| No. Contagion is so far limited. Economy is still doing relatively well and inflation is still hot. BTFP is arguably QE-lite and has reversed some QT as far as I can tell. When we crash you won't need to ask if we're crashing. It will be obvious. China reopening trade has been softer than expected so far, but could still put pressure on commodities. Honestly the market is very confused right now. The bond market is saying recession(see rates dropping/curve steepening). The stock market is saying everything is more or less fine. Gold is up, but maybe because of dollar weakness and lack of faith in the fed to maintain a strong dollar. The upper half of Americans really haven't felt enough pain yet. They still have plenty of money and are keeping demand high. I fully expect us to crash, but I don't think the bank crisis is more than a waypoint on a journey that started with the first rate hike(and, arguably, 2008). Re: BTFP. It seems like QE-lite to me because banks were sitting on underwater assets that can now be used as collateral at full PAR value meaning the banks can reanimate these dead investments and put that money to work. I would love to be proven wrong but after going back and forth this is my current understanding. Also, this is HN. Don't expect a high degree of accuracy on economic predictions here. Economics is hard. Even the fed and all of their PhDs can't get it right. I think there are a lot of unknown risks out there now. Banks at least have the FDIC, the treasury and the fed(at least if you're big enough to present a systemic risk). There are non-bank lenders and other parties in our grossly complex financial system that are also under stress and could be the catalyst for major reversion soon. |
This 100%.