Possible US Banking Collapse Inbound?

[brihard]

Looking at the S&P 500, FRC is definitely the outlier. A few big banks have been hit with selloffs, but no other bank/financial service outfit is anywhere close to that.

I'm betting that some of the major players will be exploiting this to increase their positions.

A lotnof people and institutions will be selling positions in healthy banks, knowing that the sector will dip broadly and that they can pick their positions back up a few percentage points lower for an easy spread. As long as it doesn’t trigger margin calls, this should balance back out without too much harm done.

 

[Brad Sallows]

So it seems that in the US "they" are essentially moving to near-universal (if not universal) mandatory customer-funded deposit insurance. (All, or at least most deposits will be guaranteed by a fund created by charging institutions, the costs of which will predictably be borne mostly by customers as fees, perhaps some employees as never-obtained compensation gains, not very much by owners/shareholders.)

 

[Brad Sallows]

A downside to hefty public (government) deficit spending is that it requires borrowing, which means someone holds the paper, which means someone is going to be caught out if the spending fuels inflation and the value of the paper falls and someone else asks for obligations to be made good.

How the Fed Broke Silicon Valley Bank (reason.com).

 

[Colin Parkinson]

In a normal economy, if an industry can’t hire people for a low wage, it should increase that wage to attract workers. I witnessed this firsthand while living in an oil patch community 20 years ago. Back then to get workers, fast food restaurants and other traditional minimum wage jobs had to increase wages and benefits to complete for labour with the oil and gas sector.

Fast forward a few years later when I briefly returned to the community and all the minimum wage positions were taken over by temporary foreign workers. I later found out that they were being paid minimum wage sans benefits. Industry and government found a way to suppress wages.

Go to any fast food restaurant now. How many workers there are teenagers starting out or retirees making a couple extra bucks while keeping busy? Mostly they are staffed by new Canadians trying to eke out a living on minimum wage, probably working more than one job to support their family. It’s hard not to think that they are being exploited. “Come to Canada, land of milk and honey! By the way, we won’t recognize your prior work experience so you’ll have to work at McDonalds to support your family. You’re welcome!”

The labour market is broken.

In the security business, outside of the Commissionaires, it's almost all immigrants, many of them are working 2-3 jobs and many study during work to better themselves. At my work site it's common for the members to work 16hrs double shifts, alternating between the Commissionaires and the Clients own inhouse security. Most commute from Surrey as housing/rent is out of reach of most and they live in large family homes stuffed with people. A lot of businesses in North Vancouver have packed it in thanks to high rents and lack of labour. You can't raise pay, because the price point of your product/services is pinned on what people are willing/able to pay.

 

[Halifax Tar]

Our societies standard of living has declined. Friction will be felt far more at the lower levels of income than at the higher levels simply due to the nature of money and how it works.

Declined, or had slowed growth ? Because as I look around our big blue rock, we (Western folks) are looking pretty sharp.

The problem we are dealing with now though:

Basic Needs have a baseline cost associated with them and those costs are increasing faster than the system we have created is able to cope with.

If a person has to allocate a larger proportion of their income towards basic needs, they will have less money to allocate to savings or other pursuits. This means we will have more people unable to meet their Psychological Needs. We will also, have more people unable to meet even their Basic Needs.

If the costs of one needs is stripping their income, then they have 3 choices:

1) Lower you wants to help fund your needs.
2) Create more income. Many avenues for this.
3) Wallow in self pitty.

Poverty isn't usually a choice for many. I learned this at a young age from one of my school friends who grew up in an abusive household with an alcoholic mother and abusive/also alcoholic step-father.

The school had a meals program that he relied on to feed him otherwise he wouldn't have food. At 14, he and his brother, who was 16, were moved to Foster Care after they beat their step-father nearly to death with a baseball bat defending their mother from one of his vicious attacks.

Predictably, my friend didn't have the greatest marks in school and obviously never had the opportunity to attend University. How could he? I don't think any of you would be focused on Math 101 when you're having to fight your step-father?

He is doing ok now, is married, has a job and lives an ok life. His brother is a drug addict and lives on the street. He also had an older sister who just passed away at 40 from a a drug overdose.

Could they have simply worked harder? I don't think it's that simple.

They each had choices to make. One chose a different path than had be laid out for him. Others not so. I'm all for investment in social/mental health for our homeless and struggling. But I'm also a realist and know we will never beat this. At best we can hope to make it level out and maintain. Why ? Because we have choices to make.

making money ≠ working hard.

