Subnostr

This is true. But it just doesn’t feel like a traditional banking crisis, just a bunch of bad apples who took too much risk and got caught. Meanwhile others are quickly unwinding trades before they get caught staving off a wider market panic.

Mike Hall ⚡️ 2y ago

I think it depends on your terms. “Crisis” indicates an unfortunate event coming that we’re helpless against. Do I think pretty much every bank is insolvent right now at these rates…yes.

But the govt has proven time and again they’ll change the rules to meet any crisis (bailouts). So is banking in a crisis…maybe not. But the manipulation it takes to keep banking out of crisis puts EVERYONE into a FIAT crisis…in my opinion.

You can’t continue to manipulate the rules to benefit a few and not expect consequences. (Just my 2 cents)

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Discussion

Doug Brown 2y ago

Agree. Banks weren’t negligent in their duties in searching for yield, but 100% in their risk mgmt approach.

They’re insolvent in liquid terms, but doesn’t insolvency mean their assets are smaller than liabilities? Which I’m this case isn’t true as the treasuries are still worth what they were backing in the long run, just not liquid like cash and providing less yield than the market rate. The Fed/Tres/FDIC backing just staved off depositors from calling their margins and gave the banks precious time.

Mike Hall ⚡️ 2y ago

If they were marked to market today at these rates, they’d be insolvent. That’s why everything you hear on the news is screaming that the banking industry is fine, because we all need to have confidence and believe that to be true. If many don’t, and they ask for their deposits, and banks are forced to mark to market their treasuries at these rates…it all comes down.

Not arguing at all, totally see what you’re saying. I just think it’s the fiat monetary policies that put us here. But here we are.