Credit deflation and the reflation cycle to come (part 5)

[JMD]

10 hours ago, Long time lurking said:

You are confusing $ with treasurers and you are right about them being stuck in the 70`s without $ as that is what it had have to have to trade with the outside world that is the $ hegemony 

What you miss thought is everything inside of China is funded by the Renminbi  ,which the central bank prints at will as it`s the the Yuan is pegged to the Dollar it`s basically a twin banking system developed to allow huge funding of targeted sectors of the economy when the loser in that funding race go bust they just segregate that money from the economy it`s QE without consequence for the central bank  

It`s a hard system to work out and it`s getting harder ,i had a link that done a good job of explaining the intricacies  but that link no longer says what it said 5 years ago   Yuan/Renbi are one of the same now 

That's interesting. Could you say more about China's twin currency system? Perhaps how it works internally to benefit targeted sectors? Do any other countries do this? 

[JMD]

10 hours ago, marceau said:

Agree, and of course I can't prove his intent or beliefs. It's outcome is pure prog though, and it's become part of equalitarian canon that paved the road to DEI etc.

The simply observable truth is that peoples are genetically different and superiority absolutely exists, both between groups and within groups.

Yes agreed. James Watson the double-helix guy also believes that and he should know about those things (though he got into lots of trouble for saying such things out loud!).

[Lightscribe]

5 hours ago, Pip321 said:

To be fair, if I had just £1k on deposit in SV bank….I wouldn’t by 9:01am tomorrow. 

If it’s anything like when the Icelandic banks went down (Kaupthing, Icesave etc) then people would have to apply and confirm funds, details etc which takes weeks/months before the money is transferred to the new owners (ING took over Iceland banks) and only then can it be withdrawn.

[Plan-b]

18 minutes ago, Lightscribe said:

If it’s anything like when the Icelandic banks went down (Kaupthing, Icesave etc) then people would have to apply and confirm funds, details etc which takes weeks/months before the money is transferred to the new owners (ING took over Iceland banks) and only then can it be withdrawn.

I got mine out just in time, just happened to see a report online so phoned them up and it was answered by a very calm and helpful lady who after a few checks made the transfer and later that day they were gone. Close one.

Edited March 13, 2023 by Plan-b

[Lightscribe]

21 minutes ago, Plan-b said:

I got mine out just in time, just happened to see a report online so phoned them up and it was answered by a very calm and helpful lady who after a few checks made the transfer and later that day they were gone. Close one.

Yeah, I was in Australia at the time, using my tiny travel laptop to phone via VoIP straight off the bat. Managed to get my funds transferred out with Kaupthing, not with Icesave however so had to apply. 

I remember then, you had ridiculous idiots on MSE, trying to play things down (as well as representatives from the banks themselves posting)  ‘saying it’s fine, nothings going bust’ chastising people for withdrawing and causing a bank run whilst trying to withdraw themselves.

[CannonFodder]

 

https://www.google.com/amp/s/amp.theguardian.com/business/live/2023/mar/13/silicon-valley-bank-uk-tech-sector-rescue-help-jeremy-hunt-rishi-sunak-business-live

HSBC will buy uk arm of svb for a £1 i think

[kibuc]

15 minutes ago, CannonFodder said:

 

https://www.google.com/amp/s/amp.theguardian.com/business/live/2023/mar/13/silicon-valley-bank-uk-tech-sector-rescue-help-jeremy-hunt-rishi-sunak-business-live

HSBC will buy uk arm of svb for a £1 i think

This is of tertiary importance.

The big news is that one movie was announced better than a few others, and some women wore dresses for the occasion.

Edited March 13, 2023 by kibuc

[afly]

15 minutes ago, CannonFodder said:

 

https://www.google.com/amp/s/amp.theguardian.com/business/live/2023/mar/13/silicon-valley-bank-uk-tech-sector-rescue-help-jeremy-hunt-rishi-sunak-business-live

HSBC will buy uk arm of svb for a £1 i think

Jeremy hunt is a very lucky boy

[Plan-b]

5 minutes ago, kibuc said:

and some women wore dresses for the occasion

Inclusively - so did some men

[HousePriceMania]

7 hours ago, Axeman123 said:

although it does send a message "bank wherever" to depositors, 

That's the whole point of it, meanwhile their system is broken and they can't fix it 

 

Get every fooking penny out the banking system because when it blows, full on collapse or hyperinflation then you'll lose 99p in the £ 

[Pip321]

Decided to watch ‘All quiet on the Western Front’ last night following numerous mentions on this thread…..and nothing else on.

