patrick.net

Possible silver lining; if they stop raising interest rates the stock market will like it.

Collapses start off slow and then kinda go all at once

Here's an update on junk bond. Note the increase in the defualt rate over a 2 week period.

https://www.msn.com/en-us/money/markets/junk-bond-defaults-eclipse-past-two-years-in-3-months-as-wall-street-braces-for-credit-crunch/ar-AA192CJr?ocid=msedgdhp&pc=U531&cvid=2a23142a0da84c1abcd08be76fe781f3&ei=26

There's also about $6 trillion corporate debt just one step above junk. Everyone knows it's a systemic risk with the corporations just playing games with the ratings agencies (once the downgrades happen it will be quite quick).

Misc says

Here's an update on junk bond. Note the increase in the defualt rate over a 2 week period.

Been keeping an eye on one of the big ETF's for junk (or high yield) bonds. Notice the big drop off back during the Great Recession.
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Patrick says

This is precisely how the coveted "no FDIC" scenario looks like. What's so good about it?

Misc says

What we've seen so far in problems with the banks is those that purchased long term bonds that went down in value as interest rates went up.

Some mainstream economist crunched the figures and came up with a $620 billion dollar hit to the banks balance sheets if these were marked to market. That is if they needed to be sold.

We haven't even gotten to the fun part yet. That's when borrowers start to not pay back their loans because they ran out of money they could borrow on their credit lines. Credit spreads are widening especially for junk bonds. They are now over a 5% spread to treasuries. That means companies are borrowing at about a rate of 8-9%. Companies trying to roll-over their outstanding debt are gonna find that they just can't pencil in anything except for losses at these new rates. Credit is simply going to dry up for a large swath of corporations.

Good luck to all with your investments.

https://www.axios.com/2023/03/21/high-yield-bond-spr...

Confession: I do keep a couple of dollars hidden my mattress. Is there anything right or wrong with this?

gabbar says

Confession: I do keep a couple of dollars hidden my mattress. Is there anything right or wrong with this?

It depends on your reason for doing it.

GNL says

gabbar says

Confession: I do keep a couple of dollars hidden my mattress. Is there anything right or wrong with this?

It depends on your reason for doing it.

I don't trust banks, so I figured keeping some in the mattress won't harm anyone.

gabbar says

GNL says

gabbar says

Confession: I do keep a couple of dollars hidden my mattress. Is there anything right or wrong with this?

It depends on your reason for doing it.

I don't trust banks, so I figured keeping some in the mattress won't harm anyone.

Stacking PMs under your mattress might be a better option than cash.

GNL says

gabbar says

Confession: I do keep a couple of dollars hidden my mattress. Is there anything right or wrong with this?

It depends on your reason for doing it.

More convenient to pay hookers.

The stock market and the economy in general feels like the movie Ocean's 13. The part where they are making the hotel shake withe the "one that dug from the French side"

The 2 banks that went down took out a hit on the FDIC of about $22.5 billion. The majority of the losses were for amounts over the $250k per account. The fund had $128 billion in assets at the end of last year. The fund was already below statutory limits. The fund only charges fees on the accounts for up to the $250k. The FDIC is wondering how much extra to charge and who to charge for the shortage.

RWSGFY says

This is precisely how the coveted "no FDIC" scenario looks like. What's so good about it?

FDIC exists to bail out the banks, not the users. Real insurance would be privatized, and would cost more the more leveraged the bank. Under FDIC, banks are incentivized to take as much risk as possible, because the Fed guarantees their bailout.

No FDIC = real insurance = no zombie banks = no bailouts.

Yet another victim of central banking propaganda...

NuttBoxer says

RWSGFY says

This is precisely how the coveted "no FDIC" scenario looks like. What's so good about it?

FDIC exists to bail out the banks, not the users. Real insurance would be privatized, and would cost more the more leveraged the bank. Under FDIC, banks are incentivized to take as much risk as possible, because the Fed guarantees their bailout.

