nigelforbes

I read yesterday that the administration in my neck of the woods created a four point plan to deal with PM2.5 levels. Apparently, when it's below 50 somebody watches carefully, from 50 to 70 somebody does something, from 71 to 90 somebody else joins the watching and if it gets over 100, they have a meeting! And this was actually published in the papers.

This of course is not strictly correct, banks globally lost value and Thai banks were no different. https://www.set.or.th/en/market/index/set/fincial/bank

If you read again what I wrote you'll see that I said, "The Fed raises interest rates several times and a solitary bank fails to adjust its assets and liabilities. Short sellers spot the mismatch and place bets that the bank will fail". What I wrote is the same as you saying it's bad (A/L and risk) management. Prior to the interest rate rises, the banks "hold to maturity" profile was fine, even if they were all long dated bonds because they remained above the threshold. As rates increased, the need for greater short term reserves increased but this wasn't actioned. From Fox: "What happened is fairly simple: when interest rates were at historic lows, SVB invested depositors' funds in long-term Treasury bonds. But as the Federal Reserve increased interest rates to combat inflation, the price of those bonds cratered, taking SVB with it. When interest rates went up, the assets lost their value and put the institution in a problematic situation," https://finance.yahoo.com/news/silicon-valley-bank-committed-one-135059554.html The Fed not raising rates is part of my extrapolation of events rather than fact.

Well done.

Banks are supposed to hold a mixture of bond durations, short, medium and long, matched to their liabilities. The problem in this instance is that banks piled into long duration bonds at a time when they were cheap.

All 7/11 employees voted in favor of the government plan.

The CPI report is due today. If that comes in hot the Fed will have difficulty avoiding a rate increase, which will put further distance between longer duration bond face and redemption values, hence it will further stress bank balance sheets. But, if CPI has fallen far enough, a high value rate increase may be avoided, as indeed may any rate increase at all. Fingers crossed that CPI has fallen by a decent margin. Meanwhile, equities markets are betting CPI will have fallen, S&P Futures are up 0.75% with one hour fifteen until the US markets open. My pension holdings need CPI to fall, please!

When banks take deposits they become a liability that must be repaid at some point. Liabilities must be offset by buying assets that match the liabilities in value. A 10 year Treasury Bond that has a 10 year duration (for example) will repay the face value of the bond in 10 years time, meanwhile it pays interest or coupon payments every year. If the current rate of interest is say 3% (for example), the bond may pay 3.5% effective interest. But as interest rates rise, the redemption price of the bond falls because newer bonds pay higher rates of interest, the bigger the gap between the interest rate and the coupon rate, the lower the redemption value of the bond. The longer the duration of the bond, the more the early redemption rate will fall when interest rates rise and new bonds are issued. The trick is to sell longer duration bonds before the gap between the coupon rate and the interest rate widens, that way the loss on redemption is broadly covered by coupon payments. That means selling long duration bonds soon after rate increases are announced. But when the gap is too large, coupon payments don’t make up for the bond redemption loss, which is what happened at SVB. Eventually SVB got to a point where their assets were worth substantially less than their liabilities which meant they were no longer solvent.

There is no risk to the bank or the depositors if a majority of deposits are over the FDIC maximum limit so I don't know what "fundamental aspect of deposit protection" you are talking about. The risk that should have been mitigated is the mismatch between bank assets and liabilities and that was wholly a bank responsibility to manage, nobody elses. As interest rates began to rise, Treasury or risk management at the bank should have said to the CFO, we need to replace some long dated bonds with newer shorter duration bonds, slowly over time in line with rate rises. If they had done that, the mismatch wouldn't have shown up on their balance sheet, the short sellers wouldn't have targeted them etc etc.

There's road works/construction on much of that road, traffic is bad even on a good day, let alone in rush hour, 4 am/5 am wouldn't go amiss.

Imagine what the situation would be if they had done nothing, as one poster suggested!

If they pause rates hikes or drop them back down, inflation becomes real sticky, as in permanent and that's a problem.

Do you see monsters lurking in the closet or under the bed at night! People set up companies in different countries for different reasons all the time, usually because they intend to do business and trade as a company. Of course there will be some people who open a business solely to obtain a bank account, it's a long convoluted and round about way to do that but nevertheless, some do so. How many people do that, out of the 332 million (less 6%) population, is it a meaningful number and what risks does it pose? The risk I suppose is that a bank that has a foreign owned bank account, might go bust and that FDIC will have to pay out money to a person who doesn't live there. Is that a loss? Only in the same way that the DPA in Thailand will pay out up to 1 million Baht per account to non-Thai's! How many accounts might this total? If you see things in your closet and under your bed at night, the number may well be in the millions or tens of millions. Otherwise I suspect it's a very small number, otherwise somebody would have almost certainly got on top of the problem, don't you think!

