My take:
There are always hyper intelligent very greedy bastards operating in the dark corners of finance who know the score and will do anything to make danger and looming disaster work for them. For them, it was easy to figure that rising interest rates would erode the banks' capital support in a leveraged way because, after all, banking is fractional gig.
Hell, if I had thought of that now-very-obvious nuance, I'd been shorting banks, too.
The financial pirates do it massively, with super-leveraged stuff. We are sheep, complete innocents compared to them.
Happened in 2008, when Goldman was selling crap while shorting it. Countless other examples.
When this episode is over, there will be new Michael Burrys who took massive short positions on banks early on and made zillions.
Michael Lewis will write books about them, movies will be made. Wash, rinse, repeat.
This time is different because it appears that the "precautions" taken post-2008 are a joke.
Bank managers no longer think as near-fiduciaries, like they should.
Why should they? No one regulates them in any substantive way. And there no longer exists a code of honor among this gang of thieves.
Stress tests have been called ludicrous by the very few who have put pen to paper. Those who really do objectively engage with the numbers, are ignored until it is too late.
So here we are.
What will happen?
Some band-aid scheme until band-aid schemes no longer work.
Until systemic risk is taken out of the system by prohibiting these arseholes from dealing in derivatives, the sword of Damocles will be always hanging over us.
But let's not get optimistic about that. Those arseholes have very effectively captured the regulators (who are, incidentally, idiots), so....
Hang tight.
Time will tell.
I have no clue, except for one thing I think is likely to happen and that is this:
It isn't over yet.
The latest scheme reeks of global regulatory desperation. |
