Hard to say, Michael. There is no exact science or way of knowing. It's different people making different and, often, politically motivated guesses. best, Larry
Hi Joseph, Not trying to be cute. And I'm not trolling Trump. He's not part of this national conversation. Why is that? And why are you obsessed with this miscreant? Hasn't he done enough damage to our country? Good you never did business with him. You'd be singing a very different tune. Check with all the people he has swindled. That's ok in your book? https://fred.stlouisfed.org/series/QBPBSTLKDPDOFFDPESTIDP says the FDIC insured deposits are just south of $10 trillion. This source has total deposits in the U.S. banking system at $19 trillion -- https://ycharts.com/indicators/us_banks_total_deposits#:~:text=Basic%20Info,0.99%25%20from%20one%20year%20ago. "Some assets are held to maturity because they are exactly that." Pardon me, but this is pure drivel. SVB didn't have a choice to hold its assets to maturity because they had to be sold to meet its run on deposits. "There is no such thing as selling HTM and realizing a $2 trillion loss in assets. Again, you are old enough to remember 2007-2008. There is every such thing as selling assets in a fire sale and experiencing massive losses -- fare greater than $2 trillion. Yes, not all bank assets are valued at the wrong prices. But enough are. What your fine print says is that the banks don't book/disclose the marked to market quarterly losses of HTM assets. You write: "The valuation of HTM assets aren't booked ... because they aren't going to be sold." Sorry, this is so much happy horseshit. The aren't going to be sold just up to the second they have to be sold. And ask SVB if it had to sell HTM-valued assets right before it collapsed. I don't mind a reasonable discussion. I don't mind being wrong. But let's get real. If there were no problem, we would be facing a potential massive financial collapse.
My first statement says exactly what your first sentence says, so I'm confused? Marking to book every quarter is not marking to market every quarter. The statement that half the banks are flat broke marked to market has a link to the study by the four finance professors. Have you read it and looked at the table (I think it's number 10.)? Please don't get upset with me. This is about the facts. If I'm wrong on them, I'll be the first to admit it. This is why I link to everything I claim. I want you and others to see the source. Please respond or call if you want to chat. I'm sure you can educate me. And I'm saying this seriously. 617 834-2148.
Very cute Larry. They disclose market value every quarter. You should research this before you embarrass yourself. Some assets are classified as held to maturity because they are exactly that. As for some finance professors estimating $2 Trillion of losses - to start with, there is no such thing as selling assets and losing $2 Trillion (which your friends estimate is 10%) So this would require selling $20 Trillion of HTM assets. Do you see that happening anywhere? Ever? The total assets of ALL FDIC insured banks was 23 Trillion as of YE 2022 (this is not a question of insured versus uninsured DEPOSITS. Oh, and HTM assets are a subset of assets). Look this up at fdic.gov if you know how to read financial statements. So your friends are suggesting that if all the assets of the entire banking system were sold to someone, Martians perhaps, there'd be a $2 trillion loss? You should sanity check these numbers before you repeat them. And yes, banks disclose market value every quarter. The valuation changes of HTM assets are not booked as losses - not run through the P&L -because they are not going to be sold, unless the Martians are actually buying them. This is Trump-level trolling that you are writing. You should be embarrassed.
Harking back to an earlier Deutsche Bank scandal (the $130Bn CDO accounting shenanigans unearthed by Ben-Artzi, (aside:i can only hope this become a good hollwyood movie) ), Deutsche saved(!) itself (not using that term lightly, quite literally) by moving the ENTIRE CDO portfolio over to "held to maturity" status....they could do this.. because....(get this!)....they were a "commercial" and "mom and pop" deposit taking bank (in Frankfurt), married to a global sinful INvestment Bank! Glass Steagall anyone?
Every quarter banks disclose the value of HTM securities and loans. Your first statement is patent nonsense and you go downhill from there. No half of all banks are not flat broke but you are intellectually bankrupt.
For me, if I click your image for MaxFi to look at the product it simply opens the image in a new window. I could be an edge-case or it may be my browser or something,, but in terms of ease-of-purchase (or further info) the image should link to the webpage.
Prof Kotlikoff - I just read Bradford DeLong's "Slouching Toward Utopia". It is funny, the book was written as an argument to Eric Hobsbawm's "The Age of Empire" I preferred AoE because it took "class" into consideration in explaining how capitalism has grown and who it has impacted and why.
I heard DeLong interviewed on Pitchfork Economics about the book and as predicted he was challenged with his buddy Jason Furman's handling of the Financial Crises and Furman's lean toward austerity during the crises. DeLong was a bit defensive on behalf of Furman (a friend and fellow Harvard Alum) but when asked if his colleague at Cal, Christina Roemer, who was also in the Obama administration at the time, and who fought for stronger stimulus has not proven to have had the better strategy DeLong would not chose sides.
How about you? Are you of the view that Roemer was correct in assuming that, as we learned during Covid, stronger stimulus vs austerity would have led to faster economic recovery, higher government revenue and lower deficits?