(1) I can work as hard as I want but if I lack talent or ability, am physically or mentally disabled, or there is low demand for the work I am providing, that hard work will provide me with very little money.

(2)I could also do no work at all and make a lot of money simply through inheritance, demand for my services, my name, endorsements, etc.

(1) Our disabled need to be provided for, that's a fair ask.

(2) I used to hear this argument in my George Brown Social Worker program. Man, they hated people with inheritances. Someone in that family set the family up so that future generations will be better off, good for them. I have no issues with that. And anyone who does is just jealous. Now the following generations have choices to make, keep the family fortune going or squander it. Again choices, choices, choices.

Demand for services took work to establish that demand. And the same for name and endorsements.

Money also becomes more efficient the more you have of it. If I have $1,000,000.00 and I earn 5% interest a year on it, that's $50,000.00 a year. I did absolutely nothing and I made enough money to, in theory, cover all my basic needs while literally doing nothing!

Contrast this with someone who has $1000.00 and earns 5% interest on that per year, congrats you gained $50.00 a year, enough for a couple of meals at McDonalds! You will also continue to need to work your butt off to make ends meet.

The system works on the more you put in, the more you get out. Its fair.

Income from Labour is the least efficient form of income there is!

The idea that all you need to do to make a lot of money is work hard is one of the biggest lies we tell ourselves. There is a lot more to it then that.

Regardless of what anyone says, income inequality is growing and an increasing number of people are unable to afford basic necessities.

I disagree. If one is willing to work hard, and be a productive member of society they can make a good life.

Effort inequality is growing my friend, effort inequality.

 

[Lumber]

Thank-you for that glib talking point.

Tell me, in your personal financial life, do you believe it is better to set a budget and live within it (building room for unforeseen events), or do you spend every cent, “ cuz the gov will bail me out, anyway”?

The former, obviously.

My point, glibly put, is that you cannot look at societal problem through an individual by individual lens, and this, to me, is the greatest failing of the Republican way of trying to fix the economy.

Put another way, we don't measure a Government's success based on whether or not it created equality of opportunity; we will instead judge a government's success based on quality of outcomes. No one is going to call a government program/initiative/policy a success if you see only a few successful people with the rest of the population downtrodden and poor just because "well, they all had the same opportunity."

Governments have to take into account ALL factors, including outside influence, changing dynamics, and yes, even personal proclivities and financial illiteracy.

 

[Halifax Tar]

The former, obviously.

My point, glibly put, is that you cannot look at societal problem through an individual by individual lens, and this, to me, is the greatest failing of the Republican way of trying to fix the economy.

Put another way, we don't measure a Government's success based on whether or not it created equality of opportunity; we will instead judge a government's success based on quality of outcomes. No one is going to call a government program/initiative/policy a success if you see only a few successful people with the rest of the population downtrodden and poor just because "well, they all had the same opportunity."

Governments have to take into account ALL factors, including outside influence, changing dynamics, and yes, even personal proclivities and financial illiteracy.

There can never be equality of opportunity because we all have the freedom of personal choice.

Officially it pretty much exists. There are no official barriers keeping a non criminal in Canada from pursuing their potential.

The problem is that individuals do things to undermine their own potential by the choices they make. Yup I get it, if I grow up in house of pimps and dealers, there is a good chance that I will follow that path. BUT The choice is mine. I can choose to break the cycle or perpetuate it.

 

[Brad Sallows]

John Cochrane (The Grumpy Economist) and his commentariat provide more information and explanation.

Critics who allege incompetence (or at least poor judgement) are vindicated. SVB's choices stand out.

Regulators also seem to have missed the obvious. Not a flaw of regulations, but of the watchers.

 

[Lumber]

There can never be equality of opportunity because we all have the freedom of personal choice.

Officially it pretty much exists. There are no official barriers keeping a non criminal in Canada from pursuing their potential.

The problem is that individuals do things to undermine their own potential by the choices they make. Yup I get it, if I grow up in house of pimps and dealers, there is a good chance that I will follow that path. BUT The choice is mine. I can choose to break the cycle or perpetuate it.

True, but we are not talking about "real" or "universal" equality of opportunity, we are doing only within the context of what the government has power over, and as you said, there are no (or very few) official barriers.

So what does the government do? Lay back and say "my job is done; people have freedom to chose"? Or do they study and analyze the results of peoples' freely made choices, identify areas where outcomes are not equal, and see if there are way that they can help.

