As With Every Financial Crisis, The Central Bank Sets The Stage For A Collapse
A weekend topic starting with Global Finance. “Avaya Holdings Corp, Tuesday Morning, Sorrento Therapeutics—what’s the common thread between these very different companies? Within a few days, the three of them went bankrupt. ‘We have had almost unlimited credit for 10 years,’ reinforces Jim Baer, president of CMBG Advisors in Los Angeles. ‘Quantitative easing has flooded the economy with low interest rates. In 1998, we had cumulative deficits of $6 trillion, in 20 years we have added $25 trillion. That’s not sustainable, the party is over.'”
“Ronald Winters and Clare Moylan, principals at Gibbins Advisors, noticed filings of large healthcare corporations in the fourth quarter of 2022 that were three times higher than during the first quarter year-to-date. Hospitals and nursing homes suffer from higher labor costs and ‘they used the cash that the government sent during the pandemic.’ Biotech companies are also at risk, but for a different reason. ‘They used to raise large amounts of capital because market conditions were so good,’ says Moylan. ‘Pharmaceutical companies could basically burn all that money until the commercialization of their product.’ Not anymore—’the balloon burst.’ Chapter 11 seems to be back on the horizon.”
The Washington Examiner. “A coming crunch in the commercial real estate market could spell trouble for banks that sunk lots of money into commercial real estate loans over the past several years. ‘Joel Griffith, senior fellow for economic policy studies at the Heritage Foundation, blamed ‘cheap money and excessive money printing’ for the burst of commercial real estate investment. ‘Why were commercial real estate values increasing at a time when we had vacancy rates increasing?’ Griffith told the Washington Examiner. ‘That’s because of the Fed.'”
From Bisnow London. “A harsh spotlight has been turned on the commercial real estate loan books of U.S. regional banks in the past fortnight. The question now for UK real estate is, will the same problems be repeated here, or manage to cross the Atlantic? First, landlords should expect some pain and equity should expect to take losses. For some of those whose loans were based on aggressive pre-2022 valuations, it could be curtains. Academics at business school Bayes looked at European bank lending and concluded that German lenders might be a potential source of stress in the UK and European lending market.”
“‘German bank lenders still offer some of the highest LTV for investment assets (between 75% and 80%) and loan-to-cost for development lending (between 77% and 82%),’ Bayes said. ‘Other European bank lenders have been more conservative (between 55% and 60% LTV and 60% and 75% LTC).’ The implication is some of these loans are likely to be underwater if valuations are under pressure. Alongside German banks, another area to watch is debt funds and nonbank lenders.”
The Epoch Times. “During a Feb. 28 speech by FDIC Chairman Martin Gruenberg, he casually admitted that ‘Unrealized losses on ‘available for sale’ and ‘held to maturity’ securities totaled $620 billion in the fourth quarter.’ At the time we thought Gruenberg’s estimate of unrealized losses for the banking system was remarkably small. Unfortunately, we may have been right. A study released on March 13th took a deeper look at the unrealized losses banks were likely holding. The study found that actual losses to banks’ security holdings were $780 billion, versus the $620 billion estimated by the FDIC.”
“But the authors went deeper, rightly noting, ‘Loans, like securities, also lose value when interest rates go up.’ They found that total unrealized losses as of December 2022 were $1.7 trillion. In a chilling warning, the authors noted that ‘the losses from the interest rate increase are comparable to the total equity in the entire banking system.’ We’re not out of this banking crisis. In fact, it may be just the beginning.”
Mansion Global on California. “A new Los Angeles mansion tax, to be enacted April 1, will require sellers to pay 4% on sales of homes priced between $5 million and $10 million, and 5.5% on sales of properties at $10 million or above. The looming tax has helped some sellers get on the same page as buyers about pricing, after months of failing to meet in the middle, said The Agency co-founder Billy Rose. That is especially true of developers, many of whom planned their projects under a wholly different calculus, when the market was hot, he said. ‘A lot of these houses were conceived when the market was kind of go-go and escalating,’ Mr. Rose said. ‘Now, [developers are] hemorrhaging money and getting cold feet about holding on to these properties.'”
The Copenhagen Post. “Ah well, they were good times while they lasted. Following a decade of furious development, the housing market now finds itself in a downward spiral. According to figures from Danmarks Statistik, not only have prices plummeted for houses and apartments across the country, but the sale of housing has also faded significantly.”
“‘All of the country’s regions saw a decline in housing prices from the fourth quarter of 2021 to the fourth quarter of 2022,’ wrote Danmarks Statistik. ‘The biggest price decline for single family houses was in Bornholm at about 15 percent, followed by Copenhagen (8.7 percent) and north Zealand (7.6 percent). The lowest fall was registered in north Jutland at 2.4 percent. On average, the decline in house prices nationally was 6.2 percent.'”