No FDIC = real insurance = no zombie banks = no bailouts.

Yet another victim of central banking propaganda...

Makes perfect sense. It's the banks, financial sector and corporations that own the world. Prove me wrong.

Misc says

Credit is simply going to dry up for a large swath of corporations.

Which will affect housing prices at some point.

How does an individual buy treasuries?

GNL says

Stacking PMs under your mattress might be a better option than cash.

What's PM?

gabbar says

What's PM?

Precious Metals

gabbar says

How does an individual buy treasuries?

Treasury Direct or brokerage account.

In order. Water. Food. Guns. Ammo.

Next level.... beer. Joking aside if you have the first 4 you're golden. Metals, dollars, bitcoin, etc. none of it matters if the stuff hits the fan. I can just kill you for your water, food, guns and ammo.

Not only the federal debt ceiling problem being in the next few days or weeks, but read the below articles.

Seems like the economy is not as great as it seems or being presented by the mainstream media.

For the Dems (and the establishment), they have to cause or time an inevitable crash no later than this fall so that they have enough time to convince the public that the economy has started a recovery by summer of 2024, or they prolong the crash until after November 2024.

https://thebrunswicknews.com/news/national_news/lines-stretch-down-the-block-at-food-banks-as-costs-go-up-and-pandemic-aid/article_ad007b21-07e2-5a81-a10c-222dea0d62b5.html

http://theeconomiccollapseblog.com/homeless-encampments-are-exploding-in-size-all-over-america-as-rents-soar-and-evictions-surge/

WookieMan says

In order. Water. Food. Guns. Ammo.

WookieMan says

I can just kill you for your water, food, guns and ammo.

That's why we should do all we can to preserve society. The world is dystopian enough without having to worry about marauding gunmen.

Alcohol, tobacco, and firearms will be better than gold when if cannibal anarchy arrives.

WookieMan says

Next level.... beer. Joking aside if you have the first 4 you're golden. Metals, dollars, bitcoin, etc. none of it matters if the stuff hits the fan. I can just kill you for your water, food, guns and ammo.

You've forgotten the most important thing, community. No one survives on their own. Don't be a lone wolf.

WookieMan says

In order. Water. Food. Guns. Ammo.

Next level.... beer. Joking aside if you have the first 4 you're golden. Metals, dollars, bitcoin, etc. none of it matters if the stuff hits the fan. I can just kill you for your water, food, guns and ammo.

Beer brewing will be a super power. Trading a few bottles will make up a lot of shortfalls or get some small favors done.

AmericanKulak says

rading a few bottles will make up a lot of shortfalls or get some small favors done.

Or get you to be the brewmaster slave for the local warlord. Just got to keep your quota low.

Misc says

Companies trying to roll-over their outstanding debt are gonna find that they just can't pencil in anything except for losses at these new rates. Credit is simply going to dry up for a large swath of corporations.

And then they will default on their debt and the shitstorm starts

NuttBoxer says

FDIC exists to bail out the banks, not the users.

and EBT exists to make WALMART and cohorts richer

HeadSet says

Or get you to be the brewmaster slave for the local warlord. Just got to keep your quota low.

Like Jesse on Breaking Bad

komputodo says

Like Jesse on Breaking Bad

Never saw that show. Sounds interesting, though.

I had to watch it through a few times to understand it's a family show more than anything. The American family is the core of that show, and what makes it so good. That and Walt being an ego-maniac.

gabbar says

How does an individual buy treasuries?

@gabbar You can buy them directly from the US government:

https://www.treasurydirect.gov/

I just saw on news that Argentina is near default. Not surprised since I remember going back at least 20 years that Argentina's credit worthiness was at significant risk.

https://www.bloomberg.com/news/articles/2023-05-10/argentina-is-going-broke-to-stall-a-full-on-currency-collapse

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How is bankpocalypse going? Any day now and we'll be eating each other?

