When you’re in a hole, stop digging. Seriously. It’s frustrating to see policy makers make the same mistakes as in 2008. There are real solutions on the table. They are not that complicated. Yet, as in 2008, we are barking up the wrong trees. In 2008, we merkinvestments.com/insights/2023/…… twitter.com/i/web/status/1… FDIC further erodes discipline
One reason expanded FDIC insurance is a bad idea is because it takes yet another market-based measure of the health of banks away. That is, aside from the share price, we are then entirely dependent on the wisdom of regulators to keep the banking… twitter.com/i/web/status/1…

A Golden College Savings Plan:

The other day, I was asked whether I held any gold outside what we manage as a firm. I do. Why? Well, I bought the gold before we launched any gold products. This is the story how it started. 🧵 In 2003, we decided to have a golden college savings plan. Literally. Before I go any further, I need to stress, as always, this isn't investment advice, nor is this for everyone. But let me take you on this journey. 2/

How do you properly fix deposit flight into larger banks? How do you fix too big to fail without introducing undue systemic risk? The answer has been hiding in plain sight since this 2001 paper available on the Fed's website: "Using Subordinated Debt" 🧵
federalreserve.gov/econres/feds/u… Imagine a world where banks were required to have staggered subordinate debt, say over 10 years. Each year, they would need to refinance 10% in the market. If conditions were unfavorable, they would need to shrink by 10%

BREAKING - literally, something's breaking: during covid, Fed introduced swap line facilities to countries there's no standing facility, i.e. smaller countries. $60bn has been drawn. (not so) fun fact: $60bn is max a counter-party can draw
federalreserve.gov/newsevents/pre… and, no, this is not alarmist, it's factual: when a counter-party draws a swap line at the Fed, there's stress in the system. When a counterparty draws the maximum they may draw, it's a reason for concern.

"Treasury Secretary Janet Yellen on Thursday walked back her comments from the day before that walked back her remarks the day before"
Sometimes @WSJopinion goes overboard - in this OpEd it is spot on and provides important historic context:

https://twitter.com/i/status/1636110304605274112

Importantly, they remind us - and @SecYellen references much in recent testimony: Congress in 1991 barred FDIC from protecting uninsured depositors unless Treasury in consultation with President invoked a “systemic risk” exception with two-thirds of FDIC board & Federal Board.

Today's plunge in the S&P is, at least in part, a symptom of the changing micro-structure of markets: less liquidity

Regulations inhibit liquidity providers are part of the story, but also algorithmic traders that only show top line liquidity. 1/ Let me explain: algorithmic traders - love 'em or hate them - are in the game for the long run. If they showed their cards, they may get whacked. So they don't. It's really that simple. In practice, though, it means that the prices you see at any time are merely a show 2/

A @bsurveillance guest suggests the job recovery has stalled because companies are more efficient. No, the job recovery has stalled because policies make life hell for small business. Small business is not in the S&P500, so economists miss it. 1/ We're putting in the seeds for basic income, @bsurveillance guest adds; agreed, but small business doesn't want handouts, they want to run a business. A trillion spent on safely re-opening is more sustainable policy than checks.

We are entering a year full of promise. We could lay the groundwork for sustainable fiscal policy, monetary policy and whatever you pet policy may be (mental health, environmental...). Except, let’s not forget the road to hell is paved w good intentions Don’t take me wrong: I’m an optimist. But I’m also a realist - our policies are always focused on short term gratification (eg think $2k stimulus); had we spent a trillion in March on how to safely operate instead, we would be in much better shape today;