“Apartment prices also dipped nationally by 5.3 percent last year – Funen was hit particularly hard with a downturn of 11.2 percent, while Copenhagen sustained less ‘damage’ at about 4 percent. Housing sales overall have also been impacted by rising inflation and interest rates. As a result, demand has plummeted. Nationally, the number of house sales dropped by 30 percent – a figure that was even more pronounced in the capital at about 40 percent. A similar trend was seen with apartments. The number sold nationally fell by 35 percent last year.”
The Sydney Morning Herald in Australia. “After the shock collapse of the country’s 12th-largest home builder on Friday, Porter Davis clients are scrambling for legal advice and answers, while some claim their unfinished homes have been damaged and looted overnight. Suzi Ralph, who has been living in a rental with her husband and two children while their home was being built in Warranwood, said her family had spent $900,000 on their Porter Davis build before the company folded. Ralph’s is one of about 1700 properties that were started by the Melbourne-based builder but are now left unfinished. Contracts had been signed for another 800 future homes but work had not started.”
“Ralph, 42, who is currently travelling in Japan, said her neighbour sent photos on Saturday showing someone taking supplies from her property. ‘I have no idea what I can do, if it legally is ours or [if it is] the contractor who hasn’t been paid,’ she said. ‘We thought our money would be safe. I’m paying $7000 a month in rent and mortgage repayments and funding the build at the same time. I’m bleeding money.’ They have paid the lock-up invoice, but cladding isn’t finished, the front isn’t rendered, there’s no roof on the garage, no appliances, toilets or cabinetry and plaster work is damaged from a leaking roof.”
“In Struthtulloh, in Melbourne’s outer-west, Kim Misic has hired a security fog machine and changed the locks on their Porter Davis property, concerned it could be broken into and damaged. She is worried about how they are going to finish the house, if they lose their money. ‘We are pretty much paying a full mortgage on it. I’m currently on maternity leave, we are living on one wage with two young kids. It’s all just very scary. It’s very hard for us to think about what the future is going to look like,’ she said. ‘If someone was to break into that property, we’d have to pay for that and that’s money we don’t have to spare.'”
“For Lina, who spent inheritance money from her mother on her Truganina property, the collapse of the builder is emotional. On Saturday, she said her son saw a disgruntled tradie throwing bricks through other half-finished Porter Davis builds. ‘Everyone is angry, it’s not just the homeowners. No one wants to go to work for nothing. My son stopped him and had a chat and said, ‘this was not going to help anyone,’ she said.”
“Mother-of-two Nadya Krienke-Becker said they were building their ‘dream home’ in Bayside. Their slab had been laid, and they were told the frame would go up after Easter. ‘The whole thing is a debacle. None of us know what’s next. Then the staff, suppliers, tradies. The impact on the economy. People think it’s 1700 families, but it’s not. It’s a far bigger ripple effect. There are a lot of people who woke up today and do not know how they are going to feed their families. That’s horrendous.'”
From Mises.org. “In the midst of the panic, Credit Suisse’s CEO, Ulrich Koerner, offered an insightful public statement: ‘Our capital, our liquidity basis is very very strong,’ Koerner said. ‘We fulfill and overshoot basically all regulatory requirements.’ This was perhaps one of the only factual statements uttered across global financial media during the chaos, amid a flurry of mainstream analysts begging for Credit Suisse’s rescue while conversely claiming that this rescue posed no threat to the global financial system.”
“Despite its reputation as a tax haven, the Swiss banking industry is one of the most regulated financial sectors on Earth, with countless stringent requirements established in the name of protecting the solvency of the financial system, all of which Credit Suisse dutifully adhered to. Yet the bank completely imploded, proving that these regulations were at best, useless, and at worst, directly responsible for its woes.”
“As with every financial crisis, the central bank sets the stage for a collapse by creating untenable economic conditions in the form of an artificial boom fueled by a drastic increase in the money supply. The SNB’s near-fifteen-year suppression of interest rates directly lowered the returns on fixed-income assets, which form the bulk of every bank’s portfolio, dramatically diminishing profitability in the Swiss banking sector.”
“More importantly, the SNB’s distortion of markets resulted in all kinds of financial absurdities, such as negative-yielding 50-year government bonds, 0 percent unsecured corporate bonds, and near–0 percent mortgages. These malinvestments never would have come to life without the SNB’s intervention, but year after year of low interest rate, zero interest rate, and negative interest rate policies have resulted in Swiss markets pricing themselves upon the lowest rates seen in five thousand years, a recipe for disaster.”
“While the yields on Credit Suisse’s assets continually fell as the suppressed-rate environment dragged on, the vulnerability of its portfolio to a rise in interest rates increased. Anyone with a shred of common sense questioned the sustainability of keeping rates so low for so long, but as always, state officials justified their delusion through convoluted academic dogma.”
“To any proponent of the Austrian school of economics, this is yet another example that can be added to the list of countless business cycles that have proven the validity of Austrian business cycle theory: The Swiss government and the SNB intervened in the economy in the name of fostering prosperity. Their intervention fueled a bubble of malinvestment in low-yielding assets. Their attempts to slow the resulting uncomfortable rise in prices without causing a recession were futile as the bubble popped, and the illusionary house of cards they had erected collapsed before their eyes.”
