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I just think it's funny that rich people can get billions of dollars to stay solvent in a sudden crisis, and I can't get a dime when I can't pay for lunch. Am

• anoncareer0212 7y ago
  Bad analogy - the banking system doesn't fall apart if you miss lunch
  • pjmorris 7y ago
    Actually, that's exactly how banking systems fall apart, if you push it too far.
    • anoncareer0212 7y ago
      Actually, that takes such a broad view of the analogy that it has no semblance to the analogy, only the idea of completely ceasing all spending
  • excitom 7y ago
    You basically proved his point. The analogy is correct but no one cares if a little guy can't buy lunch. Same problem, different scale.
    • anoncareer0212 7y ago
      HN comments tend to have more charity than other places online – it's unlikely I "proved his point" by answering his query regarding if it's a bad analogy :) Its not that "no one cares" about "a little guy", it's that even though I didn't eat lunch today, my colleagues did. If me skipping lunch meant my colleagues didn't have any food, someone would step in to avoid my colleagues dying
• deleted 7y ago
  [deleted]
• rexbee 7y ago
  You can pay for lunch with a credit card without having the funds available.
  • jfk13 7y ago
    That's assuming you have good enough credit to get a credit card (without exorbitant fees attached).
    • cddotdotslash 7y ago
      And you get good credit by proving to banks that you won't run off with their money. In fact, they will loan you $1000s each month at 0% interest if you pay it back the next.
      • bsanr2 7y ago
        Unfortunately, the way credit risk is measured does not always measure actual credit risk, but your proximity to stereotypes of high credit risk.
• bwanab 7y ago
  Presumably it's because if a bank goes under, the economy can quickly nosedive (see 2008). If you can't get lunch, you're hungry for a couple of hours, but the world pretty much goes on unscathed. It's hard to make analogies between household finance and corporate/national finance. Modern finance is a huge and complex topic. If you haven't and are interested, start with some basic economics, then move on to more focused topics.
  • bcrosby95 7y ago
    There's a middle ground between making it impossible for certain private companies to fail (basically turning those industries into a permanent oligarchy) and saying "fuck it, let it burn".
    • isostatic 7y ago
      As the income and wealth disparity, between people and between generation, the number of people thinking "let it burn" increases. A lot. This is then multiplied when those people are those who actually do the work. Rich people in retirement homes can't get their stocks and 401ks or whatever to wipe their asses.
    • kortilla 7y ago
      It’s not impossible for these companies to fail. Banks have failed over and over even since the crisis.
• mgraczyk 7y ago
  Aside from the fact that you can easily borrow money for lunch in a variety of ways, the main difference is that banks almost never default, compared to individuals. Only one bank has failed in the US in the last two years. https://www.fdic.gov/bank/individual/failed/banklist.html https://www.fdic.gov/bank/individual/failed/banklist.html The real risks are systematic (many banks failing), not that an individual bank will fail.
  • taneq 7y ago
    This feels like a circular argument: Banks get bailed out, because banks always repay their loans, because banks can’t go broke, because banks get bailed out.
    • mgraczyk 7y ago
      Whether or not bank bailouts were prudent is a matter of debate, but unlike individuals, default is rare and overall bailouts were repaid quickly. https://www.politifact.com/new-hampshire/statements/2012/oct/25/barack-obama/barack-obama-says-banks-paid-back-all-federal-bail/ https://www.politifact.com/new-hampshire/statements/2012/oct...
    • mywittyname 7y ago
      Not really. It's more like, when a bank fails, there's a system in place to ensure a quick, transparent sale of assets to another financially sound institution.
    • kortilla 7y ago
      No, banks don’t get bailed out. That’s the point. These aren’t being bailed out each night.
  • ldayley 7y ago
    This is true- but for perspective in 2010 around 100 U.S. banks went under (actually seized, closed, and merged out by the FDIC). But yes, it’s far easier to get funded as a bank than an individual, mostly because there are laws, institutions, and processes to try and remedy problem banks if trouble happens and individuals are really on their own to find advice and resources. EDIT: I was wrong, according to FDIC it was 157[0]. [0]: https://www.fdic.gov/bank/historical/bank/ https://www.fdic.gov/bank/historical/bank/
• andrekandre 7y ago
  also a layman, but i think a lot of people feel the same way, and it’s (as far as i can see) one of the motivations for a lot of the political change going on in the u.s one other thing though, that i think about a lot is: why do we even have a system that needs so many bailouts and adjustments and hacks to keep it going... seems like our “economic os” is lacking “memory protection”...
  • kortilla 7y ago
    >one of the motivations for a lot of the political change going on in the u.s Which is horrifying because it means it’s being driven by total ignorance. >why do we even have a system that needs so many bailouts Overnight lending is not a bailout, ffs. You can do the same thing as an individual with a credit card, a payday loan, etc.
    • bsanr2 7y ago
      It would help if much of the financial industry didn't purposely obfuscate the meanings, uses, and ramifications of use of their tools. There seems to be a lot of euphemistic jargon in use, for example.
