Wednesday, 25 November 2020

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Friday, 27 November 2015 00:00

The FDIC Corroborates My "F@ck the Fundamentals" Message for the Fed Featured

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Banks are headed towards rough waters and it's not just me who believes so. You may be getting the rose-colored glasses edition from the media and Wall Streeet (ahem, banks!) but all you have to do is read past the soundbyte laden 1st paragraph or so. Take this recent article from Bloomberg quoting the FDIC: FDIC Says Bank Profits Rose in Third Quarter, Warns of Credit Risk. We're going to ignore the credit risks potion (which is an entire article on its own) and focus on a singe sentence where the FDIC agrees with Reggie in that the Fed's monetary policy is B@llsh1t!:

"In the environment of low rates, interest-rate risk and credit risk have increased..."

Let's parse this statement. "In the environment of low rates, intereste -rate risks and credit risks have increase..." So, the premium on the interest that you are charged for being (or operating in a) high risk is not being charged, despite the fact said risks "have increased"?!?!?! Basically, teh safety cushion that modern markets price into higher risks has been removed and rates are low despite the fact that the risks about dicate rates should be high? Tell me, what's wrong with this picture?

Here's another snippet causing me to reminisce on a blast from the past:

"Revenue growth for the industry as a whole has been modest since 2009,” he said. “This is partly a reflection of the challenging interest-rate environment.” 

Uh huh! Listen these clips from 2011 below...

You've heard me pontificate on these topics before...

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Reggie Middleton's Prognosticated Market Crash and False Positives in Interest Rate Raise Promises
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...  Let's see how much tens of billions euros and a trillion dollar promise is worth in terms of buying time from an interest rate and currency storm... The Trillion Dollar Promise worked for 4 month ...
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2010 Contrarian Prediction of the Disastrous Consequences of ZIRP & Free Money Policy In the Banking System, Year 5
... ing affected by low interest rates— they are killing its spread income. Now, go to the 0:55 marker in this video and listen for a minute or two, then continue reading. Chairman and Chief Executive  ...
Created on 17 April 2015
"Fu$k the Fundamentals!": Negative Rates In EU Will Absolutely Wreck the Very System the ECB Sought to Save
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