“The dissolution of Credit Suisse is far from the end of this business cycle’s financial crisis, as negative interest rate policies were not unique to Switzerland, having been implemented across Europe and in Japan.”
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The first link is worth reading in full, as is the Epoch Times article. It covers the SVB crater well.
‘A lot of these houses were conceived when the market was kind of go-go and escalating,’ Mr. Rose said. ‘Now, [developers are] hemorrhaging money and getting cold feet about holding on to these properties’
I’ve got lots of articles on this LA thing, but Billy hit it right: there was a really dumb yuuge mansion boom a few years ago and that’s what led to this. The tax just put the exclamation point on it.
A friend who lives in Highlands Ranch said a lot of 30-something couples moved into McMansions with huge windows & cathedral ceilings, and now they are paying out huge monthly utility bills while keeping their shacks uncomfortably cold. Who is going to buy those white elephants if heating & cooling costs become even more prohibitive?
white elephants
If the past is any indication, they’ll be bought for 1/10th of replacement cost and there will be half a dozen electric meters on the side. That assumes they were built to last for centuries.
“Who is going to buy those white elephants if heating & cooling costs become even more prohibitive?”
https://twitter.com/FromKulak/status/1641942281115648000
Thread
CatGirl Kulak 😻😿 (Anarchonomicon) @FromKulak
🧵The Next Great Housing Crash 🧵
1/ [- 15/]
Housing Is America’s most important asset.
Decades of savings are in the average American’s home, and mere renovations are now major investments on the scale of what houses once were
It wasn’t always like this. And It won’t be much longer
5:15 PM · Mar 31, 2023 · 143.9K Views
The local zoning board might not allow that…citiations up the wazoo for the owner …
zoning board
It is what happened to most of the old Victorians here, even in the Historic District.
“Who is going to buy those white elephants if heating & cooling costs become even more prohibitive?”
– Never mind HVAC $…
https://twitter.com/texasrunnerDFW/status/1641796993910554624?cxt=HHwWgIC-9drq6sgtAAAA
Amy Nixon @texasrunnerDFW
Demographics—stop using the SIZE of the millennial generation as a housing demand argument
Look at the MAKE UP of it
70% have 100k+ of non-mortgage debt
56% are unmarried
45% have no kids and 44% of those don’t plan to
Who’s buying 21 million McMansions?
1/2
7:38 AM · Mar 31, 2023 · 119.1K Views
—
https://twitter.com/texasrunnerDFW/status/1641796996372525056
Amy Nixon @texasrunnerDFW
48% of millennials already own homes
They’re likely married with two solid incomes & children
Who’s left? More likely the ones with more debt, lower income, unmarried, no kids
So again, I ask, who in this group is buying 20 million boomer McMansions in the next 10 yrs?
2/2
7:38 AM · Mar 31, 2023 · 14.2K Views
Three 3rd world immigrant families per McMansion
Local zoning board not gonna allow that for even one minute in a McMansion town…
Local zoning board not gonna allow that for even one minute in a McMansion town…
They allowed Airbnb and Uber/Lyft.
In the 2008 crash, it was the subprime borrower who got all the blame, but 2023 may become even more interesting. You need to pay 5800 a month to live in my humble neighborhood.
Those ingested mansions are going to need a 50% haircut before rational people start looking again.
Don’t buy till 25.
“…huge windows & cathedral ceilings…”
“Pride goeth before destruction, and an haughty spirit before a fall.” —Proverbs 16:18
‘We thought our money would be safe. I’m paying $7000 a month in rent and mortgage repayments and funding the build at the same time. I’m bleeding money’
Well Suzi, Jerry said housing need a reset. Serprize!
“the front isn’t rendered, there’s no roof on the garage, no appliances, toilets or cabinetry and plaster work is damaged from a leaking roof.”
That’s on hell of a punch list.
My comfy early-’90s rental doesn’t have any of those issues. Just sayin’….
‘They found that total unrealized losses as of December 2022 were $1.7 trillion. In a chilling warning, the authors noted that ‘the losses from the interest rate increase are comparable to the total equity in the entire banking system’
No mention of this in the globalist scum media. I wonder why?
The FDIC only has enough funding allocated to cover 1.26% of insured depositors, yet Yellen the Felon has pledged to cover all deposits, even those vastly exceeding $250K, in “systemically important” banks. Translation: account holders at small & regional banks in flyover country can color their money gone if bank runs turn to bank sprints.
small & regional banks
will be absorbed by the few big banks.
Problem solved!
It means no QT as they hold those securities to maturity…or marked to market at the foreclosure sale …
You will own nothing.
It all belongs to Zelensky.
“It all belongs to Zelensky.”
Wall street’s global banks own Zelensky, and Ukraine is just a stepping stone on the path to Russia’s vast gas, oil and mineral wealth likely worth hundreds of trillions.
