Reply With Quote
I'M A PANICAN
Nathan Tankus is pretty good at lay explanations of the USA's financial plumbing.
QE4 would be the obvious solution, but we are ruled by a bad king -- Tankus thinks this is 2025's Lehman moment
https://www.crisesnotes.com/our2025lehmanbrothers/Putting this all together, financial regulators have been regulatorily treating United States Treasury Securities as “money” without making sure that the infrastructure was there to guarantee its liquidity on a 24-7 basis. More generally, we’ve increasingly relied on ins utions like hedge funds to hold large amounts of financial assets as we discouraged large banks from doing so. Hedge Funds run on leverage. As market volatility explodes, they sell assets in an attempt to deleverage. But they were absorbing assets for the rest of the economic system. For every seller there must be a buyer. So more buyers must be forthcoming or prices need to decline to fit these big assets in the ever smaller amount of “free balance sheet space”. Think of a clown car.
Hedge Funds, and other similar non-bank firms, attempts to shrink their balance sheets will lead others to try to shrink their balance sheet which will just cause further market dislocations in superficially unrelated markets. This deleveraging pressure is clearly happening globally. Perversely, the erratic unreliability of the U.S. is, just as it did in 2008, getting the rest of the world to ever more desperately chase down dollars. Pricing in the Trump-Musk Payments Crisis has not happened, and I do not expect it to happen anytime soon, as I wrote about yesterday. Ergo no running from the dollar.
Still, the question remains, who absorbs assets from the asset absorbers?
Why, the Federal Reserve of course. Unlike a lot of commentators, I think they will step in and stabilize financial markets domestically. The tricky question is… will they do so globally? In 2008, and again in 2020, “Swap Lines” (think “lines of credit") with other central banks has been critical to stabilizing global financial markets. This time is different. Why would Trump want to cut off the rest of the world until they end their trade deficits with the United States, as well as cut off foreign aid, but be okay with Jay Powell and the Federal Reserve lending trillions of dollars to foreign central banks? European policymakers already started to, correctly, think about this possibility weeks ago.
Trump’s orbit may not have known about Central Bank Swap Lines in the first term, but they do now. Which brings me to a grim thing I posted on Facebook on December 30th 2016:
The worst day of the Trump presidency might be when someone tells Trump what Central Bank Liquidity Swaps are.
I'M A PANICAN
Bartiromo to Bessent: "You're talking about $6 trillion in market value lost in a week. You're talking about CEOs now unwilling to give guidance for 2025. Is there a response or a backup plan for what seems to be corporate America shutting down corporate activity?"
Scary times indeed, WH. Something has got to be done though before the US itself collapses under the burden of its own debt and lopsided trade deals.
Not sure what the right call is because I'm in no position to give up a solution. Time will tell...
not sure what you mean
how is "lopsided trade" threatening the US?
Exactly what Fox News advertisers have been telling you to do all along
JAMIE DIMON: We haven’t had a real recession, and COVID was so, so — COVID was so short, I almost don’t include it. I think you’ll see more credit problems than people have seen in a long time.
MARIA BARTIROMO: And yet you’ve got to … Your different groups at JPMorgan. You say JPMorgan’s going to be fine, but we could see a softening of the macro story.
DIMON: Yeah. So JP — [laughter] I did say to the people 10%, I think we just got a little sloppy the the last a five years. I’m kind of mad at myself, I remind people what kills companies is complacency, arrogance, bureaucracy. I was talking about Sears and A&P and Eastman Kodak — it’s amazing that companies just get too lax, and E did that too. We put some head count controls in place. I call it just like going for a run and eating your spinach. It’s not a big deal. We can handle that, and we’ll become a better company. People having a lot of fun, raising their hand and saying, ‘Why are we doing this? Can we cut it out?’ I say, ‘Go ahead, you’ve got my permission.’
BARTIROMO: Are you hearing that from CEOs as well, are they now going to start pulling it in and cutting back on various expenses?
DIMON: I think you’re going to see a little bit of that, ye
ah.
BARTIROMO: How significant? Do you personally expect a recession?
DIMON: I am going to defer to my — at this point, but I think probably that’s a likely outcome.
BARTIROMO: Markets, when you see a 2,000, 2,000-point declining it sort of feeds into itself, doesn’t it? It makes it feel like you’re losing money in your 401(k), in your pension, you’ve got to cut back.
DIMON: I always a remind people, markets aren’t always right, but sometimes they are. I think this time they are right because they’re pricing in uncertainty at at the actual company level. And how it affects consumer sentiment, it’s hard to tell. The consumer still has jobs, wages are going up at the low end, but if companies start account cutting back, yeah, consumer sentiment and business sentiment changes. I think you’ve already seen business sentiment change a little bit. No one’s wishing for that. Hopefully, if there is one, it’ll be short. But I do think fixing tease the tariff issues and trade would be a good thing to do. That will get one major uncertainty behind us. We have the strongest economy in the world, be good not to add to the uncertainty out there.
TSA-style cherry picking, Trump only hears what he wants to hear
We won't hear from tsa for a while...TSA-style cherry picking, Trump only hears what he wants to hear
Has the price of tattoo ink gone up for yall?
oh I don't know about that
he just posted in the de-dollarization thread, he thinks Scott Bessent is a genius for wrecking us like this
I mean, maybe it is genius if the point is to do 1990s style shock therapy, intentionally immiserating the whole country to consolidate power and hand everyday life over politically connected businessmen
Lol
143 yr old sleepy joe...didnt even have to wake up to make sure the economy did not collapse...
he kept us the best economy on the planet without even trying...or waking up...
all the felon had to do was play golf, lie that he "fixed" the economy and take credit for sleepy joe's work - and coast to an easy 4 years of crimin' ...
but he couldn't even do that...
he's been posting here a lot more recently. Times must be tough.
Trump backing down, again.
^playing u like a piano
4D chEsS!!!!
By bending the knee again?
Hope you loaded up a few days ago when I told you it was a great time to be buying
Why obliterate stocks in the first place?Hope you loaded up a few days ago when I told you it was a great time to be buying
sigh
10% tariffs still in place on everyone else and now China up to 125% tariff. This has always been about decoupling the world from China and the plan is working marvelously as the Yuan and foreign investments plummet.
There are currently 1 users browsing this thread. (0 members and 1 guests)
Posting Permissions