The point about disabled people you made is a perfect one, albeit an easy one. Disabled people have the same opportunities and able-bodied folk, at least when it comes to governments rules and regulations, but the government has stepped in to make their lives better (equality of outcome) in the face of their personal limitations.

The same can be applied broadly; what other way can the government act to better the lives of people, even if the people are acting against their own self interest? To wit, if the government looks at the whole country and says "people are freely spending themselves into debt", leading to overall worse outcomes for those people and their progeny, should the government simply sit back and say "oh well, their free choice", or should the government try and find a way to help those people and prevent the country as a whole from turning into a poverty stricken shit hole?

I honestly believe that ultra conservative pro-capitalists really don't care if 90% of the country spent themselves into poverty and the entire country turned into the slums of Detroit, so long as THEY (the capitalists) are doing fine and are still free to continue to smugly preach "well, it was their choice".

 

[Halifax Tar]

True, but we are not talking about "real" or "universal" equality of opportunity, we are doing only within the context of what the government has power over, and as you said, there are no (or very few) official barriers.

Why should the government be expected to pick up for people who make poor personal choices ? And if we decide they should, to what extent ?

So what does the government do? Lay back and say "my job is done; people have freedom to chose"? Or do they study and analyze the results of peoples' freely made choices, identify areas where outcomes are not equal, and see if there are way that they can help.

Why should we expect the government to help ? I mean the government is providing healthcare and education and resources to help your parents in your rearing. Why should they be responsible for someone who decided to squander their potential ?

The point about disabled people you made is a perfect one, albeit an easy one. Disabled people have the same opportunities and able-bodied folk, at least when it comes to governments rules and regulations, but the government has stepped in to make their lives better (equality of outcome) in the face of their personal limitations.

Disabilities are very different from someone who chooses a different path.

The same can be applied broadly; what other way can the government act to better the lives of people, even if the people are acting against their own self interest? To wit, if the government looks at the whole country and says "people are freely spending themselves into debt", leading to overall worse outcomes for those people and their progeny, should the government simply sit back and say "oh well, their free choice", or should the government try and find a way to help those people and prevent the country as a whole from turning into a poverty stricken shit hole?

In your example the Gov adjusts interests rates. But the reality is the Gov cant do anything. If all 38 million of us decided to spend ourselves into insolvency there isn't a thing they could do. But again, personal choice keeps most of us from doing that.

I honestly believe that ultra conservative pro-capitalists really don't care if 90% of the country spent themselves into poverty and the entire country turned into the slums of Detroit, so long as THEY (the capitalists) are doing fine and are still free to continue to smugly preach "well, it was their choice".

Why should they ?

FYI here's a list of the biggest givers in the US ... They are all filthy rich.

America’s Top Givers 2022: The 25 Most Philanthropic Billionaires

From Warren Buffett to newcomer Jeff Bezos, the nation's most generous billionaires have given away a collective $169 billion in their lifetimes–and are still richer than ever.

www.forbes.com

 

[Brad Sallows]

I honestly believe that ultra conservative pro-capitalists really don't care if 90% of the country spent themselves into poverty and the entire country turned into the slums of Detroit, so long as THEY (the capitalists) are doing fine and are still free to continue to smugly preach "well, it was their choice".

Yes, the ultra-conservative neighbourhoods of the country are definitely slums. You can't imagine the horror of living in BC's "Bible Belt".

 

[Eaglelord17]

Standard of living has gone down relative to what we used to get for value.

In the 50s you could work a average job, buy a house, have a car, raise 6 kids, and do it all under one income.

Today you basically need two incomes to afford a place to live, and maybe raise a child in most cities.

Technology has advanced there is no disputing that, but anyone trying to argue the standard of living hasn’t declined when your comparing apples to apples is delusional.

We just happen to have more mind numbing entertainment to keep the masses in line.

 

[Lumber]

Yes, the ultra-conservative neighbourhoods of the country are definitely slums. You can't imagine the horror of living in BC's "Bible Belt".

By ultra-conservative I was speaking in the economic, fiscal, monetary policy and general involvement of the government aspect.

Besides, those of whom I'm referring are not the one living with the rest of the proles.

 

[IKnowNothing]

True, but we are not talking about "real" or "universal" equality of opportunity, we are doing only within the context of what the government has power over, and as you said, there are no (or very few) official barriers.

Whenever I read about, think, or discuss these concepts I think of this comic.

The Pencilsword: On a plate

A short story about privilege. By Toby Morris.

www.rnz.co.nz

I was raised in between the two. The functional output was a Richard upbringing that paid for his own school, but for tremendous effort and sacrifice by my parents it really would have looked a lot more like Paula.

