Comments by "G Money" (@AliceinWonderlandzz) on "Peter Zeihan || The Financial Crisis of 2023?" video.

  1. Wrong - see Lynn Aldens newsletter
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  2. XXX - 3 Strikes. Sorry you've completely misread the situation. I refer you to Lynn Alden's newsletter for a very clear and deep understanding. Bottom line the risk is systemic among regional banks - they have all been using "hold to maturity' valuations to rig their balance sheets. This has caused a liquidity crunch because they have assets in an untouchable category that can't be used to meet withdrawals. SVB lost a major depositor and that triggered them selling underwater treasuries and loans to stay liquid which snowballed into insolvency. All the regionals have the same vulnerability and they are bleeding deposits in a flood because anyone and everyone is moving their money to the major banks. The new rules can't fix that. We will see a cascade of these regional banks unable to meet liquidity requirements, especially because they will not be able to secure repo financing on inflated assets. This will seize the banking system in the same way we saw 2008. No interbank borrowing will take place because they cannot value the hold to maturity assets properly. You have a trifecta of asset value collapses that threaten the whole system - the interest rate devalued treasuries, but also the corporate paper (bonds and mortgages) in a collapsing commercial real estate market of which the regionals made an outsized portion of the market, and finally the ongoing collapse of the housing market. If the stock market and housing market continue to fall the system seizes. We should see regionals start to fail but I expect a big bank like Credit Suisse to be nationalized triggering the larger crisis. The FDIC does not have the liquidity to absorb a string of failures and the Fed will have to step in. What Powell does next is the issue. My gut says he wants to stick to hawkishness and keep raising rates to take out inflation despite the systemic risk. But Biden has the final word. His hand was evident on Sunday when Yellen went on the talk shows and pledged the Fed wouldn't save SVB and by 5 pm they reversed and were in full rescue mode. I think even a .25% hike in the next meeting at the end of the month triggers the banking seizure. Powell has to pivot and stop quantitative tightening and selling off his treasuries. By third quarter I predict the first interest rate cut. What it means is persistent inflation, tight credit and a 1970's economic malaise at best or hard depression if the banks seize.
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