Financial Armageddon!!

[Chris W]

Yes, most people in NZ are blissfully unaware of these risks and the risks of financial stability of the financial system in NZ.

The RBNZ governor at the time was keeping watch of a potential depositor run on banks in NZ, after
1) the bank depositor run on Northern Rock in the UK, and
2) the collapse of the finance companies in NZ due to lack of liquidity & depositor runs. Heard two unrelated reports of families who had diversifed their deposits across multiple finance companies who ended up losing most of their deposits.

To reduce the risk of bank runs in NZ, the Government implemented the Crown Retail Deposit Guarantee Scheme in October 2008, which expired in December 2011.

Bank deposits in NZ are currently no longer guaranteed.

The RBNZ provided liquidity to banks during 2008 - 2009 period and government guarantee schemes also assisted in providing liquidity to the NZ banks in 2008 - 2009.

Anyone who understands banking crises is aware of potential risks of financial stability on the financial system and the potential impact on the economy and its residents.

The last time a bank in NZ needed a government recapitalisation was in 1990.

Under current conditions, some people in NZ are now focusing on the safety of their money again with:

1) bank run on SVB in the US
2) bank run on Signature Bank in the US
3) potential issues with Credit Suisse in Switzerland.
4) today's press release by RBNZ

[Perry]

Bad credit loans, think Resimac or Bluestone non bank finance lenders which have higher interest rates.

I've no idea what those names relate to.

But when subprime is tied with the word "auto," that's perplexing. (For me.)

Besides bank lenders, we have all sorts of second-tier lenders in NZ for used car purchase finance.
Q Card
MTF
Core
. . . and others.

Are they all "sub-prime" in their context? Why? Just because the asset is a used car?

Used cars bought on HP usually go on to the [digital] securities register, to give the lender a smidgeon of collateral / protection.

[Jeffa]

I haven't read the article on Auto loans, but from my understanding in the U.S Auto loan finance, some of there lending is similar to our mortgage lending, you can fix for a year or 2, the problem is these car loans are rolling off low fixed rates to todays higher rates and people are just returning cars with debt owing, this is causing a build up of car dealer inventory on top of car dealers being unable to sell cars already back logging on the yards.

These warnings affect more the new car market, the used car market is actually more insulated because it has already lost much of its value for basically being used <$19k ish .

Ford has paused producing the pick up truck and started to cut workers,

This only gets worse and will affect the worlds economy the higher interest rates rise or even pause, the only way to fix this mess is to lower interest rates again, inflation or not, bond market is pricing in rate cuts to begin in the U.S as early as June.

[Jeffa]

I haven't read the article on Auto loans, but from my understanding in the U.S Auto loan finance, some of there lending is similar to our mortgage lending, you can fix for a year or 2, the problem is these car loans are rolling off low fixed rates to todays higher rates and people are just returning cars with debt owing, this is causing a build up of car dealer inventory on top of car dealers being unable to sell cars already back logging on the yards.

These warnings affect more the new car market, the used car market is actually more insulated because it has already lost much of its value for basically being used <$19k ish .

Ford has paused producing the pick up truck and started to cut workers,

This only gets worse and will affect the worlds economy the higher interest rates rise or even pause, the only way to fix this mess is to lower interest rates again, inflation or not, bond market is pricing in rate cuts to begin in the U.S as early as June.

My point being, the sub prime crisis in 08/09 was made up of bad mortgage lending to people with bad credit, lower poorer social economic class,blacks, Latinos,white trailer trash,drug addicts hookers etc,

This sub prime crisis is made up of bad car loans...the car loan industry in the US is far bigger than the home loan industry.

[Perry]

There is just so much nonsensical blather about. Much of it uses words and expressions which are meaningless, or contextually strained, or totally enigmatic. At least, for the uninformed. E.g.

Does "halt on trading" mean no share market trading?

Or no customers being able to 'trade,' with their bank, either electronically or at the counter?

Or both?

So far, most of the bank disease contagion seems to be in the Northern hemisphere. So far.

[Perry]

Wokery, Brokery, Dock!

Silicon Valley Bank and its depositors and investors have learned the hard way that financial mismanagement and collapse is a genderless, wokeless, colour blind and environmentally apathetic affair.

Wokery - known in the business world by its various three-letter acronyms, such as CSR (corporate social responsibility), ESG (environmental, social, and governance) and DEI (diversity, equity and inclusion).

While it will likely be derided as a specious association, virtually all of the firms which have recently detonated in spectacular fashion were devout standard-bearers of the environmental, social, and governance (ESG) doctrine.

[chook]

The fed printer is working overtime, half a trillion in last 2 weeks to TRY and stabilize the US banking system.
What this means? here is just a few..
Soaring inflation
more bank runs and bank defaults
Kiwi saver funds tanking..

But the liars are telling you..."Everything's fine"

[chook]

And we havent mentioned Europes banks, take a look whats happening right now with Europes number one bank Deutchbank...

[Frezzinghot]

And we havent mentioned Europes banks, take a look whats happening right now with Europes number one bank Deutchbank...

Nothing to see here, move along, move along.

[chook]

China is leading the charge in de-Dollarizing the US dollar, they have made deals with France & Brazil (to name a few) to trade in local currencies.

Watch for this to speed up confirming the downfall of the US Dollars reserve status.

This wont be good for the US economy.

[Jeffa]

China is leading the charge in de-Dollarizing the US dollar, they have made deals with France & Brazil (to name a few) to trade in local currencies.

Watch for this to speed up confirming the downfall of the US Dollars reserve status.

This wont be good for the US economy.

Or the rest of us, this could lead to war in Asia or closer to our backyard in Australian waters, I see OZ ordering some U.S made Nuclear armed Submarines for next decade.. the U.S will defend the dollar until the end.

[chook]

This is not good folks...

[chook]

Its even scarier when its bigger..

[chook]

If you thought the banking crisis was over think again, its only getting started. First Republic bank USA

[Chris W]

If you thought the banking crisis was over think again, its only getting started. First Republic bank USA

Their business model is not sustainable under current conditions.

They sold their money for a long term at a fixed price to their customers. (I.e. long term mortgages with fixed interest rates)

Meanwhile their costs have increased and are now loss making.

The mortgage borrowers may like their long term fixed rate mortgages, but that has meant that their lender will go bankrupt due to the lender taking on interest rate risk.

People are unaware of financial stability risks until banks go bankrupt.