Meta Econ Takeover Day 27 \ stacker news ~meta

1520 sats \ 9 comments \ @Undisciplined 13 Nov 2023 meta

I'm coming back to the theme of a looming financial crash, because I really think we're on the cusp.

One of the things that sometimes gets lost, wrt financing the debt, is that until very recently the debt that was rolling over had been borrowed at pre-ZIRP rates and was being replaced with very low interest rate debt. That meant a much higher total debt load could be carried at the same cost. Now, that old debt is getting rolled over at similar rates to what it was borrowed at, so there aren't any savings that can cover the new debt being accrued.

Sovereign Debt is Eating the World By Peter St. Onge "Sovereign debt is eating the world. Lining up a financial crash that could make 2008 look like a picnic. How did we get here?"

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250 sats \ 7 replies \ @siggy47 13 Nov 2023

I remember that fact being used by pundits before this tightening cycle as an argument that the fed would never raise rates. I guess they were attributing too much foresight to ole Jay and his buddies. Not that the alternative would have been any better. There were no solutions at that point anyway.

210 sats \ 6 replies \ @Undisciplined OP 13 Nov 2023

It might explain why they kept rates so low for so long, but eventually they had to contend with inflation. They do seem to be stuck between a rock and a hard place.

I've been expecting a targeted default for a while now. These global wars seem like as good of a pretext as anything to take the moral high ground and cease payments to the bad guys.

210 sats \ 5 replies \ @siggy47 13 Nov 2023

Possibly. How do you see it playing out if it happens? China still holds a hell of a lot of treasuries, even though that number goes down each month. Who else?

42 sats \ 4 replies \ @Undisciplined OP 13 Nov 2023

China's the main party I'm thinking of. It just seems like they need to get creative, because there's no way to continue financing this debt and there's no will to reduce debt accumulation. Maybe that just doesn't get them far enough to be worth the fallout, plus it's a one-off remedy.

224 sats \ 3 replies \ @siggy47 13 Nov 2023

I still wouldn't rule it out. Desperate times call for desperate measures. I know there are people who believe the Whitney Webb theory that there will be a false flag cyber attack on the international banking system that causes a complete reset, but that seems way too far fetched to me. Then again, I still have trouble believing the covid lockdowns happened.

252 sats \ 2 replies \ @Undisciplined OP 13 Nov 2023

I agree on both counts. What seems more realistic to me is some financial regulation that requires pension funds and university trusts to hold a large share of their portfolios in treasuries. I'm sure there are other seemingly mundane strategies that can be rolled out.

210 sats \ 1 reply \ @siggy47 13 Nov 2023

Yes. Very realistic and it would take some pressure off.

252 sats \ 0 replies \ @Undisciplined OP 13 Nov 2023

Then they could start doing shady stuff like increasing retirement age and means testing, in order to keep more of the funds locked up.

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210 sats \ 0 replies \ @grayruby 13 Nov 2023

Peter is awesome. I am in the camp that they will have to do some sort of YCC eventually but who knows what happens in the near term.