Possible US Banking Collapse Inbound?

[Weinie]

Where are @Weinie's cousins lounging on higher boxes in the left picture?

They are off cashing their pogie cheques.

 

[KevinB]

Of course we have more coming in than going out. It is called “living within your means”. And it is a conscious choice, whether one makes $25K or $25 Million.

Some folks on the low end of that spectrum are not going to have more coming in and are simply treading water at best.

In the last year inflation on groceries has been astronomical here.
Cereal that was $2 is now $5-7, and bread from .99 to 3.99.

I notice it, as our monthly savings is down significantly from what it was. For those who don’t have the same income levels, I’m sure it’s extremely tough.

 

[Humphrey Bogart]

Bank shares down 74% in pre-market trading despite Biden's backing Bank shares down 74% in pre-market trading despite Biden's backing

Here we go!

 

[MJP]

The being poor is choice argument ignores societal issues and structure that contribute to poverty. Like most things being poor can't simply be pinned wholly on an individual's actions or lack thereof. Complex issues have complex underpinnings and generally require complex solutions. If it was easy we would have resolved poverty, homelessness or any number of complex issues that plague our society long ago

 

[Remius]

Two points.

1) Minimum wage jobs are meant for students and retirees to do on a part time basis to make some cash, they aren't supposed to be a career.

Low wages are paid out to little or no skill jobs. While used as stepping stone or supplemental income by many it is not the purpose to just make some cash for students or retirees. They just happen to be the main demographic willing to take on those jobs at those pay rates. It’s a supply and demand contract and minimum wage is enforced by the government to prevent abuse.

2) If one chooses to work a profession/job that wont fund their desired lifestyle they would like then that person has to either make peace with that or improve their lot in life.

Not sure I agree with that. We lament the state of the CAF exactly because we refuse to improve our working conditions and tell people that they can take the door if they aren’t happy. It isn’t just about lifestyles but the basic ability to live. Not everyone can and situations will vary.

 

[Lumber]

I didn't realize we had so many Republicans on this forum.

Better go put on ma' bootstraps!

 

[Weinie]

I didn't realize we had so many Republicans on this forum.

Better go put on ma' bootstraps!

Spoken like a dyed in the wool Democrat

 

[RangerRay]

In a normal economy, if an industry can’t hire people for a low wage, it should increase that wage to attract workers. I witnessed this firsthand while living in an oil patch community 20 years ago. Back then to get workers, fast food restaurants and other traditional minimum wage jobs had to increase wages and benefits to complete for labour with the oil and gas sector.

Fast forward a few years later when I briefly returned to the community and all the minimum wage positions were taken over by temporary foreign workers. I later found out that they were being paid minimum wage sans benefits. Industry and government found a way to suppress wages.

Go to any fast food restaurant now. How many workers there are teenagers starting out or retirees making a couple extra bucks while keeping busy? Mostly they are staffed by new Canadians trying to eke out a living on minimum wage, probably working more than one job to support their family. It’s hard not to think that they are being exploited. “Come to Canada, land of milk and honey! By the way, we won’t recognize your prior work experience so you’ll have to work at McDonalds to support your family. You’re welcome!”

The labour market is broken.

 

[SeaKingTacco]

I didn't realize we had so many Republicans on this forum.

Better go put on ma' bootstraps!

Thank-you for that glib talking point.

Tell me, in your personal financial life, do you believe it is better to set a budget and live within it (building room for unforeseen events), or do you spend every cent, “ cuz the gov will bail me out, anyway”?

 

[Humphrey Bogart]

Some folks on the low end of that spectrum are not going to have more coming in and are simply treading water at best.

In the last year inflation on groceries has been astronomical here.
Cereal that was $2 is now $5-7, and bread from .99 to 3.99.

I notice it, as our monthly savings is down significantly from what it was. For those who don’t have the same income levels, I’m sure it’s extremely tough.

Our societies standard of living has declined. Friction will be felt far more at the lower levels of income than at the higher levels simply due to the nature of money and how it works.

Think back to Psych 101 and Maslow's Hierarchy of Needs:

These are all the things we as Humans need/want. Most people are able to achieve the first two Basic Needs and the Modern Nation State has, in theory, been presented as a solution to providing these needs for everyone although success for everyone remains elusive.

A majority of people are able to achieve the next two, Psychological Needs. While the last one, Self-Fulfillment, remains out of reach for many.

The problem we are dealing with now though:

Basic Needs have a baseline cost associated with them and those costs are increasing faster than the system we have created is able to cope with.

If a person has to allocate a larger proportion of their income towards basic needs, they will have less money to allocate to savings or other pursuits. This means we will have more people unable to meet their Psychological Needs. We will also, have more people unable to meet even their Basic Needs.

The results of this friction at the lowest end of society is the following:

Poverty isn't usually a choice for many. I learned this at a young age from one of my school friends who grew up in an abusive household with an alcoholic mother and abusive/also alcoholic step-father.

The school had a meals program that he relied on to feed him otherwise he wouldn't have food. At 14, he and his brother, who was 16, were moved to Foster Care after they beat their step-father nearly to death with a baseball bat defending their mother from one of his vicious attacks.