At least the dollar is high in fiber, crypto got nothing!

GNL says

How is bankpocalypse going? Any day now and we'll be eating each other?

If anything the country is going to need to tighten its belt just like a household does in order to overcome harsh economic times.

I don't think its going to be that drastic though, as they'll make cuts in order to ensure a more sustainable debt to income (or GDP) and keep core CPI below 4%.

I saw Wolfman at Wolf Street website post today about the Fed Funds rate versus core CPI. I say be patient as more people get laid off and businesses close. It will force down core CPI as people get more innovative and productive in order to economically survive.

In the mean time, tts still good to learn homesteading skills. Do work and make repairs instead of hiring someone to do it. Grow your own food.

We are looking at growing sweet potatoes, russelt potatoes, tomatoes, cucumbers , strawberries, etc in those 20 gallon grow bags (fabric and non woven) sold on Amazon.

Maybe we'll grow shrimp in our garage since it is warm enough year round in the Florida panhandle.

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"Isolated Case".

Yeah right, the dollar amount of bank failures is equal - maybe it's surpassed - 2008.

AmericanKulak says

"Isolated Case".

Yeah right, the dollar amount of bank failures is equal - maybe it's surpassed - 2008.

Well, they didn't consider Lehman Brothers a bank, but it was in reality. That adds an extra $600 billion onto the 2008 failure assets (not adjusted for inflation).

I wonder if Schwab is down because of some fear associated with it being a bank (in addition to major brokerage). Its down about 52% from its all time high in January 2022.

Granted, some of this is due to relatively new competition from the new online brokerages like Robin Hood.

And there is not as many trades by retail investors compared to 2021 and 2021. I was trading a lot of options back then, and Schwab charges a fee for that (65 cents per option trade).

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AmericanKulak says

"Isolated Case".

Yeah right, the dollar amount of bank failures is equal - maybe it's surpassed - 2008.

2023 dollar ain't the same as a 2008 dollar. The number will most certainly be bigger, but it doesn't mean it's the same thing or will be as bad. Truth is our government told us to hide in our houses for 2 years and basically do very little. Not educate our kids properly. We really have no idea the long term consequences.

I think in history this will turn into "the lost decade" or something like that. We just go sideways for years though it feels like a recession. Biggest thing in our favor is demographics. And even the Democrats are realizing that we can't rely on foreigners for manufacturing things we use. These shortages have hurt both parties. It will take a decade to correct and get things being built here again.

China is dying off and their former one child policy will easily take two decades to unravel. The only reason China was a manufacturing behemoth was because they had a large 30-50 year old male population. It's not getting replaced any time soon. Wouldn't be shocked if China goes below 1B people by 2035. They could just throw low skill labor at their manufacturing. Now they can't find the bodies to do it.

I'm not super happy short term with Biden in the White House. But you have to look at other countries. Think of a Germany. They have no resources. Hell most of Europe doesn't. Russia, USSR or whatever future variation will always be incompetent. Whether they're winning or not they're killing off men that were needed for the future of Russia.

Banks and finances aren't really the issue. You need people that can work. The major super power countries outside of the US are losing work force numbers. Japan, S. Korea, China, Russia etc. have bad demographics. I haven't looked into the ME too much in that realm, but they have money shooting out of the ground and it's generally Western contractors doing the work. A place like Dubai or Abu Dhabi is all Western designed and built with slave labor. Muslims know how to build mosques and basic living facilities. Not these huge skyscrapers and the engineering that goes into making islands. They just have the money to pay other people to do it for them.

Regardless of debt and banking issues I think the US is in a decent spot to weather the storm outside of current leadership. Which Biden will likely take at least 2 years of the next administrations time to reverse. I wouldn't expect any uptick till at least 2026 and maybe longer. Sideways. The two big bank failures this time around were in CA. The other New York. I'm not going to bank at SVB if I move to Texas or Florida. A ton of super wealthy people are leaving these places. With that goes deposits.