Business Insider
Markets are headed for a rally right before a recession ‘pounds away at the economy,’ JPMorgan Asset Management CIO says
Morgan Chittum
31 March 2023, 22:30
Markets are headed for a rally right before a recession ‘pounds away at the economy,’ JPMorgan Asset Management CIO says
Investors should not lean into the fleeting rally next quarter amid a looming recession, JPMorgan’s Bob Michele says.
“If we’ve been taught anything this past month, you may see it coming or you may not.”
Markets are headed for a brief rally before an inevitable slowdown in the economy, according to JPMorgan Asset Management CIO Bob Michele.
…
https://finance.yahoo.com/news/markets-headed-rally-recession-pounds-033003808.html
5 must-see charts that show why the economy is barreling toward disaster — putting stocks at risk for massive declines
William Edwards
Apr 1, 2023, 5:45 AM
…
https://www.businessinsider.com/stock-market-crash-recession-outlook-banking-crisis-indicators-sp500-charts-2023-3
Paywall.
“But the yields are currently inverted at a deeper level than they have been in at least 40 years. Right now, a 3-month bill yields 4.8%, while a 10-year note yields 3.5%.”
Houston, we have a problem.
Yes Professor, this is a classic bear market enticing unwary gamblers to get back in the game. S and P 4100. Nine stocks taking up most of the volume. Big drop guaranteed by October.
Maybe they’ll hit 4300 before Wiley Coyote takes a fall.
Why is it you hear so many stories about this I wanna noo house just before muh babie #3 is born………Cant you wait until you are actually living in he finished house?????/
————
We are pretty much paying a full mortgage on it. I’m currently on maternity leave, we are living on one wage with two young kids. It’s all just very scary.
A reader sent these in:
Auto loans 60 days+ delinquent have hit a record high per Auto Finance News
https://twitter.com/DonMiami3/status/1641479858034286592
Vacancy rates taking off like a rocket
https://twitter.com/GRomePow/status/1641209303326691328
hello
https://twitter.com/INArteCarloDoss/status/1641753396448317441
French Food Consumption
Real Terms
m/m : -1.5%
Y/Y :-9%
Back to July 2007 Level.
https://twitter.com/NicolasGoetzman/status/1641696526383677440
So incompetent and out of touch, yet they keep getting promoted and celebrated. Worth mentioning that Mary C Daly, Yellen’s protégée at SF Fed, was promoting diversity while FDIC was primed to get robbed of $ 25 b by SVB’s VC overlords! Terrific
https://twitter.com/INArteCarloDoss/status/1641696864645914625
Here’s what I don’t miss on this last Friday of Q1
A year ago, inflationistas were howling about the money supply. Now that it’s the most negative since 1930 (hat tip Lacy) I can’t hear a damn thing
Despite the deflationary warning bells ringing, it’s somehow quieter on my feed
https://twitter.com/DiMartinoBooth/status/1641793493004681216
A real estate agent we worked with 6 years ago just texted me
She’s really scraping the bottom of the barrel there
Feel free to make some big trades based of this information, I don’t mind
https://twitter.com/buccocapital/status/1641883006607544326
Rent for $1,900 or buy and pay 5k a month for 30 years?
https://twitter.com/NipseyHoussle/status/1641884722677575689
“U.S. Has 3rd Lowest Percentage Of Households That Own Their Homes Free And Clear Without Mortgages”
https://twitter.com/JohnWake/status/1641827042571460609
941,000 multi-family units under construction, ready to hit a market that is contending with a 6.32% mortgage rate, with bank lending standards tightening post-SVB. I suspect we will have to contend with this tough residential real estate market for some time.
https://twitter.com/JeffWeniger/status/1641798540501434370
The median age of first-time buyers jumped from 29 in 1981 to 36 in 2022 — the oldest in the National Association of Realtors’ records.
https://twitter.com/unusual_whales/status/1641762512948576258
Page One of the @MiamiHerald today has a piece about how property insurers in #Florida can’t hike premiums fast enough.
https://twitter.com/carlquintanilla/status/1641451266789486593
If you think the Commercial Real Estate crisis won’t spill over to Residential Real Estate, then I got a skyscrapper to sell you 😂
https://twitter.com/agnostoxxx/status/1641804579753934851
Cramer now pushing office reits
https://twitter.com/zerohedge/status/1641797805495779328
The 3-Month Treasury bill yield of 4.97% is now 1.42% higher than the 10-Year Treasury bond yield (3.55%). With data going back to 1962, only March 7, 1980 (recession: Feb-Jul 1980) had a more inverted yield curve than today.
https://twitter.com/charliebilello/status/1641889053103513600
Average 30-Year Mortgage Rate in the US…
1970s: 8.9%
1980s: 12.7%
1990s: 8.1%
2000s: 6.3%
2010s: 4.1%
2020s: 4.0%
All-Time Low (Jan 2021): 2.65%
Today’s Rate: 6.32%
https://twitter.com/charliebilello/status/1641828668468248576
big news! i finally finished paying off the latte i bought in November with financing
financial freedom is alive and well
https://twitter.com/0xgaut/status/1641848243389706240
“Microsoft, $MSFT, was paying $90 an hour for contractors during the height of job hiring in 2021, and now you’re routinely seeing $45 an hour for someone with PhD experience,” per Bloomberg.
https://twitter.com/unusual_whales/status/1641790195396911112
This is incredible: In California, the median home value is $720,000, which comes with a typical annual payment of $55,000 for a new buyer.
