Swammerdami
Squadron Leader
There is much talk of doom and gloom, but the timing and form of the coming crisis are uncertain. There are many anecdotes of American manufacturers shutting down lines, e.g. due to worry about the availability of aluminum, but monthly indicators remain strong. Are we headed for recession, i.e. rising unemployment? Perhaps not, since jobseekers might find work at the slots vacated by deported immigrants.
Jeffrey Sachs points out that the world was headed for financial crisis even before the reins of power were handed to the Orange Idiot. The move away from the Dollar as the only key reserve currency began in 2022 under Biden with the freezing of Russia's accounts at central banks. (Regardless of whether this was the morally correct action it reminded countries that their dollar reserves were subject to U.S. whim. How would you like your checking account frozen because the bank didn't like your politics?)
I see Canada being praised for standing up to the U.S. and diverting its trade to countries other than U.S. Canada's calm bravery is compared with Trump's psychotic behavior. But won't Canada still suffer a severe economic downturn? Do we need to wait several months to judge this? Pundits speak of foreign central banks buying gold instead of U.S. Treasuries. But I see anecdotes, not firm data. The 30-year Treasury yield just poked its nose above 5% but it was that high in 2023.
Are American commercial banks being propped up by the government? I still don't properly understand why banks should earn 5.4% on their excess reserves. Nor why the cash reserve required to back demand deposits was reduced to zero. I see that in 2022, the NET unrealized gains of commercial banks on their securities was a whopping NEGATIVE $700 Billion! There were five different datasets available at FedRes's FRED site for "Unrealized gains (losses) at commercial banks on available-to-sell securities." In 2022 all five of these datasets were DISCONTINUED.
I've been reading in an attempt glean what the consensus forecast is, but all I come up with is "chaos and unpredictability." Sell your long-term bonds. This may be a good time to refinance your house. The stock-market bubble will burst ... but when?
Jeffrey Sachs points out that the world was headed for financial crisis even before the reins of power were handed to the Orange Idiot. The move away from the Dollar as the only key reserve currency began in 2022 under Biden with the freezing of Russia's accounts at central banks. (Regardless of whether this was the morally correct action it reminded countries that their dollar reserves were subject to U.S. whim. How would you like your checking account frozen because the bank didn't like your politics?)
I see Canada being praised for standing up to the U.S. and diverting its trade to countries other than U.S. Canada's calm bravery is compared with Trump's psychotic behavior. But won't Canada still suffer a severe economic downturn? Do we need to wait several months to judge this? Pundits speak of foreign central banks buying gold instead of U.S. Treasuries. But I see anecdotes, not firm data. The 30-year Treasury yield just poked its nose above 5% but it was that high in 2023.
Are American commercial banks being propped up by the government? I still don't properly understand why banks should earn 5.4% on their excess reserves. Nor why the cash reserve required to back demand deposits was reduced to zero. I see that in 2022, the NET unrealized gains of commercial banks on their securities was a whopping NEGATIVE $700 Billion! There were five different datasets available at FedRes's FRED site for "Unrealized gains (losses) at commercial banks on available-to-sell securities." In 2022 all five of these datasets were DISCONTINUED.
I've been reading in an attempt glean what the consensus forecast is, but all I come up with is "chaos and unpredictability." Sell your long-term bonds. This may be a good time to refinance your house. The stock-market bubble will burst ... but when?
