomes a for real problem for real people
8) you’ll love wage and price controls…
9) its corporate greed that somehow didn’t exist two years ago, just started overnight
10) did we mention the inflation that isn’t happening, but would be great, is Putin’s fault?
11) overturning Roe will damage the economy
12) CTRL/H inflation/stagflation
13) CTRL/H stagflation/recession
14) CTRL/H recession/New Great Depression
Note: blame the Republicans is taken for granted for being 1a), etc.
Lets back up a bit – while financial tomfoolery has been going on for sometime, what pushed things over the cliff so to speak, was the extremely rapid rise in rates. To fight “inflation”.
I parenthesize because current inflation began with supply chain destruction, was exacerbated by energy exploration/supply destruction, compounded by Ukriane conflict, intensified by US blowing up the Nordstream, and further aggravated by the increase in interest rates that was supposed to bring “inflation” under control (a al Volker).
Inflation was indeed occurring but it was engineered to do so. The US cannot afford high rates- nor can any heavily indebted nation in the West – but that’s precisely what has been engineered.
The fed conducts stress tests on banks with worst case scenarios factored in. If the fed was not factoring in a rapid rise in rates in their worst case scenarios, in their 2022 document, why would anyone assume that they would raise rates extremely rapidly?
https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20220210a1.pdf
Powell himself admitted in congressional testimony that his goal was to ” try to re-align supply and demand”.
Well given that every Uniparty policy/aciton has been to destroy supply- it only follows that Powell means demand needs to collapse. And its not excessive demand. Its basic demand.
But again the goal is to collapse the USA/West, and kill the USD as world reserve. Viewed through that lens, things are progressing according to plan
I’m listening to Tom Luongo of Gold, Goats, n’ Guns.
Do NOT panic.
“I didn’t realize it was bank-collapse season already.
I still have my train-derailment decorations up.”
– Twitter meme.
The award for disastrous financial policy goes to…
https://pjmedia.com/vodkapundit/2023/03/13/the-biden-economy-is-falling-apart-everything-everywhere-all-at-once-n1677787
There’s an interesting line in that article about the raising of interest rates being too timid to get inflation in check (this is the first person I’ve read say this), when the problems today of SVB and other banks are due to the their lack of response to the interest rate hikes as is. That is, for them, the hikes were too bold.
Looks like we have got to the point where we can’t thread the needle between keeping inflation down and supporting the US dollar on one side by raising interest rates, and keeping banks, investors, the stock market, and the general economy afloat with cheap money on the other side.
Guess which side is going to be sacrificed.
Rate cuts and stagflation for everyone!
Wage-price spiral coming in 2024!
Its the 1970s all over again!!!!
(You’d almost think there was a weak Democrat and a “Trudeau” in charge of things. Oh, wait.)
Doing what? Buying Comerica Bank stock after it’s plunged 50%!? Yeayyyyy … I own a FAILED bank, run incompetently by humanities graduates. That’s some “bargain” alright …
Well I bought a ship tonne of distressed bank shares today. We will see if I’m
Laughing or crying within a week or so.
Kanji, Commerca plunged today to $30 ish but came back to $42 for a 40% gain in one day if you bought it at the right price. So I understand what OP is saying in that they shake out mom and pop and buy on the cheap fleecing the little investors and banking big bucks all in one day through subterfuge lies and fear. Rinse and repeat then we wake up one day and we are all surfs.
Buy land. Be ready to defend it.
For fun… Take a look at Credit Suisse CDCs. 50 to 450 in about 48 hours.
That goes and are all in unknown country.
Liberals will be arguing with you in a week that.
1. Everyone KNEW, that bank failures and bank runs were a probable outcome of Covid policy.
2. Bank failures are a good thing.
3. The public must bail out the banks.
4. There is no need to look back at Covid policy.