01-04-2023, 06:35 AM
This is like 2008 when Bears Stearns threaten to collapsed and was bought over by JP Morgan. Investors cheered and stock market rallied sharply but the real problems were coming and Bears Stearns was just tip of the iceberg.
Below is a good video by a researcher to explain the impending problems with a high level of details.
I would summarise the problem in 4 parts
1. Federal Reserve raise rates sharply at a time when debt levels are highest in history.
2. US treasuries which were held by banks fell in value causing $2T in losses. Commercial Real estate fell sharply several major companies have defaulted. CRE is a 20 trillion dollar market with trillions of debt due this year and next. Because interest rate is so high, many companies will just default. Consumer loans like. Auto loans have seen the highest default is last 20yrs
3. The US economy is weakening and will enter recession.
Just like 2008 investors ignore such big problems in the beginning of the year and the market collapsed later.
Below is a good video by a researcher to explain the impending problems with a high level of details.
I would summarise the problem in 4 parts
1. Federal Reserve raise rates sharply at a time when debt levels are highest in history.
2. US treasuries which were held by banks fell in value causing $2T in losses. Commercial Real estate fell sharply several major companies have defaulted. CRE is a 20 trillion dollar market with trillions of debt due this year and next. Because interest rate is so high, many companies will just default. Consumer loans like. Auto loans have seen the highest default is last 20yrs
3. The US economy is weakening and will enter recession.
Just like 2008 investors ignore such big problems in the beginning of the year and the market collapsed later.