This means that the median new buyer is spending ~63% of their income on home payments. This is by far the highest percentage of income required to buy a house out of any state. Montana is a distant second with 52% income used on a median home payment. Americans are struggling to buy houses.
https://twitter.com/KobeissiLetter/status/1641877969780998144
OUCH! Charles Schwab stock is having its worst month since 1987 as depositors are pulling money from bank’s account searching for higher yields, depriving Schwab of cheap funding and putting pressure on earnings.
https://twitter.com/Schuldensuehner/status/1641829922724360193
‘This means that the median new buyer is spending ~63% of their income on home payments. This is by far the highest percentage of income required to buy a house out of any state’
Sound lending!
The majority of Californians are on the fast track to bankruptcy.
Well it’s not so bad being homeless. A cop friend told me in LA the homeless were given free tents. So the homeless males used the tents to prostitute out mentally ill women.
I truly can’t figure out why more people aren’t homeless in LA with runaway home values.
I truly can’t figure out why more people aren’t homeless in LA with runaway home values.
The official numbers vastly underreport the true quantity of homeless. Remember all those people camped along the banks of the Santa Ana river? And that was in Orange County, just a stone throw away from Disneyland. T
Lots of people are sitting on insanely cheap payments. The little my parents pay for their beach house is shocking. There are millions like them, sitting on cheap payments, 2.5% interest rates, and massive equity.
Not sure who will come up behind them, though. They balk when I explain I cannot afford $6,000 per month for a 2 bed 1 bath post WW2 shack. But prop 13 they exclaim!
Sustainable…not!
“Rent for $1,900 or buy and pay 5k a month for 30 years?”
There’s a no-brainer!
That’s about the exact math I was faced with when I signed a year rental lease. I happily stack the dollar difference each month when I pay my bills.
“Auto loans 60 days+ delinquent have hit a record high per Auto Finance News”
Used prices are slipping, but not fast enough.
Auto loans 60 days+ delinquent have hit a record high per Auto Finance News
So people can’t afford $1000 a month car payments? I’m sure no one saw that coming.
“Cramer now pushing office reits”
Now there’s a sure loser. Insurance companies and small banks would love to unload their office holdings. The fed will likely be the buyer of last resort.
Dumver city hall wants to repurpose them as housing fo rthe homeless. What could possibly go wrong?
Denver is a SH*T HOLE.
Literally: FECES and NEEDLES.
BTW amazing ski conditions today, and this is 100+ from the I-70 corridor and all the Dumverites who like waiting in 30 minute lift lines.
French Food Consumption
On the bright side, they’re gonna be thinner.
The generation that came of age during the Great Depression lived longer, because they tended to eat sparingly and get plenty of exercise on the available jobs.
“Microsoft, $MSFT, was paying $90 an hour for contractors during the height of job hiring in 2021, and now you’re routinely seeing $45 an hour for someone with PhD experience,” per Bloomberg.
Your pedigrees don’t carry that much weight in coding. Experience in a hot specialty matters a lot more.
That said, I don’t expect there will be a lot of people getting raises this year.
“big news! i finally finished paying off the latte i bought in November with financing”
Snort 🙂
Did ‘ya use a balance transfer credit card? 🙂
We paid 10% interest on a Va loan in the 70’s
Did your house cost 2.5 x income, or less?
This Trump Stormy thing is taking stories off the front page just like when Slick Willy got in trouble and started firing Cruise Missiles at Bin Laden.
Exclusive—Anatomy of a Biden Family Business Deal: Get Son Hunter or Sister Valerie to Sign ‘on Behalf of the VP’
SEAMUS BRUNER
1 Apr 2023
Former U.S. Senator Ted Kaufman (D-DE)—a longtime Biden associate—was central to the Bidens’ academic negotiations. In an August 30, 2016, email, Kaufman advised Team Biden: “When it comes to the [UD Memorandum of Understanding] MOU, probably less detail about what we are doing the better.”
In an email on August 9, 2016, longtime Biden business associate Eric Schwerin related to the Bidens his conversation with “Alan,” who appears to be UD’s Executive Vice President of Finance and Facilities, Alan Brangman:
I just got off the phone with Alan at UD. I was doing some follow up with him per our last call. Few things we discussed.
