tag:blogger.com,1999:blog-6616959642391988608.post6300497563199357446..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: More thoughts on the banking crisisScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger29125tag:blogger.com,1999:blog-6616959642391988608.post-53121497410395906672023-04-05T11:03:36.476-07:002023-04-05T11:03:36.476-07:00Off-Topic: Deflation in Artificial Intelligence.
...Off-Topic: Deflation in Artificial Intelligence.<br /><br />AI companies purchased for billions of $? Probably overpaid.<br /><br />https://newatlas.com/technology/stanford-alpaca-cheap-gpt/wkevinwhttps://www.blogger.com/profile/17600473578823788550noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-20995910624737542552023-04-03T17:37:14.066-07:002023-04-03T17:37:14.066-07:00https://jacobin.com/2023/04/inflation-falling-volc...https://jacobin.com/2023/04/inflation-falling-volcker-summers-housing-pce-cpi<br /><br />Worth reading. <br /><br />Inflation dropping quickly. <br /><br />Scott Grannis can (again) say, "I told you so." <br /><br />BTW, I work in SE Asia. Inflation is becoming deflation in parts of Asia. <br /><br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-38563658569499859742023-04-02T07:20:55.459-07:002023-04-02T07:20:55.459-07:00By now it's pretty apparent liquidity has inde...By now it's pretty apparent liquidity has indeed increased.<br /><br />Going forward, we will have Trump back in the race, which possibly means even more liquidity from the current administration for obvious reasons. This seems even more likely as savings ar drained toward 2H, together with other Covid policies.<br /><br />I'm not trying to be cynical or even political about it, simply Royhttps://www.blogger.com/profile/09325498485905547125noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-9760526700821065112023-04-01T07:39:30.308-07:002023-04-01T07:39:30.308-07:00Nouriel Roubini wrote a good article on the debt t...Nouriel Roubini wrote a good article on the debt trap we're now in, due to rising interest rates and the coming liquidity crisis due primarily to the banking crisis due to unrealized losses on treasuries. The feds patched it for now, by not forcing banks to mark to market which is the gold standard of liquidity. So unless banks have mostly 2 year notes and the next crisis doesn't Glennhttps://www.blogger.com/profile/03941828615434154861noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-9477279120285830952023-03-29T08:04:47.593-07:002023-03-29T08:04:47.593-07:00See the FED's reversal of QT:
https://fred.st...See the FED's reversal of QT:<br /><br />https://fred.stlouisfed.org/series/WTFSRFL#:~:text=Total%20factors%20supplying%20reserve%20funds%20are%20the%20sum,drawing%20right%20certificate%20account%2C%22%20and%20%22Treasury%20currency%20outstanding.Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-51037985949457024092023-03-26T09:01:15.121-07:002023-03-26T09:01:15.121-07:00See: Eric Basmajian
In the week ending March 15th...See: Eric Basmajian<br /><br />In the week ending March 15th, other deposits at all domestically chartered banks declined by $60 billion.<br /><br />Other deposit liabilities "ODL" strips out large-time deposits and money market funds.<br /><br />Other deposits at large banks increased by $65 billion, while other deposits at small banks declined by $125 billion.<br /><br />Over the lastSalmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-65676395354569603962023-03-25T14:39:32.020-07:002023-03-25T14:39:32.020-07:00MMMFs are intermediaries. Theoretically, they cou...MMMFs are intermediaries. Theoretically, they could create money, but in practice they don't.<br /><br />Any institution whose liabilities can be transferred on demand, without notice, and without income penalty, via negotiable credit instruments (or data pathways), and whose deposits are regarded by the public as money, can create new money, provided that the institution is not encounteringSalmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-13027000065771057752023-03-23T18:11:54.840-07:002023-03-23T18:11:54.840-07:00Thank you Salmo ... There is one other thing that ...Thank you Salmo ... There is one other thing that you say, i.e. "Savers never transfer their savings outside the banks", which I understand on the system wide basis. But by Savings are you including money market funds (in Repo or other)? Does this hinge on whether they are money market accounts (at banks) vs money market funds (not at banks)?Richard H.https://www.blogger.com/profile/11837604197337217284noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-2819688201720370712023-03-23T06:34:03.421-07:002023-03-23T06:34:03.421-07:00The same as bank reserves. Remember that "ex...The same as bank reserves. Remember that "excess reserves" is an accounting concept, not a physical item. The physical item (asset) is deposits at Fed Res BanksSalmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-28543712691158266012023-03-22T10:05:48.095-07:002023-03-22T10:05:48.095-07:00Hello Salmo, are IBDDs interbank demand deposits? ...Hello Salmo, are IBDDs interbank demand deposits? Is that the same as excess reserves, or Federal funds? <br />Thanks.Richard H.https://www.blogger.com/profile/11837604197337217284noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-24916040363391196412023-03-22T09:27:07.459-07:002023-03-22T09:27:07.459-07:00@Benjamin Cole:
re: "effects of how housing ...@Benjamin Cole:<br /><br />re: "effects of how housing costs are measured.."<br /><br />Bankrupt-u-Bernanke caused the GFC all by himself. #1 Bernanke drained legal reserves for 29 contiguous months, turning otherwise safe assets into impaired assets. # Bernanke remunerated IBDDs, destroying the nonbanks. I.e., long-term money flows fell.<br /><br />Today we have the opposite Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-38870184371951660242023-03-22T07:32:14.963-07:002023-03-22T07:32:14.963-07:00minnesota nice,
If the Fed pauses here/cut the ma...minnesota nice,<br /><br />If the Fed pauses here/cut the market would probably view it as a statement that there's something wrong with the economy and a recession is around the corner.<br /><br />The Fed is not using Scott's metrics, it uses its own + plenty of politics.Royhttps://www.blogger.com/profile/09325498485905547125noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-12825520014269641342023-03-22T00:14:56.298-07:002023-03-22T00:14:56.298-07:00Another great post by Scott Grannis.
