Assets are called “safe” when they’re free of default risk. But that doesn’t mean their prices can’t drop, or that the financial system is safe if systemically important institutions buy them on margin.
What appears to be a liquidity issue will ultimately become a financial stability issue as investors discover their “safe assets” are not safe.
Source: Solvency Constraints – Fed Guy
I could buy a one- or two- year T-bill paying better than 2.25 percent. So why would I buy a CD paying half or three-quarters percent?
With no card number, CVV security code, expiration date or signature on the card, Apple Card is more secure than any other physical credit card.
Source: Apple Card launches today for all US customers – Apple
While @jackieLbrewer was working at the bakery there was a cash register glitch. For several days they took credit card payments on paper, writing the number down by hand, and then entering them manually at the end of the day.
Those customers would have been totally secure from being able to buy bread.
The government shutdown gives renewed relevance to this 4-part series I wrote for Wise Bread at the peak of the financial crisis: Getting by without a job, part 1–losing a job
At some point in the last few years, presumably related to my writing for Wise Bread, a whole bunch of PR flacks started sending me their press releases—mostly about money stuff, with a little writing stuff and journalism stuff thrown in.
It has been very tedious, but I have hesitated to mark these messages as spam, because the topics are things that interest me (even if the actually email messages are almost never of any interest whatsoever).
After spending a year or two just deleting all that crap manually, I’ve spent a few minutes today making a filter that grabs that stuff and puts it in a folder called “Lame PR” so I don’t have it cluttering up my inbox.
So far I’m sorting by sender, because I think there are only about a dozen senders behind the majority of this crap. Maybe I’m mistaken. There may be too many senders. But I doubt if they’re doing the spammer tricks to make this stuff hard to filter. (They’re hoping that I find their “content” so useful, I’ll be using filters to make sure I do see their content!)
Once I get them filtered out, my inbox will be much more useful than it has been.
I always enjoy James Howard Kunstler’s rants, and the recent revelation of sloppy bank record-keeping gives him a good jumping-off point.
It’s true that this rather seems to be a third strike by the banks. First, they lent money to people without regard to whether the borrower would be able to make the payments. Second, they made loans on houses that were wildly overpriced thanks to the housing bubble. And now, strike three, it turns out they did such a poor job of record-keeping that they may not be able to prove that they own the mortgage on the house!
The value of those mortgages was already somewhat doubtful, given that the banks only option was to foreclose and sell the house for a fraction of its bubble-inflated value. But if their bad record-keeping means that they can’t even foreclose, maybe the paper is worth zero. If the paper is worth zero, Kunstler figures the results will be dire:
With fraud absolutely everywhere in our banking system, like some advanced metastatic cancer, financial metabolism comes to a sickening stop. Nobody can buy or sell property. Nobody can trust any American financial institution. Money can’t circulate. Nobody will be able to get any money.
Personally, I doubt if most of the records are really lost. If the banks are willing to spend the money—hire a bunch of researchers, archivists, and paralegals along with some secretaries and assistents—I expect they can prove most of the mortgages. But it’d be expensive.
My hope is that this will mean, finally, that the banks will have a real incentive to do what they should have been doing right along—renegotiate the mortgages, writing the value of the mortgage down to something under the fair market value of the house, and the interest rate down to current market rates. If they keep proper records of these new mortgages, they can sweep the problem of the old, sloppy records under the carpet.
So, I’m rather more optimistic than Kunstler on this issue. In fact, I think it just might save us.
