I’ve been idly thinking about the secondary banking crisis in the 70s in the U.K. and the Savings & Loan debacle in the 80s in the US - over exposed to property (UK) plus auto loans (US) - sound familiar? - and then we had the GFC - banks never learn, do they?
And along with “inflation is transitory”, “no landing” (which planet are these people on? 10s and 2s were minus 107bps yesterday!) we are now reminded daily that the banks are well capitalised! Maybe, but is that on a true mark to market basis I wonder?
And then there are the SPACs and a whole swathe of the Venture Cap market which have imploded or are going la la la don’t look too closely at our NAV calcs.
Blackstone REIT (BREIT) which is private and not freely traded has been unable to service redemptions to the tune of the odd couple of a billion dollars last month. The fourth month in a row it has restricted redemptions. I’m told the fact that it has paid 35% of requests is a good sign. Last person out please turn the lights off.
And now we have Silicon Valley Bank closed down by the FDIC on top of the shenanigans at Silvergate the crypto “hole in the wall”. La Yellen is apparently looking at “a few banking operations that are causing some concern”, but all is “under control”.
She also had time to opine on the dollar, "I don’t think the dollar has any serious competition, and is not likely to for a long time”, as the BRICs gear up to buy oil and commodities with anything but!
By the end of this month her US Treasury will need to have issued a total of over $900 billion in USTs for Q1 2023! With the Fed in higher for longer mode at least the coupon is getting attractive, but as some notable emerging economies can tell her (Argentina, Venezuela and not forgetting Zimbabwe plus Germany in the “roaring “ 20s) you can’t keep doing this forever without someone crashing your currency.
Got gold? Just asking.
Thank you Rich. I’ll be musing a lot this weekend! “Emergency” Fed meeting Monday could be an “interesting” start to the week don’t you think?
I do enjoy your musings Mr Hale