How about this opinion?
TL;DR: Bankrun because of negative interest rates.
meritorius_demotion
Joe, thanks for the shoutout and the back and forth via DM
As I said to you, I'm wondering if the large banks have gone to their respective federal chairs and at this point have laid bare to them because of this single month of China decreasing manufacturing, we don't even have a month supply shock runway to keep the ship from sinking due to the current velocity of money to maintain our current global economy. While a month long shortage of goods should rightfully decrease GDP albeit there will be some bounceback due to pent up demand, I'm of the firm belief all the zombie corps out there will go tits up.
Likewise banks clamoring for interest rate decreases guts their traditionally core business of treasury yield arbitrage based off of deposits as it obviously makes sense to everyone that unless you live in a world of serious deflation, lending money out in the negative percentages as the Germans do makes no sense. Of course there are statutory minimum amounts of bonds their banks must hold so they are coerced into the game and let's face it if you have to hold 50 billion in treasuries its better to do so at -.3% rather than -.5% as an example so there will always be a market due to it. Given the mystery repo bank being largely speculated as Deutsche or some other German bank and you can see in the graph how repos have spiked after a good decrease in the need of them since they started in September, a .5% decrease and another one already being priced in is an obvious capitulation sign where they have told their chairs that the only way they stay afloat and stop a panic are these drastic measures as pre-emptively curbing illiquidity is just wasting bullets unless the people who need to use it themselves are already outright telling them they can't wait for the expected money velocity decrease due to less goods to hit their balance sheets as that will be the day they are insolvent.
It is interesting though that as interest rates decrease the need for banks as a store of wealth becomes increasingly useless outside of security purposes so people are even more greatly encouraged to go direct to bonds/stocks and even classics like real estate for investment but it further hampers the banks ability to lend against deposits maintained by their institution without requesting the fed to lower it's threshold for maintained deposits. if inflation then hits through say trillions of dollars of QE and interest rates stay low there is then exactly no reason to keep your money in banks outside security which will result in bona fide bank runs.
TL;DR: Bankrun because of negative interest rates.
meritorius_demotion
Joe, thanks for the shoutout and the back and forth via DM
As I said to you, I'm wondering if the large banks have gone to their respective federal chairs and at this point have laid bare to them because of this single month of China decreasing manufacturing, we don't even have a month supply shock runway to keep the ship from sinking due to the current velocity of money to maintain our current global economy. While a month long shortage of goods should rightfully decrease GDP albeit there will be some bounceback due to pent up demand, I'm of the firm belief all the zombie corps out there will go tits up.
Likewise banks clamoring for interest rate decreases guts their traditionally core business of treasury yield arbitrage based off of deposits as it obviously makes sense to everyone that unless you live in a world of serious deflation, lending money out in the negative percentages as the Germans do makes no sense. Of course there are statutory minimum amounts of bonds their banks must hold so they are coerced into the game and let's face it if you have to hold 50 billion in treasuries its better to do so at -.3% rather than -.5% as an example so there will always be a market due to it. Given the mystery repo bank being largely speculated as Deutsche or some other German bank and you can see in the graph how repos have spiked after a good decrease in the need of them since they started in September, a .5% decrease and another one already being priced in is an obvious capitulation sign where they have told their chairs that the only way they stay afloat and stop a panic are these drastic measures as pre-emptively curbing illiquidity is just wasting bullets unless the people who need to use it themselves are already outright telling them they can't wait for the expected money velocity decrease due to less goods to hit their balance sheets as that will be the day they are insolvent.
It is interesting though that as interest rates decrease the need for banks as a store of wealth becomes increasingly useless outside of security purposes so people are even more greatly encouraged to go direct to bonds/stocks and even classics like real estate for investment but it further hampers the banks ability to lend against deposits maintained by their institution without requesting the fed to lower it's threshold for maintained deposits. if inflation then hits through say trillions of dollars of QE and interest rates stay low there is then exactly no reason to keep your money in banks outside security which will result in bona fide bank runs.