1) To confirm, the budget for the Biden Center is $2.5m a year for five years. For a total of $12.5m over the five years. I know there was some question about that. [Emphasis added]
2) They are happy on their end to have consulting contracts for the employees of the Center. They have cleared that on their end. The consulting contracts can begin once we finalize the MOU and then the clock will begin ticking on the $2.5m budget for year one. So, it is up to us how much the consulting contract is for as long as it is within budget and can be justified vis a vis other consulting contracts.
3) That $2.5m budget include salaries, benefits and operational expenses. So, if the Biden Center wants to put together a series of seminars, the funding for those seminars would come out of the $2.5m. The Biden Center can get sponsors to defray some costs, but we should keep in mind that the whole $2.5m can’t be spent on salaries. We need to start thinking programmatically what the Biden Center would do in year one and how much it might cost. Then we’ll know what we are left with for salaries/consulting contracts. [Emphasis added)
4) The counter-party to the MOU in UD’s mind would not be the VP personally but could be the Biden Foundation or potentially a family member signing on behalf of the VP (Hunter or Val?). We should discuss who we want it to be.” [Emphasis added]
This email from Eric Schwerin, who is now cooperating with the congressional committee that is investigating the Biden family’s foreign business dealings, confirms that the Biden academic venture at the University of Delaware would provide up to $12.5 million in cash to directly fund the Bidens’ plans there.
https://www.breitbart.com/politics/2023/04/01/anatomy-of-a-biden-family-business-deal-get-son-hunter-or-sister-valerie-to-sign-on-behalf-of-the-vp/
The Trump indictment is a distraction. Keep yer eyes on the magician’s hands, not the hottie helper’s bodacious ta-tas.
There might be more magic in those bodacious ta-tas.
It’s April Fool’s Day, so you can safely ignore gloomy financial advice.
There will be no new financial crisis in our time, per that most peerless of prognosticators, Janet Yellen. She’s got models & stuff….
Ms Yellen will give us cookies and print a couple trillion in her basement. Do you want soy milk or regular with your chocolate chip?
From Mises.org. “As with every financial crisis, the central bank sets the stage for a collapse by creating untenable economic conditions in the form of an artificial boom fueled by a drastic increase in the money supply. The SNB’s near-fifteen-year suppression of interest rates directly lowered the returns on fixed-income assets, which form the bulk of every bank’s portfolio, dramatically diminishing profitability in the Swiss banking sector.”
“More importantly, the SNB’s distortion of markets resulted in all kinds of financial absurdities, such as negative-yielding 50-year government bonds, 0 percent unsecured corporate bonds, and near–0 percent mortgages. These malinvestments never would have come to life without the SNB’s intervention, but year after year of low interest rate, zero interest rate, and negative interest rate policies have resulted in Swiss markets pricing themselves upon the lowest rates seen in five thousand years, a recipe for disaster.”
“To any proponent of the Austrian school of economics, this is yet another example that can be added to the list of countless business cycles that have proven the validity of Austrian business cycle theory: The Swiss government and the SNB intervened in the economy in the name of fostering prosperity. Their intervention fueled a bubble of malinvestment in low-yielding assets. Their attempts to slow the resulting uncomfortable rise in prices without causing a recession were futile as the bubble popped, and the illusionary house of cards they had erected collapsed before their eyes.”
—
https://www.oftwominds.com/blogmar23/global-bankruptcy3-23.html
The Everything Bubble and Global Bankruptcy
CHS-OTM
March 26, 2023
“Scrape away the complexity and every economic crisis and crash boils down to the precarious asymmetry between collateral and the debt secured by that collateral collapsing. It’s really that simple. “
“In eras of easy credit, both creditworthy and marginal borrowers are suddenly able to borrow more. This flood of new cash seeking a return fuels red-hot demand for conventional assets considered “safe investments” (real estate, blue-chip stocks and bonds), demand which given the limited supply of “safe” assets, pushes valuations of these assets to the moon.”
“The price people are willing to pay for all these assets soars as the demand created by easy credit increases. And why does credit continue increasing? The assets rising in value create more collateral which then supports more credit. “
“This self-reinforcing feedback appears highly virtuous in the expansion phase: the grazing land bought to put under the plow just doubled in value, so the owners can borrow more and use the cash to expand their purchase of more grazing land. The same mechanism is at work in every asset: homes, commercial real estate, stocks and bonds: the more the asset gains in value, the more collateral becomes available to support more credit. “
“This safety is illusory, as it’s resting on an unstable pile of sand: bubble valuations driven by easy credit. We all know that price is set by what somebody will pay for the asset. What attracts less attention is price is also set by how much somebody can borrow to buy the asset.”
“Once the borrower has maxed out their ability to borrow (their income and assets-owned cannot support more debt) or credit conditions tighten, then those who might have paid even higher prices for assets had they been able to borrow more money can no longer borrow enough to bid the asset higher.”