Thanks, Kiers. Yes, deja vu all over again.
best, Larry
Hard to say, Michael. There is no exact science or way of knowing. It's different people making different and, often, politically motivated guesses. best, Larry
Hi Joseph, Not trying to be cute. And I'm not trolling Trump. He's not part of this national conversation. Why is that? And why are you obsessed with this miscreant? Hasn't he done enough damage to our country? Good you never did business with him. You'd be singing a very different tune. Check with all the people he has swindled. That's ok in your book? https://fred.stlouisfed.org/series/QBPBSTLKDPDOFFDPESTIDP says the FDIC insured deposits are just south of $10 trillion. This source has total deposits in the U.S. banking system at $19 trillion -- https://ycharts.com/indicators/us_banks_total_deposits#:~:text=Basic%20Info,0.99%25%20from%20one%20year%20ago. "Some assets are held to maturity because they are exactly that." Pardon me, but this is pure drivel. SVB didn't have a choice to hold its assets to maturity because they had to be sold to meet its run on deposits. "There is no such thing as selling HTM and realizing a $2 trillion loss in assets. Again, you are old enough to remember 2007-2008. There is every such thing as selling assets in a fire sale and experiencing massive losses -- fare greater than $2 trillion. Yes, not all bank assets are valued at the wrong prices. But enough are. What your fine print says is that the banks don't book/disclose the marked to market quarterly losses of HTM assets. You write: "The valuation of HTM assets aren't booked ... because they aren't going to be sold." Sorry, this is so much happy horseshit. The aren't going to be sold just up to the second they have to be sold. And ask SVB if it had to sell HTM-valued assets right before it collapsed. I don't mind a reasonable discussion. I don't mind being wrong. But let's get real. If there were no problem, we would be facing a potential massive financial collapse.
Hi Joseph,
My first statement says exactly what your first sentence says, so I'm confused? Marking to book every quarter is not marking to market every quarter. The statement that half the banks are flat broke marked to market has a link to the study by the four finance professors. Have you read it and looked at the table (I think it's number 10.)? Please don't get upset with me. This is about the facts. If I'm wrong on them, I'll be the first to admit it. This is why I link to everything I claim. I want you and others to see the source. Please respond or call if you want to chat. I'm sure you can educate me. And I'm saying this seriously. 617 834-2148.
best, Larry
Very cute Larry. They disclose market value every quarter. You should research this before you embarrass yourself. Some assets are classified as held to maturity because they are exactly that. As for some finance professors estimating $2 Trillion of losses - to start with, there is no such thing as selling assets and losing $2 Trillion (which your friends estimate is 10%) So this would require selling $20 Trillion of HTM assets. Do you see that happening anywhere? Ever? The total assets of ALL FDIC insured banks was 23 Trillion as of YE 2022 (this is not a question of insured versus uninsured DEPOSITS. Oh, and HTM assets are a subset of assets). Look this up at fdic.gov if you know how to read financial statements. So your friends are suggesting that if all the assets of the entire banking system were sold to someone, Martians perhaps, there'd be a $2 trillion loss? You should sanity check these numbers before you repeat them. And yes, banks disclose market value every quarter. The valuation changes of HTM assets are not booked as losses - not run through the P&L -because they are not going to be sold, unless the Martians are actually buying them. This is Trump-level trolling that you are writing. You should be embarrassed.
This is a very informative post! Mind blowing!
Harking back to an earlier Deutsche Bank scandal (the $130Bn CDO accounting shenanigans unearthed by Ben-Artzi, (aside:i can only hope this become a good hollwyood movie) ), Deutsche saved(!) itself (not using that term lightly, quite literally) by moving the ENTIRE CDO portfolio over to "held to maturity" status....they could do this.. because....(get this!)....they were a "commercial" and "mom and pop" deposit taking bank (in Frankfurt), married to a global sinful INvestment Bank! Glass Steagall anyone?
Also, look at Charles Schwab!
https://seekingalpha.com/article/4587107-schwab-stock-bank-deposits-decelerating-extreme-caution-needed
(imagine the irony! they tout fancy market monitors and technical wizardry to mom and pops via their "think or swim" ads!)
Every quarter banks disclose the value of HTM securities and loans. Your first statement is patent nonsense and you go downhill from there. No half of all banks are not flat broke but you are intellectually bankrupt.
For me, if I click your image for MaxFi to look at the product it simply opens the image in a new window. I could be an edge-case or it may be my browser or something,, but in terms of ease-of-purchase (or further info) the image should link to the webpage.
Thanks for the interesting emails!
Prof Kotlikoff - I just read Bradford DeLong's "Slouching Toward Utopia". It is funny, the book was written as an argument to Eric Hobsbawm's "The Age of Empire" I preferred AoE because it took "class" into consideration in explaining how capitalism has grown and who it has impacted and why.
I heard DeLong interviewed on Pitchfork Economics about the book and as predicted he was challenged with his buddy Jason Furman's handling of the Financial Crises and Furman's lean toward austerity during the crises. DeLong was a bit defensive on behalf of Furman (a friend and fellow Harvard Alum) but when asked if his colleague at Cal, Christina Roemer, who was also in the Obama administration at the time, and who fought for stronger stimulus has not proven to have had the better strategy DeLong would not chose sides.
How about you? Are you of the view that Roemer was correct in assuming that, as we learned during Covid, stronger stimulus vs austerity would have led to faster economic recovery, higher government revenue and lower deficits?