Connect with us

Economics

Processing the entrails of First Republic Bank

In highly anticipated news, First Republic (NYSE: FRC) went bye-bye over the weekend. As long as the yield curve remains inverted and quantitative easing…

Share this article:

Published

on

This article was originally published by Divestor

In highly anticipated news, First Republic (NYSE: FRC) went bye-bye over the weekend.

As long as the yield curve remains inverted and quantitative easing continues, financial institutions are going to receive continued pressure and the “too big to fail” institutions will be the ones to vacuum up the money.

Think of it this way – behind each bank asset (a customer loan) is a bank liability (a customer deposit). If the asset to liability situation goes out of regulatory proportions (e.g. you took your customer loans and invested in them in high-duration government debt and suddenly your customer wants their deposits back and you can’t pay it), you get FDIC’ed. However, when the FDIC process occurs, it is not as if all of that capital goes away – it has to go somewhere. It doesn’t end up as paper banknotes inside the safe or underneath the couch, but rather it goes to another financial institution. The assets and liabilities go somewhere else within the financial net – they do not vanish!

In this case, it appears destined that the assets in this digital financial world (where assets get transferred with mouse clicks) will bubble up to the systemically important banks.

I’ve been trying to pick away at the entrails of the lesser banks within the USA, but I don’t have a clue how to project who will survive and who will not. So I’ve given up.

I will leave this post with one amusing note. Financial releases go through plenty of review cycles within management, but if they can’t spell the word “average” correctly, it is trouble:

Share this article:

Economics

Argentina Is One of the Most Regulated Countries in the World

In the coming days and weeks, we can expect further, far‐​reaching reform proposals that will go through the Argentine congress.

Share this article:

Published

on

Continue Reading
Economics

Crypto, Crude, & Crap Stocks Rally As Yield Curve Steepens, Rate-Cut Hopes Soar

Crypto, Crude, & Crap Stocks Rally As Yield Curve Steepens, Rate-Cut Hopes Soar

A weird week of macro data – strong jobless claims but…

Share this article:

Published

on

Continue Reading
Economics

Fed Pivot: A Blend of Confidence and Folly

Fed Pivot: Charting a New Course in Economic Strategy Dec 22, 2023 Introduction  In the dynamic world of economics, the Federal Reserve, the central bank…

Share this article:

Published

on

Continue Reading

Trending