BTW, the Cat...Another great post by Scott Grannis.<br /><br />BTW, the Cato guy says inflation nearly dead already...we are seeing lag effects of how housing costs are measured...<br /><br />https://www.econlib.org/is-inflation-high-not-according-to-the-producer-price-index/<br /><br />worth pondering....Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-51349691825232038612023-03-21T17:49:23.801-07:002023-03-21T17:49:23.801-07:00If the Fed increase rates, wouldn't that possi...If the Fed increase rates, wouldn't that possible decrease the long term treasuries because of a fear of recession (giving us a deeply inverted yield curve). On the other hand, if the fed decreases rates, wouldn't that be seen (rightly or wrongly) as inflationary and, thus, long term rates would increase?minnesota nicehttps://www.blogger.com/profile/00727666702361173951noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-44774508278818956322023-03-21T13:37:46.030-07:002023-03-21T13:37:46.030-07:00I agree that this is essentially a government inco...I agree that this is essentially a government incompetency issue, but it is not entirely the FED's. Dodd-Frank over emphasized credit risk and left out duration risk. With deposit insurance there is more incentive to reach for yields. Whatever the government does, it is always rear-view mirror driving and creates new problems. SVB mgt went for risk-safe higher yields but incurred massive Jimhttps://www.blogger.com/profile/06973763424450222215noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-84862488777742422012023-03-21T08:44:41.389-07:002023-03-21T08:44:41.389-07:00Scott,
This is excellent. 100% agree. It is amazin...Scott,<br />This is excellent. 100% agree. It is amazing to me that the Fed is going to raise rates tomorrow to hit the 4.75-5.00% mark. Looks like 80% probability--see below. The Fed has caused this crisis by leaving rates low for a long time, engaging in substantial quantitative easing, and then jacking rates up at nearly the fastest in history. If one looks at SVB's balance sheet and NIM, DanQhttps://www.blogger.com/profile/18009589414137471279noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-83181035038960912122023-03-21T06:40:01.434-07:002023-03-21T06:40:01.434-07:00Powell is dangerous. Powell doesn't know what ...Powell is dangerous. Powell doesn't know what he's doing. With the Continental Illinois bailout, reserves were "washed out".Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-89337481796381488782023-03-21T05:41:12.252-07:002023-03-21T05:41:12.252-07:00S&P is back over 4000 as of this writing. Unle...S&P is back over 4000 as of this writing. Unless there's a massive drop by the market's close it's pretty much certain they would raise tomorrow by 0.25.<br /><br />And, if the market likes that and keeps going up, then next time might be 0.5...Royhttps://www.blogger.com/profile/09325498485905547125noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-40164139764016134852023-03-21T05:37:03.410-07:002023-03-21T05:37:03.410-07:00It looks like all deposits will be guaranteed and ...It looks like all deposits will be guaranteed and the only way to achieve that is by printing a lot more when banks fail.<br /><br />That 300B is just the beginning.Royhttps://www.blogger.com/profile/09325498485905547125noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-87129612436836942872023-03-21T05:32:09.131-07:002023-03-21T05:32:09.131-07:00A universal guarantee on all bank deposits, like d...A universal guarantee on all bank deposits, like during the GFC, will reduce the supply of loan funds, will reduce the transaction’s velocity of funds, will reduce the real rate of interest, and thus will lower R-gDp and raise the Federal Deficit.<br /><br />The FED’s Ph.Ds. don’t know a debit from a credit, a bank from a nonbank.Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-66216648925423986012023-03-20T14:09:32.569-07:002023-03-20T14:09:32.569-07:00See: Monetary Tightening and U.S. Bank Fragility i...See: Monetary Tightening and U.S. Bank Fragility in 2023: Mark-to-Market Losses and Uninsured Depositor Runs?<br />SSRN-id4387676.pdf<br /><br />Grannis is right. But N-gDp is still too high. The FED is doing things backwards. You drop interest rates and drain reserves at the same time. I.e., by driving the banks out of the savings business, you increase the supply of loanable funds, but not Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-8061658795634730742023-03-20T13:29:52.254-07:002023-03-20T13:29:52.254-07:00re: "moving the country in the direction of a...re: "moving the country in the direction of a national bankruptcy"<br /><br />Yes, the FED is operating the economic engine in reverse.Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-56212274976294130462023-03-20T10:50:53.166-07:002023-03-20T10:50:53.166-07:00We live in extraordinarily dangerous financial tim...We live in extraordinarily dangerous financial times and the more the Fed/admin steps in to "Save" us, the worse the risk gets.stevehttps://www.blogger.com/profile/07387986994469835875noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-65316998900213222082023-03-20T10:49:17.826-07:002023-03-20T10:49:17.826-07:00An absolute MUST read:
https://www.ftportfolios.c...An absolute MUST read:<br /><br />https://www.ftportfolios.com/retail/blogs/economics/index.aspxstevehttps://www.blogger.com/profile/07387986994469835875noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-55988067058723414502023-03-20T06:47:17.715-07:002023-03-20T06:47:17.715-07:00This morning WSJ has an opinion piece that asks yo...This morning WSJ has an opinion piece that asks you to imagine that, instead of SVB, the regional bank in trouble was in Houston, and served a tight night group in the fracking industry. How likely would it be the Fed would behave the same? Not hard to imagine. The article also highlights how the SVB bailout saves not just the bank but the California economy as well.<br /><br />https://randyhttps://www.blogger.com/profile/16368254229927808998noreply@blogger.com