A global recession is on the horizon - please read OP for mod warning

badboyblast · 13-03-2023 12:00am

Any sign yet lads? stick with it, ye will eventually be right

Cheerful S · 13-03-2023 12:00am

https://www.boards.ie/discussion/comment/120351284#Comment_120351284

There is a problem in that we haven't heard what the US government is guaranteeing here. How large is the loss? A few billion, is manageable, but imagine it is around 100 billion to 200 billion. The entire bank failed, so everything must be covered. Tomorrow we will see the risk. See a run on banks tomorrow that means depositors aren't happy about what they're hearing. No one can predict what will happen next though.

Timing belt · 13-03-2023 12:02am

https://www.boards.ie/discussion/comment/120351423#Comment_120351423

Yet again a bank that was heavily exposed to deposits from crypto. Fed have stepped in with emergency action…the market will see this as a sign of higher rates for longer.

realitykeeper · 13-03-2023 12:26am

Given the news about SVB and Silver gate Banks, concern about contagion is bound to arise.

These banks got into difficulty because they used deposits to buy bonds when interest rates were low and were forced to sell those bonds prematurely at a loss when depositors started withdrawing their cash.

People withdraw their money for many reasons, sometimes to pay higher interest on their debts or due to the rising cost of living or in the case of a bank run, because they are afraid. Whatever the reason, if the Irish banks both bonds with a low yields of interest when inflation was low, and are forced to sell (to cover withdrawals) when ECB rates are higher, they will incur a loss.

I guess what I am saying is banks should beware of taking savers for granting. Giving them derisory rates of interest on their savings will do little to endear savers to their banks.

Cheerful S · 13-03-2023 12:29am

https://www.boards.ie/discussion/comment/120351343#Comment_120351343

All of these banks have assets, so they aren't total washouts. You have to see what the US government is promising in terms of cash. You keep taking banks over by regulators, and this is a problem. There is high inflation and a running debt problem in the US economy. There is still a lot of work to be done in terms of managing these losses on the assets.A really interesting aspect of this affair is that regulators are now taking over banks to prevent a run on them. I am not aware that has happened before?

Ozark707 · 13-03-2023 12:41am

So with this bailout will the banks who now hold bonds that have lost a lot of value be made whole when the time comes? And the taxpayer is not picking up the tab, but the Fed instead?

Timing belt · 13-03-2023 12:43am

https://www.boards.ie/discussion/comment/120351552#Comment_120351552

It has happened before normally one or two small banks a year prior to 2016/17.

The real story isn’t contagion in the banks as fed stepping in to cover depositors. How are they doing it? Via a long term repo I.e a loan to the banks with bonds as collateral. Sounds similar to QE but funds should stay inside banking system. Will the market see this as inflationary is the real story because if they do and people expect higher rates than they did on Friday then you could see a big sell off

mike_cork · 13-03-2023 12:59am

Screenshot_2023-03-12-23-58-25-852_com.android.chrome-edit.jpg

I'm curious to see if any other big names will be caught up in the banking problems devolping in the us

Timing belt · 13-03-2023 1:01am

https://www.boards.ie/discussion/comment/120351596#Comment_120351596

Fed will give a loan for up to one year on the par value of the bonds and take them as collateral. So instead of buying bonds outright they are doing it via a loan….Wait for the headlines of fed pivot and more inflation as fed injects cash into banking system. So in short the taxpayer is not paying for it in taxes but may well pay for it at the checkout or via higher rates

the fed is following a BOE type "pivot". Only inject liquidity where needed, but continue hiking and (other than emergency adds) continue QT in background

Larbre34 · 13-03-2023 1:23am

If higher rates kill off poorly run and badly capitalised banks, thats no bad thing. Likewise for reckless crypto exposure.

Its all another wild west and it needs to be stopped. The US Government going after banks on the edge is a bold statement.

Jonnyc135 · 13-03-2023 9:38am

https://www.boards.ie/discussion/comment/120351394#Comment_120351394

You were on the money HSBC taking the UK arm. I don't think this will be the end of this though.

brickster69 · 13-03-2023 10:16am

I think the staff at First republic bank are going to be busy today. Looks pretty bad going by pre market trading.

Could be the 2nd, 3rd and 4th largest banks to of gone bust in US history, only took just over a weekend as well. FR is a retail bank also.

Wanderer78 · 13-03-2023 10:26am

interesting graph....

Timing belt · 13-03-2023 10:33am

https://www.boards.ie/discussion/comment/120352152#Comment_120352152

They should be ok as they secured funding from JPM so will be able to cover any deposits being withdrawn.

Jonnyc135 · 13-03-2023 10:36am

Some reversal of the 2yr - 10 year inversion in the last few days - markets pricing in QE and lower rates due to these banks which would lead me to believe the contagion may be worse the meets the eye.

If they have to go down the route of QE, lowering rates and possibly helicopter money due to another banking mess and recession at the same time as stubbornly high inflation, I think the gig is defiantly up - totally unsustainable.

Timing belt · 13-03-2023 10:39am

https://www.boards.ie/discussion/comment/120352227#Comment_120352227

Wait until market realises it’s not QE and rates still going up.

timmyntc · 13-03-2023 12:17pm

Any bailout or guarantee of investor deposits at SVB could in itself cause contagion as cash may flee other banks into the newly guaranteed SVB.

Why keep money above 250k in other banks if you could do same in SVB and have government insure your excess?

Early trading of major banks in Europe not good, not terrible.

Early US trading looking very bad.

Timing belt · 13-03-2023 12:27pm

https://www.boards.ie/discussion/comment/120352628#Comment_120352628

Yes caused major problems for Uk banks as caused a run on them

Timing belt · 13-03-2023 12:30pm

https://www.boards.ie/discussion/comment/120352603#Comment_120352603

yeah I imagine a lot of people shorting bank stocks which will drive down share prices and cause more problems….will probably see a short selling ban if it happens large scale.

brickster69 · 13-03-2023 12:36pm

https://www.boards.ie/discussion/comment/120352603#Comment_120352603

Wait till the trillions of USD currency swaps that need financing this year come into view. None of it on the banks balance sheets as well, crazy stuff and no one knows who even owes it for certain.

https://www.bis.org/publ/qtrpdf/r_qt2212h.pdf

Timing belt · 13-03-2023 12:38pm

https://www.boards.ie/discussion/comment/120352658#Comment_120352658

All of them saw massive outflows to Irish banks overnight…the ones that already had liquidity problems suffered the most

Timing belt · 13-03-2023 12:43pm

https://www.boards.ie/discussion/comment/120352672#Comment_120352672

totally separate issue and not one bit relevant which you would know if you understood the issue you are highlighting

realitykeeper · 13-03-2023 1:01pm

Now that Silicon Valley bank has collapsed, Janet Yellen says all depositors will get all their money back. She is not saying the US government is insuring all deposits in all bank accounts in the USA without limitation but it is obvious that is precisely what this means. So, what will happen when more banks fail? My guess is the US government will make depositors whole for the next bank or two that goes bust but then history is likely to repeat itself and the US government will not step in the compensate the depositors in a failing bank (it will probably be a big one). When that happens, there will be the mother of all bank runs across the planet. Some countries will be immune. Russia, for example.