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Perfectly Normal Markets- 4/28/23

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7 hours ago, fxfox said:



Every FDIC seizure of a bank of the scale of FRC is equivalent to an immediate $100-150Bn QE on Fed's balance sheet within a day or two (via special loans) Stealth QE5 via monthly bank failure.

And my face is blue. 

It's not the same as QE. 





Enjoy the Market Mirage Now Because We’re Really In a Desert April 24, 2023


The Fed’s Circle Jerk… Is ‘Twerking?

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Stress Builds as Office Building Owners and Lenders Haggle Over Debt

The health of banks and cities and the nation’s economy could hinge on high-stakes negotiations over commercial real estate loans.


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April 27 – Wall Street Journal (Peter Grant and Jim Carlton): “Before the pandemic, San Francisco’s California Street was home to some of the world’s most valuable commercial real estate. The corridor runs through the heart of the city’s financial district and is lined with offices for banks and other companies that help fuel the global tech economy. One building, a 22-story glass and stone tower at 350 California Street, was worth around $300 million in 2019, according to office broker estimates. That building now is for sale, with bids due soon. They are expected to come in at about $60 million… That’s an 80% decline in value in just four years. This is how dire things have become in San Francisco, an extreme form of a challenge nationwide.”

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April 26 – Financial Times (Eric Platt, Sujeet Indap and Harriet Clarfelt): “When a debt-laden company gets into financial distress, the fights between creditors are often ugly, but investors in leveraged loans could usually watch from the sidelines while more junior claimants haggled over what they would be repaid. Not any more. A recent court decision threatens to escalate creditor-on-creditor violence in a normally sedate $1.4tn corner of the financial markets that is critical to funding big private equity deals and the operations of lowly-rated businesses. The ruling, in the Texas bankruptcy case of Serta Simmons, blessed a controversial 2020 debt swap that only a slim majority of the mattress maker’s senior lenders had approved. Other holders of the company’s loans… were pushed further back in the queue to be repaid and the value of the loans they held crashed when Serta ultimately went bust.”

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April 28 – Reuters (David Milliken): “The Bank of England estimated… its quantitative easing programme would rack up a total financial loss of around 100 billion pounds ($125bn) by 2033, which will need to be funded by the government. In the short term, the BoE expects the government will need to pay it almost 30 billion pounds a year…”

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First republic.

Why did the big boys refuse to bite......

They remembered the Countrywide rule:

The rule is: Don't buy a busted bank buy its good assets and leave the FDIC with the bad ones.

They saw what happened to BoA when the bought Countrywide

Sued into the ground....fined into to the ground.

That was their reward for rescuing Countrywide....

Total cost of buying Countrywide....$90 Billion.

Busted banks arn't cheap.

In fact they are the most overvalued banks in America.

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