    • salawat 7y ago
      I'm not sure you're helping. Basically, the Fed issued a bunch of promises of positive growth in order to get businesses or people with money (cash) to dump that money into the banks to increase liquidity if I'm understanding this right. The financial market actually only gets into trouble when money (capital reserves) get low in comparison to balances/liabilities. "Money now" being in the right places is more important in keeping things going smoothly than "Money Later" being dumped into the market. "Money Now" shortages cause bank runs. "Money Later" (Treasury Bonds) excesses tend to attract "Money Now" when people want somewhere safe to plop "Money Now" to get back "Money Later". The extra "Money Now" allows interest rates on lending to drop. As I understand it, low "Money Now" supplies are responded to by lending at increased rates, because the bank in question can't just issue loans without the capital to service them. Or something like that. Shit, I don't even know if I managed to help. I just spent a week pouring over economics stuff to try to make sense of it all, and I'm still not sure I'm grokking it.
• gowld 7y ago
  You can get a credit card loan, a food bank gift, SNAP vouchers...
  • bsanr2 7y ago
    The short, non-snarky answer is, "No, you cannot, at least in time to get back from your 30 minute break."
• ls612 7y ago
  You can borrow money interest free for 4-7 weeks for lunch by using a credit card. These banks are borrowing money with interest for one day (overnight) to keep solvency and liquidity.
• fennecfoxen 7y ago
  No one was facing insolvency. The Federal Reserve implements its mandate to control interest rates and inflation by managing the money supply. Specifically, they do that by creating and destroying money by buying and selling government bonds on the market, until the price of those bonds is such that the interest from holding them falls within the target interest rate range. When certain interest rates were, for a moment, excessively high, they took a modestly extraordinary step to intervene. That's all. Bank bailouts were a bad idea that increased moral hazard and left the economy more at risk than it was before, but this isn't a bailout, and the commentary is about as topical here as a generic Microsoft rant on a random HN article about compilers.
• sigstoat 7y ago
  > I just think it's funny that rich people can get billions of dollars to stay solvent in a sudden crisis, and I can't get a dime when I can't pay for lunch. i think that says more about your relationship with your friends than it does the banking system.
  • pasquinelli 7y ago
    The rich have a relationship to the NY fed analogous to a friendship?
• 0x262d 7y ago
  try holding the world economy hostage with a massive amount of capital you've accrued through a combination of violence and abuse of capitalism's boom-bust nature for decades. then if you miss your lunch you can probably get someone to cover it : )
• cm2187 7y ago
  Solvency and liquidity are two different things. If you are rolling short term debt and only have long term assets you can't sell, you are taking a liquidity risk. You may be perfectly solvent (have more assets than liabilities) but if you cannot refinance the debt one day, you will go bust. The Federal reserve is not in the business of injecting capital into insolvent banks (which is why TARP in 2008 was a very unusual and controversial measure), it is in the business of providing a backstop of liquidity to banks that are solvent (this is enforced through capital requirement) but may require liquidity on a short term basis.
  • bsanr2 7y ago
    Is there a reason why I can't, say, sell equity in my car to cover the shortfall? I have a vehicle worth $nK at purchase, so I'm also solvent, just with a liquidity problem. It just seems like real cash and assets are valued less than financial instruments? Because they're More Future Money That We Expect To Exist compared to Less Now Money Which Actually Exists? I guess that makes sense but is also absolutely insane? Again, correct me if I'm wrong.
    • peterwwillis 7y ago
      You can sell equity on your home with Point (https://point.com/ https://point.com/) but I'm not aware of the same thing existing for cars, probably because it's a comparatively small chunk of change, and cars just depreciate in value, whereas homes are supposed to appreciate. Instead you could use your car as collateral for a loan, assuming you owned it.
      • tialaramex 7y ago
        _Land_ appreciates. "Real property". Many homes are built on land, and either come with the land itself as a package deal (almost all standalone residential property is like this, in the UK it would be "Freehold") or is offered as a long lease with an inherent interest in the land (more common where multiple homes share footprint, in the UK "Leasehold" or the more modern "Commonhold"). The building doesn't appreciate, if you spend $5000 on home improvements or repairs almost invariably an honest agent will tell you the value of the building was only marginally increased by doing this, because it was never the building value that mattered. Where people just own the building and NOT the land, "mobile homes" or "manufactured homes" depreciation destroys the value of the home relatively quickly, within a lifetime usually.
• zenmaster10665 7y ago
  This isn't a bailout. The Fed is there for this specific reason, to ensure the market functions smoothly. The money injected into the repo market ensured that things ran smoothly. I would think they would simply unwind the repo positions as normal when the forcing factors on the market resolve... With no money lost or won... Think of it as lubrication for a system that is a bit squeaky in some places.
  • pishpash 7y ago
    Just like QE was to be unwound. How's that going? You should be asking what the steady state looks like.
    • navigatesol 7y ago
      Why shouldn't the balance sheet permanently increase along with the size of income?
• kortilla 7y ago
  Yes, you’re reading this entirely wrong. This isn’t for rich people to stay solvent.