“Since price is set on the margin (i.e. by the last sales), the normal churn of selling is enough to push valuations down. At first the euphoria is undented by the decline, but as credit tightens (interest rates rise and lending standards tighten, cutting off marginal buyers and ventures) then buyers become scarce and skittish sellers proliferate. “
“As valuations plummet, so too does the collateral backing all the new debt. Debt that appeared “safe” is soon exposed as a potential push into insolvency. When the bungalow doubled in value from $500,000 to $1 million, the trajectory of valuation gains looked predictably rosy: every decade housing prices went up 30% or more. So originating a mortgage for $800,000 on a house that looked to be worth $1.3 million in a few years looked rock-solid safe. ”
“But the $1 million was a bubble based solely on easy, abundant, low-cost credit. When credit tightens, the home is slowly but surely repriced at its pre-bubble valuation ($500,000) or perhaps much lower, if that value was merely an artifact of a previous unpopped bubble.”
“Now the collateral is $300,000 less than the mortgage. The owner who made a down payment of $200,000 will be wiped out by a forced sale at $500,000, and the lender (or owner of the mortgage) will take a $300,000 loss. “
“The collateral collapses when bubbles pop, but the debt loaned against the now-phantom collateral remains.”
“ This is the story of the Great Depression, a story that’s unloved because it calls into question the current series of credit-inflated bubbles and resulting financial crises. So the story is reworked into something more palatable such as “the Federal Reserve made a policy error.” ”
—
Bonus article:
https://thenaturallawyer.com/money/the-federal-reserve/
The Federal Reserve: The True Story of the Hijacking of the American Economy
“The greatest treasure in the world is the right to create and control the money supply of the wealthiest and most powerful nation in history. And on December 23, 1913 we gave it to a private bank? What were we thinking?”
Montfort S. Ray, J.D.
2017
Father of the year.
Missing Florida toddler found inside alligator’s mouth day after mother’s murder
By Katherine Donlevy
April 1, 2023
The hunt for a missing toddler came to a tragic end Friday evening when the child’s body was found inside an alligator’s mouth in Florida.
The father of Taylen Mosley, 2, was charged with two counts of first-degree murder: for the child and for the stabbing death of the boy’s mother, 20-year-old Pashun Jeffery.
St. Petersburg police Chief Anthony Holloway said officers were investigating the area of Dell Holmes Park when they spotted an alligator with “an object in its mouth” inside Lake Maggiore.
Officers fired a round at the alligator — killing it — and forcing it to drop the child’s body.
Taylen’s body was retrieved, though police said it’s not yet clear how the boy died or if he was dead before he ended up in the lake.
“We are sorry that it had to end this way,” police Chief Anthony Holloway said.
Police had been searching for Taylen since 2:30 p.m. Thursday, when they found Jeffery dead from “multiple stab wounds” inside her apartment after following a blood trail from her vehicle.
https://nypost.com/2023/04/01/missing-florida-toddler-taylen-mosley-found-inside-alligators-mouth-after-mothers-murder/
Yeah, heck of a guy!
Wow just wow.
Matt Walsh’s description of the video below is accurate.
Matt Walsh
@MattWalshBlog
This is about as clear and straightforward as an assault can get. Vancouver Police have given trans people permission to physically attack anyone who disagrees with them.
Billboard Chris 🇨🇦🇺🇸
@BillboardChris
Another angle of the assault on me today. Police did nothing.
The investigating officer says I instigated, and she told me it was a mutual fight.
https://twitter.com/MattWalshBlog/status/1642180059308990469?s=20
Billboard Chris 🇨🇦🇺🇸
@BillboardChris
Listen to this officer. Totally amazing.
She was laughing as she watched me get assaulted.
She says it was a mutual fight.
https://twitter.com/BillboardChris/status/1642167670853496833?s=20
“She was laughing as she watched me get assaulted.”
Le très cuck Trudeau was probably laughing too!
Vancouver Police have given trans people permission to physically attack anyone who disagrees with them.
Some local religious schools received phone calls threatening violence yesterday. The police blew it off and refused to send a cruiser to each school for protection, so the schools chose to cancel classes.
Had it been a mosque or a planned parenthood clinic that was threatened I’m sure several cops would have been deployed, if not the National Guard. I expect some religious schools will have to deploy their own security, most likely armed volunteers.
Anyway, deranged trannies have now been recruited as brownshirts.
“Anyway, deranged trannies have now been recruited as brownshirts.”
Like these Soros hired thugs that were hired to be at this same event.
Billboard Chris 🇨🇦🇺🇸
@BillboardChris
·
This was my first assault. I’d been there for seconds. It left me with a bloody nose.
My friend @pierre_barns was on his own with some hostile people, so I went to give him support and actually move us away from these insane people.
https://twitter.com/BillboardChris/status/1642181916379209728?s=20
The Climate Lockdowns are already starting:
I expect it will only be a matter of time until Europeans will need a permit to exit their “15 minute town”. Western Europe will be transformed into one giant open air prison. Next step: Hunger Games?
Did the recent banking crisis blow over without significant incidence or consequence?