Predictably, my friend didn't have the greatest marks in school and obviously never had the opportunity to attend University. How could he? I don't think any of you would be focused on Math 101 when you're having to fight your step-father?

He is doing ok now, is married, has a job and lives an ok life. His brother is a drug addict and lives on the street. He also had an older sister who just passed away at 40 from a a drug overdose.

Could they have simply worked harder? I don't think it's that simple.


Also.....

making money ≠ working hard.

I can work as hard as I want but if I lack talent or ability, am physically or mentally disabled, or there is low demand for the work I am providing, that hard work will provide me with very little money.

I could also do no work at all and make a lot of money simply through inheritance, demand for my services, my name, endorsements, etc.

Money also becomes more efficient the more you have of it. If I have $1,000,000.00 and I earn 5% interest a year on it, that's $50,000.00 a year. I did absolutely nothing and I made enough money to, in theory, cover all my basic needs while literally doing nothing!

Contrast this with someone who has $1000.00 and earns 5% interest on that per year, congrats you gained $50.00 a year, enough for a couple of meals at McDonalds! You will also continue to need to work your butt off to make ends meet.

Income from Labour is the least efficient form of income there is!

The idea that all you need to do to make a lot of money is work hard is one of the biggest lies we tell ourselves. There is a lot more to it then that.


Regardless of what anyone says, income inequality is growing and an increasing number of people are unable to afford basic necessities.

It may have been their fault that they got to that point or it may not have been.... that's not important now. What's important is that we find solutions to mitigate the effects of these hard times because if we don't well:

Bolshevism, Fascism, Nazism, Marxism, Communism, etc...

All are essentially socialist revolutions brought about by poor economic and social conditions and their end state looks remarkably similar.

 

[Remius]

Socialism for the rich and capitalism for the poor.

 

[QV]

Some folks on the low end of that spectrum are not going to have more coming in and are simply treading water at best.

In the last year inflation on groceries has been astronomical here.
Cereal that was $2 is now $5-7, and bread from .99 to 3.99.

I notice it, as our monthly savings is down significantly from what it was. For those who don’t have the same income levels, I’m sure it’s extremely tough.

Come on! Inflation is only running at like 7% or something... right?!

In reality I'm guessing inflation is close to Great Depression numbers.

 

[Remius]

Come on! Inflation is only running at like 7% or something... right?!

In reality I'm guessing inflation is close to Great Depression numbers.

Not quite. The Great Depression saw extreme deflation. Which can be bad depending on the circumstances. Like during the Great Depression.

 

[Humphrey Bogart]

Socialism for the rich and capitalism for the poor.

Well violent revolutions are a form of wealth redistribution .

As time passes, I'm becoming more open to the idea that some form of Scandinavian Social-Capitalist system is the best form of Governance but I think we:

A. Lack the cultural homogeneity for it
B. Have a case of Latin-itis in this Country which means it will be corrupted

 

[Humphrey Bogart]

https://twitter.com/x/status/1635286150180130822

Blood in the streets now! Trading apparently halted for 30+ banks.

https://twitter.com/x/status/1635273035203887105

 

[dapaterson]

Looking at the S&P 500, FRC is definitely the outlier. A few big banks have been hit with selloffs, but no other bank/financial service outfit is anywhere close to that.

I'm betting that some of the major players will be exploiting this to increase their positions.

 

[Brad Sallows]

I'm betting that some of the major players will be exploiting this to increase their positions.

Every trade has a buyer as well as a seller.

 

[Eaglelord17]

Come on! Inflation is only running at like 7% or something... right?!

In reality I'm guessing inflation is close to Great Depression numbers.

Its worse than that. You know how in the late 70s and early 80s they had ridiculous inflation? Well to hide how bad it is they changed the metrics they use to account for it so housing and fuel aren’t included despite being two of the biggest costs.

We need some things to collapse to correct itself, and we will all be better off long term when that happens. It will just hurt in the short term.

 

[Brad Sallows]

Our societies standard of living has declined.

Our society's standard of living has improved. Relative costs of most basics (except, notably, accommodations) have steadily improved for decades. In the case of accommodations, very few people are without because they can't afford it; they are without because of other aggravating factors in their lives. Also in the case of accommodations, quality has improved along with cost, but I suppose it's difficult to find any numbers which take into account quality - a 2400 sq ft home in 2020 is much better than a 1600 sq ft home in 1970, and not just because of the 50% increase in size. And then there are all the luxuries and conveniences of life routinely accessible very far down the income scale, some of which didn't even exist a few decades ago.

I suspect what distorts peoples' satisfaction is the rapid increase in standard of living in the past few decades, and the (apparently) widespread expectation of having what one's parents had, but much more immediately than one's parents did.

 

[QV]

Its worse than that. You know how in the late 70s and early 80s they had ridiculous inflation? Well to hide how bad it is they changed the metrics they use to account for it so housing and fuel aren’t included despite being two of the biggest costs.

We need some things to collapse to correct itself, and we will all be better off long term when that happens. It will just hurt in the short term.

I have no doubt they changed the metrics to hide how bad it is. That seems to be a fairly common course of action nowadays, the pandemic is a great recent example.

But as a wise person said recently "The government gets to do whatever it wants!".