Let’s start with some tweets that lay out the terms of the ongoing debates. Macro update... There are two schools of thought... A. Regional bank fear is contained with no new SVB popping up and FRC is the last domino. Similar to UK gilt crisis, the authorities changed the rules and now we slowly go back to normal.
"TL was respectfully seeking a degree of validation for the "Theory of Everything" from her."
I'm very much no expert but from what I have read I think that both of DDB's scenarios will play out. The regional banks are basically solvent and sound in the absence of extraordinary runs on their deposits. At the same time I would expect them to be more stringent in their loans. It IS very interesting about FRC vs. SIVB.
Because Powell is in this for the long term and knows he can't do everything today. This is politics, not just finance. He probably can't count on the Senate GOP. He has to do what's possible and be ready to parry the next attack and move forward.
More below on the fact that the Fed/Treasury actions actually undermine small community banks and credit unions — exposing them to bank runs and probably contributing to banking consolidation, which is definitely NOT in the interest of ordinary Americans. Sure, Powell and Co may be fighting Davos on behalf of American big banking interests (according to Tom Luongo), but it appears they are also fighting Main Street.
Skip into to 3:20:
Deflationary recession preferable to hyper inflationary depression. But who is gonna stop the Democrats’ money laundering and war on the middle class?
G'evening and thanks again Mark for your researching and sharing. This is very significant and important, if flying at quite an altitude for we mere grounded mortals.
I wonder if the apparent empowerment of the Fed, whether intentional or by virtue of circumstance, may be a danger once we're beyond today's crisis'. Big fat elephant is our Debt-based economy arriving at the huge debt with deficits deemed 'wonderfully reduced as declared by the Chief Executive/President' to what could be 2 trillion a year for the next decade. I tend to go along with the need to return banking to a regional program. However, the Military Industrial Complex uses Dollar Hegemony as a huge weapon in it's ongoing war against humanity, oops... anyways Powell's reclaiming control of the dollar from Europe, as such, is in major conflict to that whole CMI/Davos cabal.
I vote for fighting inflation: it's a permanent 'tax' on all and hits particularly hardest those least able to deal with it. Investors, generally having fared quite well this past decade of Fed QEs and loose political monetary policies are likely to lose big. There will be bad for us all in any recession/depression that may result: but that will be far more Capitalist and healing of our economy than more Can-Kicking. FWIW.
I am grateful to be allowed to express my thoughts; this stuff seems beyond the citizenry's control, no one's asking what we want so a Jay Powell rises and fills a heroic role. Necessarily, I guess. My best to all, (WrH)
I still can't tell whether Luongo is right or whether he's just trying to fit the facts to his pet theory. Could be either or neither. Let's see what the Fed does with rates later in the month.