08 February 2024

I've Heard That Tear Stained Monologue You Do There by the Door Before You Go

Like the reruns of some movie I saw a thousand Saturdays ago.
So, Fed Chairman Jerome Powell went on 60 Minutes, and stated that some banks will close, but that the commercial real estate collapse is pretty minor on the scheme of things.

I may not as well versed in the arcane language of economics, but it seems to me that this is what is technically called, "Rearranging deck chairs on the titanic."

Didn't we hear the same thing about Lehman in 2008?

Federal Reserve Chair Jerome Powell is predicting that more small banks will likely close or merge due to commercial real estate weaknesses, but that the problem is ultimately "manageable."

The central bank official made this point during a "60 Minutes" interview that aired Sunday night. It was Powell’s first comments about the industry following a new bout of turmoil cascading through the stocks of many regional banks.

"I don't think there's much risk of a repeat of 2008," Powell said, referring to a financial crisis 16 years ago that took down some of the biggest institutions on Wall Street as well as hundreds of banks across the US.


Powell acknowledged in his "60 Minutes" interview that some smaller banks will "have to be closed" or merged "out of existence" due to losses tied to the falling values of properties across the US that are suddenly worth much less due to the Fed’s elevated interest rates and the effect of a pandemic that emptied out many city-center buildings. 

Between derivatives and other financial instruments whose acronyms I can only dream of, I guarantee you that the effects will be far broader than Chairman Powell is predicting.

From the Great Depression to the Great Recession it was 79 years, before the next one?  I'd be surprised if it does not happen in the next 78 months.

Reinstate Glass-Steagall ban the Credit Default Swap as an illegal insurance product, and jail crooked bankers.

Do it soon.


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