The Financial Times
Banks
Recent bank rescues a ‘game changer’ for financial regulators, City bosses say
Senior finance figures predict the crisis will force a re-examination of deposits, culture and global co-operation
City bosses have said the fallout from the collapses will force a review of global rules around banking
Laura Noonan, Financial Regulation Editor April 1 2023
The fallout from the collapse of Credit Suisse and a handful of US banks will prove a “game changer” for global financial policymaking, forcing a re-examination of the role of deposits, culture and cross-border co-operation, City of London bosses told the Financial Times.
The FT’s City Network — a group of about 50 senior figures in finance and policymaking — made the prediction in response to a callout on whether the recent calamities should prompt policymakers to “rethink their plans for financial sector deregulation”, a reference to the UK government’s plans to boost the City’s competitiveness by reducing red tape.
“It is now much more fundamental than deregulation,” said Michael Tory, co-founder of advisory firm Ondra. He added that the real question was about the “sustainability of fractional reserve banking” that underpins the banking system by allowing institutions to hold some of depositors’ money in liquid assets and lend out the rest.
“We’re now going to have the debate that we did not have in 2007/08 . . . [when] there was zero appetite to force a wholesale change in the structure of banking,” Tory said. Recent events had proved that “a deposit base is no longer the stable source of funding that it has, by and large, been ever since the introduction of deposit insurance in the Depression”, he argued.
…
“Recent bank rescues”
Good to know those were ‘bank rescues’, not bailouts!
Post-2008 reforms didn’t solve the problem of ‘too big to fail’ banks
By Hanna Ziady and Julia Horowitz, CNN
Updated 9:27 AM EDT, Fri March 31, 2023
The headquarters of Credit Suisse, right, and UBS, left, in Zurich, Switzerland, on March 19, 2023
Michael Buholzer/Keystone/AP
London CNN —
Regulation introduced after the 2008 financial crisis was supposed to make bank bailouts a thing of the past. But its biggest test so far has revealed some serious shortcomings.
In what feels like deja-vu, governments have had to step in as lenders of last resort to prevent the recent bout of turmoil in the banking sector from escalating into a full-blown crisis. By tapping public funds to shore up ailing private institutions, they have laid bare the huge risks that bank failures still pose to taxpayers and the wider financial system.
“I have argued for years that the biggest banks in the world are still too big to fail. This question is now beyond doubt,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, told broadcaster CBS Sunday.
Karin Keller-Sutter, Switzerland’s finance minister, hit the message home when she said that restructuring embattled Credit Suisse (CS) in line with internationally agreed post-2008 guidelines “would probably have triggered an international financial crisis.”
“I have come to the realization in recent weeks that a globally active, systemically important bank cannot simply be wound up according to the ‘too big to fail’ plan,” Keller-Sutter told Swiss newspaper Neue Zürcher Zeitung. “Legally, this would be possible. In practice, however, the economic damage would be considerable.”
…
https://www.cnn.com/2023/03/31/investing/too-big-to-fail-banking-regulations/index.html
Summers: Taxpayers Will Bear ‘Stunningly’ High Cost of Resolving SVB, Signature Bank
IAN HANCHETT
1 Apr 2023
During an interview aired on Friday’s edition of Bloomberg’s “Wall Street Week,” Harvard Professor, economist, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers stated that the amount the FDIC spent on bank resolutions is “stunningly” high and that taxpayers will ultimately bear the cost.
Summers stated, “I’m surprised by how much the FDIC has had to spend on these resolutions relative to the things that were being said earlier. They were hoping to sell SVB as a whole entity and then, in order to get somebody to buy it, they had to chip in a set of stuff that was cumulatively worth $20 billion. The arithmetic is similar relative to the scale of the bank at Signature Bank. There are a lot of questions about those transactions. I’m still confused about why the holding company debt of SVB is still being valued in a meaningful way. And I will want to see assurance that no executive there is getting deferred compensation. But these were stunningly expensive transactions. Ultimately, everybody’s going to say, it’s not coming back to taxpayers, but banks are taxpayers on behalf of people, their depositors, their customers, their people they lend to. And the $23 billion the FDIC has spent is $100 per adult American and that’s a fair amount. So, I wonder if we can’t be looking at the procedures that they’re using and finding ways to do better.”
https://www.breitbart.com/clips/2023/04/01/summers-taxpayers-will-bear-stunningly-high-cost-of-resolving-svb-signature-bank/
Comments
no bama Fight Against the Tyrants BLOG
8 hours ago
Don’t forget the proxy war we are fighting in Ukraine. Billions & Billions of American dollars going up in smoke. The massive numbers of illegals invading our borders with no one in charge. We simply can’t afford to fund these people, yet no one cares. FJB LGB
‘BANANNA REPUBLIC” IS WHAT THIS COUNTRY HAS TURNED INTO.
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12 hours ago edited
So now WE the PEOPLE are REIMBURSING Oprah and the Duke and Dutchess of Victimhood because they didn’t play by the rules?
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Schmutzli
14 hours ago
Exactly where does Joey get the authority to wave FDIC limits on insured deposits?
Mitch? Kevin? GOP?