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Again - wrong. This is not a liquidity crisis. It's a solvency crisis. These banks have debts (i.e. deposits) that exceed their assets (the mbs and bonds tha
by oraphalous 4y ago
Again - wrong. This is not a liquidity crisis. It's a solvency crisis. These banks have debts (i.e. deposits) that exceed their assets (the mbs and bonds that are now worth less than their hold to maturity value).
- basch 4y agoWhy is it a solvency crisis? The 10 year bonds, if held to maturity, cover the assets, no? It’s that they can’t offload the bonds in the current environment because there are more attractive bonds of the same duration. All of these assets and accounts have to look extremely attractive to the largest institutions that can absorb them without increasing the risk to their own books.
- oraphalous 4y agoA ten year wait till maturity is not a short term funding shortfal... lol