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Crisis? What Crisis?

tuga

tuga

Legal Alien
Bailouts coming soon to a theatre near you...

https://www.wsj.com/livecoverage/st...-billion-in-market-value-8fmAmiqs4PDb1F60OSFg

Four Biggest U.S. Banks Lose $47 Billion in Market Value
The four biggest U.S. banks lost $47 billion of market value in Thursday trading, part of a broad rout across financial stocks.

Bank investors were spooked by SVB Financial Group's decision to sell a large chunk of its securities portfolio at a $1.8 billion loss as it deals with an outflow of deposits, which more than halved the technology-focused bank's stock.
  • JPMorgan lost about $20 billion in market value Thursday.
  • Bank of America lost roughly $15 billion.
  • Wells Fargo's market capitalization was down $8.5 billion.
  • Citigroup's was down $3 billion.
The banking industry has more than $600 billion in unrealized losses on its securities holdings, according to the Federal Deposit Insurance Corp., the result of stowing extra cash in bonds when rates were super low. Now that rates have risen, the prices of the bonds have gone down significantly.

Banks likely won't have to sell their bonds at a loss unless they have big outflows of deposits. But fears of such losses combined to hammer the stocks.

Truist Financial, Charles Schwab, JPMorgan and Capital One Financial each have more than $10 billion in unrealized losses on securities that they classify as available for sale, according to Performance Trust Capital Partners, which advises banks on balance sheet strategy.

The KBW Nasdaq Bank index was on pace for its biggest decline in almost three years.
 
Not sure using Jim Callaghan's famous phrase is a good omen. I wonder if the run will spread around the globe?

We learnt in 2008 that banks in the UK are not allowed to go under as the Government will step in - mining, steel, cars no chance but banks are sacrosanct.
 
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tuga said:
Bailouts coming soon to a theatre near you...

https://www.wsj.com/livecoverage/st...-billion-in-market-value-8fmAmiqs4PDb1F60OSFg

Four Biggest U.S. Banks Lose $47 Billion in Market Value
The four biggest U.S. banks lost $47 billion of market value in Thursday trading, part of a broad rout across financial stocks.

Bank investors were spooked by SVB Financial Group's decision to sell a large chunk of its securities portfolio at a $1.8 billion loss as it deals with an outflow of deposits, which more than halved the technology-focused bank's stock.
  • JPMorgan lost about $20 billion in market value Thursday.
  • Bank of America lost roughly $15 billion.
  • Wells Fargo's market capitalization was down $8.5 billion.
  • Citigroup's was down $3 billion.
The banking industry has more than $600 billion in unrealized losses on its securities holdings, according to the Federal Deposit Insurance Corp., the result of stowing extra cash in bonds when rates were super low. Now that rates have risen, the prices of the bonds have gone down significantly.

Banks likely won't have to sell their bonds at a loss unless they have big outflows of deposits. But fears of such losses combined to hammer the stocks.

Truist Financial, Charles Schwab, JPMorgan and Capital One Financial each have more than $10 billion in unrealized losses on securities that they classify as available for sale, according to Performance Trust Capital Partners, which advises banks on balance sheet strategy.

The KBW Nasdaq Bank index was on pace for its biggest decline in almost three years.
Click to expand...

“Bank investors were spooked….”

…a strange narrative to describe the basis of our economic well being. A narrative that suggests that the nervous disposition of bankers is critical to economic stability.

We had regulation to protect us from such neurosis, the repeal of Glass Steagall act in the US and the Big Bang in the UK undid those protections.

We are where we are because of that ideology of deregulation.
 
Seeker_UK said:
He never said it.

https://en.wikipedia.org/wiki/Winter_of_Discontent#"Crisis?_What_crisis?"
Click to expand...

Yes. However, he did say….

We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.
​
…which is a repudiation of what was broadly called Keynesianism and an endorsement of Thatcherite Monetarism which brought us a even bigger dose of inflation, and even higher level of unemployment, privatisation, cuts to public spending and the deregulation of the financial markets that now exposes us to market nerves and bankers being “spooked”.


​
 
Spraggons Den said:
Interesting stuff although the entry in wiki does go onto say:

While he had never used those exact words, Callaghan's speechwriter Roger Carroll agreed they were an effective paraphrase. "He asked for it, I'm afraid, and he got it." Callaghan would be closely associated with the phrase for the rest of his life.
Click to expand...
Agree, but a huge mythology around “the Winter of Discontent” has been allowed to be built up and weaponised by the right of both parties.

The TWoD has many parallels with today’s inflation and demands for a living wage. The big difference is that there has been a downward pressure on wages for decades, making wage demands even more essential.
 
tuga said:
Bailouts coming soon to a theatre near you...

https://www.wsj.com/livecoverage/st...-billion-in-market-value-8fmAmiqs4PDb1F60OSFg

Four Biggest U.S. Banks Lose $47 Billion in Market Value
The four biggest U.S. banks lost $47 billion of market value in Thursday trading, part of a broad rout across financial stocks.

Bank investors were spooked by SVB Financial Group's decision to sell a large chunk of its securities portfolio at a $1.8 billion loss as it deals with an outflow of deposits, which more than halved the technology-focused bank's stock.
  • JPMorgan lost about $20 billion in market value Thursday.
  • Bank of America lost roughly $15 billion.
  • Wells Fargo's market capitalization was down $8.5 billion.
  • Citigroup's was down $3 billion.
The banking industry has more than $600 billion in unrealized losses on its securities holdings, according to the Federal Deposit Insurance Corp., the result of stowing extra cash in bonds when rates were super low. Now that rates have risen, the prices of the bonds have gone down significantly.

Banks likely won't have to sell their bonds at a loss unless they have big outflows of deposits. But fears of such losses combined to hammer the stocks.

Truist Financial, Charles Schwab, JPMorgan and Capital One Financial each have more than $10 billion in unrealized losses on securities that they classify as available for sale, according to Performance Trust Capital Partners, which advises banks on balance sheet strategy.

The KBW Nasdaq Bank index was on pace for its biggest decline in almost three years.
Click to expand...

So essentially banks with large holdings of government bonds are facing losses on paper because rising interest rates have eroded the value of the bonds. Which is only a problem when they need to sell.

Silicon Valley Bank specialise in deposits from tech firms who have been hit by rising interest rates and who started pulling their money out forcing SVB to sell bonds at a loss.

Hard to know if this indicates a 2007/8 style systemic problem, a post-covid correction, or just market jitters.
 
ks.234 said:
Agree, but a huge mythology around “the Winter of Discontent” has been allowed to be built up and weaponised by the right of both parties.

The TWoD has many parallels with today’s inflation and demands for a living wage. The big difference is that there has been a downward pressure on wages for decades, making wage demands even more essential.
Click to expand...

The 1979 GE defeat robbed Labour of access to the best years of North Sea oil revenues.
 
Tony L said:
Brexit has had such an impact on our economy and our ability to trade finding the resources to stay afloat in such an event will be far, far harder than it was in 2008.
Click to expand...
You already have post-event data on both to assess the impact.

GDP, GDP Growth and GDP Capita is a reosonable starting point.
 
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Tony L said:
Brexit has had such an impact on our economy and our ability to trade finding the resources to stay afloat in such an event will be far, far harder than it was in 2008.
Click to expand...
agree, but if the objective is economic and environmental stability, shouldn't we be looking at shorter supply lines and more domestic production of the things we need? I mean, after all, we can even do half decent HiFi in this country
 
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