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The looming bank collapse.


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This will end in a currency crisis.

The government will continue to bail out the banks but they will do so with a depreciating currency. Wait until pension funds, bond holders etc. realise the currency is becoming increasingly worthless.  This could be a HUGE problem 

There is no 'free lunch. There are consequences to printing money and bailing out all these sectors.  We will see them soon.

 

Edited by Warlord
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I used to think the UK et el, would simply head Japanese.  Now having spent considerable time and effort in the blockchain space, I'm no longer concerned about that.  What I think will happen is the masses will eventually have their "eureka" moment and slowly start shifting to crypto's of sorts.  Especially the younger, shafted types.

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22 hours ago, byron78 said:

The banks have lent money they've been bailed with haven't they?

Isn't that the point of bailing them out, i.e. that they ran out of capital, and need capital to back lending?  

Don't forget that the main ways they were bailed out are:

- Very low central bank interest rate (allowing them to borrow at 0.1%pa and lend out credit cards at 30-40%pa)

- Government directly taking a stake in the bank (i.e. pumping in capital that they can then lend out at 9:1 against)

1 hour ago, Warlord said:

The government will continue to bail out the banks but they will do so with a depreciating currency. Wait until pension funds, bond holders etc. realise the currency is becoming increasingly worthless.  This could be a HUGE problem 

Why is a trashed pound a problem for pension funds?

For DB schemes it's actually a benefit, as you now have to pay pensions that are worth a pittance in real terms, so any investments you had in other currencies now pay pensions in GBP more easily

For DC schemes it's largely irrelevant, since they're just tax-efficient investment vehicles that behave like very long term Stocks & Shares ISAs

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30 minutes ago, blackhole said:

I used to think the UK et el, would simply head Japanese.  Now having spent considerable time and effort in the blockchain space, I'm no longer concerned about that.  What I think will happen is the masses will eventually have their "eureka" moment and slowly start shifting to crypto's of sorts.  Especially the younger, shafted types.

Japan is an export machine.

Its debt is held by its citizen.

UK is not Japan.

 

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3 hours ago, blackhole said:

I used to think the UK et el, would simply head Japanese.  Now having spent considerable time and effort in the blockchain space, I'm no longer concerned about that.  What I think will happen is the masses will eventually have their "eureka" moment and slowly start shifting to crypto's of sorts.  Especially the younger, shafted types.

Won't shifting money out of banks (and into cryptos or gold etc)  just accelerate a bank collapse? 

(From what I've read banks seem very confident they will survive this one, and CLOs in the Atlantic article are just a tiny percentage compared to the cdo 's in 2008. )

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32 minutes ago, 24gray24 said:

Won't shifting money out of banks (and into cryptos or gold etc)  just accelerate a bank collapse? 

(From what I've read banks seem very confident they will survive this one, and CLOs in the Atlantic article are just a tiny percentage compared to the cdo 's in 2008. )

Yes, but there are a few issues :

1) most people have no "cash" to move

2) most also dont have any faith in crypto's or pet rocks.

Hence a slow boiling frog.

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17 hours ago, blackhole said:

Yes, but there are a few issues :

1) most people have no "cash" to move

2) most also dont have any faith in crypto's or pet rocks.

Hence a slow boiling frog.

I agree. 95% of people with cash aren't going to buy crypto or gold. Too volatile and harder to buy/sell.

I think most people are living hand to mouth... Wages in... Loan repayments out.

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19 hours ago, 24gray24 said:

Won't shifting money out of banks (and into cryptos or gold etc)  just accelerate a bank collapse? 

(From what I've read banks seem very confident they will survive this one, and CLOs in the Atlantic article are just a tiny percentage compared to the cdo 's in 2008. )

A tiny percentage? The article states the figures are bigger than in 2007. 

Quote from the article-

The Bank for International Settlements, which helps central banks pursue financial stability, has estimated the overall size of the CDO market in 2007 at $640 billion; it estimated the overall size of the CLO market in 2018 at $750 billion. More than $130 billion worth of CLOs have been created since then, some even in recent months.

 

 

Edited by killerbee
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6 hours ago, Sausage said:

I think most people are living hand to mouth... Wages in... Loan repayments out.

This is frighteningly true in so many cases.

Of course, those people have less to fear from a banking collapse if one did happen - as Jack says in Titanic "when you've got nothing, you've got nothing to lose".

As usual, the rich would escape, the poor have nothing to lose, and the middle class (which is now half the country) would have the most to lose.

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5 minutes ago, scottbeard said:

This is frighteningly true in so many cases.

Of course, those people have less to fear from a banking collapse if one did happen - as Jack says in Titanic "when you've got nothing, you've got nothing to lose".

As usual, the rich would escape, the poor have nothing to lose, and the middle class (which is now half the country) would have the most to lose.

The poor always have something to lose. Unlike the middle-class they are quite often to be found cold and hungry.

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2 minutes ago, zugzwang said:

The poor always have something to lose. Unlike the middle-class they are quite often to be found cold and hungry.

That is very true - I was talking about financial assets, but you're absolutely right when looked at more broadly.

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32 minutes ago, zugzwang said:

The poor always have something to lose. Unlike the middle-class they are quite often to be found cold and hungry.

And tend to rely on the services and assistance first for any cuts - so their life goes from struggling to impossible while others drop down a rung to struggling.

It's simplistic but if you're middle-class you can drop to poor. Poor drop off the cliff edge a lot easier and rich might only fall to what used to be middle-class at all.

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On 24/08/2020 at 02:35, A.steve said:

Surely only if there are other currencies who do not have a similar problem?

Bingo. Pretty much everyone in the West is printing tons of money, so all of them are going down together.

This is, most likely, the intention, so the 'elite' get their Great Reset.

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18 hours ago, Staffsknot said:

And tend to rely on the services and assistance first for any cuts - so their life goes from struggling to impossible while others drop down a rung to struggling.

It's simplistic but if you're middle-class you can drop to poor. Poor drop off the cliff edge a lot easier and rich might only fall to what used to be middle-class at all.

Sure, sure - I think my post was taken out of context.

Posters were basically asking "are people going to lose cash in a banking collapse, or will they move it to gold/bitcoin first?" to which I was noting that it's not an issue for poor people (who don't have cash anyway) or rich people (who hide their cash more cleverly) but rather for middle classes.

Clearly taking a wider view there is a lot more to life than cash in the bank.  But I was just talking about cash in the bank.

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On 25/08/2020 at 08:46, killerbee said:

A tiny percentage? The article states the figures are bigger than in 2007. 

Quote from the article-

The Bank for International Settlements, which helps central banks pursue financial stability, has estimated the overall size of the CDO market in 2007 at $640 billion; it estimated the overall size of the CLO market in 2018 at $750 billion. More than $130 billion worth of CLOs have been created since then, some even in recent months.

 

 

There was a long rebuttal of that article which said the cdo market had been packaged and repackaged  so it came to 2 trillion in 2007 and CLOs are not; and that it's only 3% of the market so not the same scale now. 

Can't find the link, sorry. 

Found it: article called in response to looming bank collapse by Follett.  

Edited by 24gray24
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