I'm not sure if you are trying to make a point here and if so, what it might be. A US company is a US company, it operates in the US under US law and in accordance with US business rules etc etc.

The connectivity of these issues struck me so I thought I'd lay out the sequence of events and the implications: The Fed raises interest rates several times and a solitary bank fails to adjust its assets and liabilities. Short sellers spot the mismatch and place bets that the bank will fail. Slowly, the bets increase until almost everyone in the financial world has heard about the problem, even Moody's spots it and tells the bank it will be downgraded. VC’s advise customers to withdraw their funds and a bank run follows. Finally the FDIC decides to act and quickly takes over the bank. But the ball has started rolling and it’s a big and important ball. Everyone starts to understand that raising interest rates has created an unrealised loss at many banks. This is because Treasury bonds held in the “hold to maturity” category now have a lower redemption value than previously when interest rates were lower. Depositors at other regional banks now think their funds are also at risk so they start to withdraw funds from the smaller banks, this imperils the smaller banks and all the account holders. Several regional banks begin to suffer liquidity problems which puts them at risk, the short sellers had moved in earlier and were betting on those banks also failing. Now all the funds from the smaller regional banks are flowing into the bigger banks so attention turns to them, consumers are afraid all the smaller banks will fail. Now the short sellers are targeting the bigger banks whose share values fall, this leads to large falls in the equity markets which hurts anyone with savings, investments or a pension fund. The cost to insure deposits at major international banks such Credit Suisse increase to high levels and now threatens the banks business, their customers business and all depositors, The value of USD falls because of bank default risk so exchange rates get hit and non-USD foreign currency holding consumers get hurt. The Fed sees what’s happening and decide they can no longer risk raising interest further to try and tame inflation which must remain high so everyone has to pay more for goods. Eventually one or two of the big banks have to be taken over which means people lose their jobs. I think this is broadly where we are right now but we don’t have full sight yet of a large bank failure but one is clearly under great stress.

You have to be US resident to hold a bank account, in that respect they are not foreigners.

If you are US resident or have a permission to remain, regardless of your nationality, your bank account is insured under FDIC rules. Permission to remain means having a visa, for example: "You must be living in the U.S. to open your account. You'll need to provide both a foreign and U.S. address, as well as two forms of ID and a tax identification number". https://promo.bankofamerica.com/international-banking/professionals/#:~:text=You must be living in the U.S. to open your,and a tax identification number.

It's hairy chest syndrome. They like to think they are superior to others in their abilities and that those others are stupid or lazy. Others from the same family insist that changing the oil in your car yourself is much cheaper and better than taking it to a garage, god forbid anyone should ever think of taking it to a dealership! They also like to buy Archa and drink it on the steps of the 7/11, why anyone goes to a bar and pays those prices escapes me, they say. The list is a long one.

Parasitic! I don't call you a cheapskate for not using agents so why the need for name calling! Agents provide a service I chose to use for convenience sake, I chose to let agents manage all my interfaces with Immigration and I'm very grateful for the quality of service they supply and the fact I can rely on them. If others chose to handle that interface themselves, that is their prerogative.

You got your wish, USD fell so now you get fewer Baht for your foreign currency, well done! https://finance.yahoo.com/quote/THB%3DX?p=THB%3DX https://www.marketwatch.com/investing/index/dxy

Thailand's DPA (deposit protection agency) initially set the insured amount very high, as I recall, I believe at 15 million Baht, because it wanted to attract funds and inspire confidence in the banking system. That job done, the levels were reduced many times, over many years, to their present level. On several occasions reductions in the level of insured deposits was postponed. There has not been in any agenda in these reductions other than to bring the level of guarantee, into line with average balances.

I'll try and find one with plenty of cartoon characters for you! Here ya go: https://standupeconomist.com/cartoon-intro-macroeconomics/

Read this and learn about PPP. https://datatopics.worldbank.org/world-development-indicators/stories/adjusting-for-price-differences-across-the-world.html

Gold and oil and commodities and the like are priced internationally, daily consumables by citizens are not.

Read my post again, I realized my error and changed it whilst you were busy ranting! That said, you cannot just take the cost of an item and compare the cost to another country without first comparing it against the income in that country. The cost of any item is always relative to income in the country where the item is purchased. You seem to think that everything has an international price and that items can be compared internationally, they can't!, they are relative to earnings. "Affordability index typically compares the price of a good or the general cost of living in a region to that of other regions or to some baseline measure of personal income. The resulting number may be presented as a raw ratio or normalized to a given index number". https://www.investopedia.com/terms/a/affordability-index.asp#:~:text=Affordability index typically compares the,to a given index number.