The striking thing for me is a reminder that when people say 

1) oh they won’t raise rates because I have a mortgage, or won’t drop them because i have savings

2) oh they won’t keep printing because inflation is hurting me

3) oh they won’t keep immigration going because I need a home, or won’t stop immigration because of humanitarian grounds 

4) oh they won’t bail out a bank while holding back nurses wages 

5) oh they won’t cut my benefits, or oh they won’t increase them with inflation when we can afford it

the reminder for the soft new generations (from boomers…all the way down) is ‘they’ (East and West) will do whatever it takes to retain their own wealth, their own power and their own interests.

If they needed to they will send young men with their whole lives ahead of them to Afghanistan, Iraq, Ukraine, or whatever the current conflict and those men will die leaving fatherless children…..just so TPTB can enjoy what remains of their lives living with excess. And never once will they be truly grateful.

Happy Monday…. carpets in today (hopefully) and lots of cleaning. 

Edited March 13, 2023 by Pip321

[Chewing Grass]

8 hours ago, Axeman123 said:

A very good post, I certainly see the book as a jumping off point rather than having a cohesive theory of everything.

IMO: The initial headstart (agriculture) enabled the development of more complex societal structures and non-food-production specialists etc, which in turn produced a higher functioning culture. This process then compounded as each new layer of greater sophistication spawned ever an higher functioning culture, meaning it became a positive feedback loop. The reason we have started to stagnate is simply that we have stalled in taking on more demanding societal structures, that would demand an even higher functioning culture, while all around us other groups are catching up. This is actually why humans should strive to colonise planets etc, as the current fuckery could not stand under that pressure and with such high costs for failures of leadership.

Which is the collapse of Empires stuff again like Rome collapsed, debasement of currency was just another symptom.

[HousePriceMania]

Everything's fine, The rich haven't lost...and relax.

 

 

[sleepwello'nights]

49 minutes ago, HousePriceMania said:

 

Get every fooking penny out the banking system because when it blows, full on collapse or hyperinflation then you'll lose 99p in the £ 

And what will you do with the computer generated digits when they're not in the bank?

There's a limit to how much you can store in PMs or food or firewood, houses cost to maintain, collectables works of art and the like are illiquid and incur storage costs. And then there is the security aspect to consider.

 

 

[HousePriceMania]

7 minutes ago, sleepwello'nights said:

And what will you do with the computer generated digits when they're not in the bank?

There's a limit to how much you can store in PMs or food or firewood, houses cost to maintain, collectables works of art and the like are illiquid and incur storage costs. And then there is the security aspect to consider.

 

 

Matters not, just get it out.  

[leonardratso]

just not practical

[geordie_lurch]

Happy Monday all

 

[AlfredTheLittle]

10 hours ago, sancho panza said:

@Castlevania

kudos to CV for highlighting the kitchen sinking ref Harbour energy who look to have buried 5 years bad news in this years full year results

for thspe that dont know Dan Neidle os the man who showed has 3.7mn views on former chancellor Nadhim Zadahwis tax avoidance schemes.

 

Worth adding that Harbour haven't done anything wrong, I think it's something to do specifically with the way energy companies recognise their future tax liabilities - most companies wouldn't be able to set future costs against current profits in this way.

[Boon]

10 hours ago, Axeman123 said:

Screwing SVBs bondholders (deservedly , don't get me wrong) must send a hell of a chill through interbank lending and so on. Credit to tighten massively in response? Similar for shareholders, no bank will be able to raise a penny against its own equity now IMO.

Yields have plunged and it could well be that there isn't a rate rise this month, and it looked like was gonna be 50bps last week.

You would think the banks would actually have to raise interest rates to attract people to keep their money there but that won't happen because of the government lending schemes.

So a crisis like this seems perfect cover

[23rdian]

3 hours ago, Plan-b said:

I got mine out just in time, just happened to see a report online so phoned them up and it was answered by a very calm and helpful lady who after a few checks made the transfer and later that day they were gone. Close one.

I pulled out 25k in time but left about 6k in there as I thought it wasn't actually going to go. I have kept their flyer as a reminder to panic first. 

[sancho panza]

9 hours ago, Axeman123 said:

The shareholders get wiped out, and (IMO) the leadership may be getting bonuses etc clawed back. Bondholders of the failed institution also take it in the arse, and that is where accountability should lie.