I'm not rich by any means, but my son with have a Richard upbringing. If when all is said and done he's not aware of the advantage (not feel guilty for it, just be aware) I've failed as a parent.

Sometimes I'll see a social media post of some old classmate that's on the dole that has some cooler shit than me. There's a moment of frustration when I see my eye-watering tax bill buy a VR headset for someone that will never hold a job. But then I think of their kids, who will be in school with mine. The Paula upbringing is more than they can realistically hope for. The limitations and choices of their parents are not their fault. And if it weren't for the government waste, the bloat, the self-righteous grandstanding- eye watering tax to help those kids overcome their lot in life doesn't seem so unfair.

 

[Brad Sallows]

Standard of living has gone down relative to what we used to get for value.

In the 50s you could work a average job, buy a house, have a car, raise 6 kids, and do it all under one income.

A 50's car or house was a lot simpler than today's car or house. It won't do to simply compare things across decades as if they are one-for-one interchangeable and not acknowledge the improvements as part of the value. The most no-frills car and house today, which are probably not very common because they are not very much in demand, are affordable.

I see in recent news that colon cancer rates are increasing among younger cohorts. Chances of survival today are good to excellent, depending on when detected. Chances in 50's, not very good at all.

Standard of living has improved and continues to improve.

 

[Halifax Tar]

Whenever I read about, think, or discuss these concepts I think of this comic.

The Pencilsword: On a plate

A short story about privilege. By Toby Morris.

www.rnz.co.nz

I was raised in between the two. The functional output was a Richard upbringing that paid for his own school, but for tremendous effort and sacrifice by my parents it really would have looked a lot more like Paula.

I'm not rich by any means, but my son with have a Richard upbringing. If when all is said and done he's not aware of the advantage (not feel guilty for it, just be aware) I've failed as a parent.

Sometimes I'll see a social media post of some old classmate that's on the dole that has some cooler shit than me. There's a moment of frustration when I see my eye-watering tax bill buy a VR headset for someone that will never hold a job. But then I think of their kids, who will be in school with mine. The Paula upbringing is more than they can realistically hope for. The limitations and choices of their parents are not their fault. And if it weren't for the government waste, the bloat, the self-righteous grandstanding- eye watering tax to help those kids overcome their lot in life doesn't seem so unfair.

If your plan goes as you hope then yes your son will have an advantage, if you choose to use that term. But it's an advantage you earned and that's not something to be ashamed of. Infact it should be celebrated.

Good on you!

And if more parents chose to work the same way things would be very different.

But it's much easier to attack the system and expect hand outs than accept responsibility and move the ball a couple yards forward for your kids.

I saw this and I like it.

 

[Bruce Monkhouse]

Things can't be all that bad .....CAF is offering lots of jobs with not bad money in 4 years,...wait what?.....hardly any takers?

I've offered a few close folks a helpful push into Corrections, [when I had push] but when I went into some of the funky details that one could expect, their desire quickly went away. Problem is folks want the $40 an hour without the pain, but then cry about "you guys are all Republicans" or something equally silly sounding......

 

[QV]

Things can't be all that bad .....CAF is offering lots of jobs with not bad money in 4 years,...wait what?.....hardly any takers?

I've offered a few close folks a helpful push into Corrections, [when I had push] but when I went into some of the funky details that one could expect, their desire quickly went away. Problem is folks want the $40 an hour without the pain, but then cry about "you guys are all Republicans" or something equally silly sounding......

That attitude nowadays in addition to the poor demographics in Canada will make for a really good job market for anyone that wants to work.

 

[Lumber]

Things can't be all that bad .....CAF is offering lots of jobs with not bad money in 4 years,...wait what?.....hardly any takers?

I've offered a few close folks a helpful push into Corrections, [when I had push] but when I went into some of the funky details that one could expect, their desire quickly went away. Problem is folks want the $40 an hour without the pain, but then cry about "you guys are all Republicans" or something equally silly sounding......

That's not at all what I was talking about. Government involvement in creating economic opportunities has nothing to so with people not wanting to take your hypothetical jobs.

 

[Halifax Tar]

That's not at all what I was talking about. Government involvement in creating economic opportunities has nothing to so with people not wanting to take your hypothetical jobs.

Our government can't manage a contract to get boots for our soldiers, and you expect them to create big scale economic opportunity?

You have so much more faith in our political class than I do.