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> Banks are not overleveraged. Banks are holding $600+ billion in currently worthless bonds. https://www.google.com/search?q=620+billion+dollar+bonds+bank htt

> Banks are not overleveraged. Banks are holding $600+ billion in currently worthless bonds. https://www.google.com/search?q=620+billion+dollar+bonds+bank https://www.google.com/search?q=620+billion+dollar+bonds+ban...

dchftcs 4y ago
No, the bonds are worth something, and the losses can narrow by a lot if they're allowed to hold to maturity, deposit interest rates rise slowly enough and if broad interest rates drop some time on the future. The risk that they can't narrow is indeed real and whether to backstop that is a source of contention here.
- yeahsure22 4y ago
  Unfortunately we are stuck living in the present where the bonds are worthless and not the future.
  - pjc50 4y ago
    "slightly less valuable than expected" is not "worthless"! The hyperbole bubble is getting exhausting. People really want to talk a crisis into existence. Are they bored?
    - WalterSear 4y ago
      https://www.cnbc.com/2023/03/19/sp-cuts-first-republic-deeper-into-junk-says-30-billion-infusion-may-not-solve-problems.html https://www.cnbc.com/2023/03/19/sp-cuts-first-republic-deepe...
  - jmillikin 4y ago
    If you happen to be holding any "worthless" Treasury bonds, I would be happy to take them off your hands for $0.10 on the dollar.
    - WalterSear 4y ago
      I bet the banks would jump at the chance to turn a $600 billion hole into a $540 billion hole.
neural_thing 4y ago
I understand that that's a scary number, but definitions are important. There is no $600B of worthless bonds. There is $600B of unrealized losses. The bonds are worth something. Moreover, unrealized losses are not leverage. Banks in 2008 were levered 30-to-1. No such thing now.
jcuenod 4y ago
Some of them are even holding bags of rocks.[0] [0] https://www.wsj.com/livecoverage/stock-market-news-today-03-20-2023/card/it-turns-out-that-jpmorgan-bought-the-nickel-that-turned-out-to-be-stones-whWn9TqZaksdTPcGyyAi https://www.wsj.com/livecoverage/stock-market-news-today-03-...

dchftcs 4y ago

No, the bonds are worth something, and the losses can narrow by a lot if they're allowed to hold to maturity, deposit interest rates rise slowly enough and if broad interest rates drop some time on the future. The risk that they can't narrow is indeed real and whether to backstop that is a source of contention here.

yeahsure22 4y ago
Unfortunately we are stuck living in the present where the bonds are worthless and not the future.
- pjc50 4y ago
  "slightly less valuable than expected" is not "worthless"! The hyperbole bubble is getting exhausting. People really want to talk a crisis into existence. Are they bored?
  - WalterSear 4y ago
    https://www.cnbc.com/2023/03/19/sp-cuts-first-republic-deeper-into-junk-says-30-billion-infusion-may-not-solve-problems.html https://www.cnbc.com/2023/03/19/sp-cuts-first-republic-deepe...
- jmillikin 4y ago
  If you happen to be holding any "worthless" Treasury bonds, I would be happy to take them off your hands for $0.10 on the dollar.
  - WalterSear 4y ago
    I bet the banks would jump at the chance to turn a $600 billion hole into a $540 billion hole.

neural_thing 4y ago

I understand that that's a scary number, but definitions are important. There is no $600B of worthless bonds. There is $600B of unrealized losses. The bonds are worth something. Moreover, unrealized losses are not leverage. Banks in 2008 were levered 30-to-1. No such thing now.

jcuenod 4y ago

Some of them are even holding bags of rocks.[0] [0] https://www.wsj.com/livecoverage/stock-market-news-today-03-20-2023/card/it-turns-out-that-jpmorgan-bought-the-nickel-that-turned-out-to-be-stones-whWn9TqZaksdTPcGyyAi https://www.wsj.com/livecoverage/stock-market-news-today-03-...