This wasn't a true bailout, although it does send a message "bank wherever" to depositors, and a price will have to be paid by all of us in the long term for that.

Wolf covered this yesterday.I see no reason why depositors shouldn't be made whole in principle.Currency is a mdium of excange and a mathod of storing savings for most and they need to have faith that a) they'll get their capiatl back and b) the regulators are doing their jobs.

I accept that possibly when the scale of the losses are that big that depositors legally could be made to shoulder some of the burden but what's happening here is infintiely preferable

Just to be clear,it looks like there is still some fat left in terms of secured bondholders to bail in before depositors are at risk.

worth noting that signature bank got closed as well.$110bn in assets $90bn in deposits.

https://www.reuters.com/business/finance/new-york-state-regulators-close-signature-bank-2023-03-12/

https://wolfstreet.com/2023/03/12/silicon-valley-banks-uninsured-depositors-bailed-out-crypto-signature-bank-shut-down-all-depositors-bailed-out-senior-execs-fired-all-shareholders-some-bondholders-bailed-in/

The way it seems to work, with lots of tough love in the statement:

1. The Fed gives the money to the FDIC as needed.
2. The FDIC makes all deposits available on Monday.
3. The FDIC then sells the assets of the banks, which takes some time.
4. The difference between the cost of bailouts of the depositors and the proceeds from the asset sales is the actual amount the FDIC lost.
5. The FDIC charges other banks a “special assessment” to cover those losses, “as required by law.”
6. And it may then pay the Fed back with those funds it collected from other banks?

Signature Bank was shut down on Sunday by New York Department of Financial Services, which announced that it took possession of the bank and that it appointed the FDIC as receiver of the bank.

Depositors of Signature bank are included in the bailout, as the joint statement by Yellen, Powell, and FDIC spelled out:

Shareholders and some unsecured bondholders of both banks get bailed in. Should have done your homework, darn. The joint statement said for both banks: “Shareholders and certain unsecured debtholders will not be protected,” with Tough Love from Powell, Yellen, and Gruenberg.

Senior management gets axed. No word about claw-backs or indictments or anything, but nevertheless at least they weren’t promoted and put in charge of the bailouts. “Senior management has also been removed,” the statement said.

Other banks with a run-on-the-bank can get funding from the Fed.

7 minutes ago, Boon said:

Yields have plunged and it could well be that there isn't a rate rise this month, and it looked like was gonna be 50bps last week.

You would think the banks would actually have to raise interest rates to attract people to keep their money there but that won't happen because of the government lending schemes.

So a crisis like this seems perfect cover

It's hard to see the Fed continuing with QT,reverse repo and raising rates at current trajectories given what's happened and that the tightening cycle clearly played a part.

The Fed is really boxed in here with inflation running.Goona get messy down the line.

Gold up another $22 this morning.

[Long time lurking]

This starting to look like they are herding everyone towards government bonds 

Surely you would be trying to reassure rather than scare 

 

[Axeman123]

38 minutes ago, Boon said:

Yields have plunged and it could well be that there isn't a rate rise this month, and it looked like was gonna be 50bps last week.

Market implied probability of 50bps is now zero, and 0bps is at 32.8%! This has to be the biggest swing in a long time, I imagine some traders will be getting carried out on their shield off the back of this.

[Axeman123]

22 minutes ago, sancho panza said:

worth noting that signature bank got closed as well.$110bn in assets $90bn in deposits.

The final banking option for crypto AIUI, and likely a clear message to other institutions not to get involved. BTC is essentially sanctioned in the US banking system now.

Likely it will come out that this was entirely unjustified and opportunist, as you say assets exceeded deposits. The rumours of problems will likely have been planted in the media by the same regulators that then used the reporting to justify action.

[sancho panza]

2 minutes ago, Axeman123 said:

Market implied probability of 50bps is now zero, and 0bps is at 32.8%! This has to be the biggest swing in a long time, I imagine some traders will be getting carried out on their shield off the back of this.

To be fair,that DDMB vid a few pages back was quite prescient when she was talking about the economy imploding under the surface.

Lot of traders took Powell at face value but watching the pressure he was under in Congressional testimony,I had a feeling he'd be forced to back down even before SVB made it a near certainty.

However,this is not the end of it.Timing wise,I feel we're about where we were when Bear Stearns went under.As Dowd and Buckner pointed out in 2020,the regulatory authorities haven't actually dealt with the underlying leverage problems that caused 08 in fact they've likely allowed them tomget worse.)

CS -still getting pounded like the moeny shot is imminent.