tag:blogger.com,1999:blog-22301740.post642681992206869011..comments2024-03-26T09:49:07.212-07:00Comments on The Scratching Post: Don't Save MoneyK T Cathttp://www.blogger.com/profile/10259428595745509790noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-22301740.post-22377623088914066792016-02-14T07:59:29.256-08:002016-02-14T07:59:29.256-08:00Thanks for the comments!
Tim, from what little I ...Thanks for the comments!<br /><br />Tim, from what little I do understand, there's a mathematics at work here that goes beyond the actions of the banks. The zero and negative interest rates by the central banks are killing bank profit margins.K T Cathttps://www.blogger.com/profile/10259428595745509790noreply@blogger.comtag:blogger.com,1999:blog-22301740.post-8020896180573730972016-02-14T04:21:15.554-08:002016-02-14T04:21:15.554-08:00I think a big part of the problem is that most of ...I think a big part of the problem is that most of the banks have gotten badly burned in three big bubbles in just 15 years (the tech stock bubble, the housing loan bubble, and the just-burst China/commodities/energy bubble). The group of investors who have been successfully pumping the bubbles and bailing before they crash are now sitting on the huge piles of cash that they created, and are trying to decide what to do next. If they just sit back and spend the money, that will trigger the major inflation that we have been expecting for some time, which will devalue the rest of their holdings. So instead, they are casting around looking for another investment area to pump it into. Which will create a new bubble. Until they settle on a new part of the economy to destroy, everyone else is just waiting, because before investing they want to know if they are onto a sound long-term investment, or yet another roller coaster ride on the Bubble Express.tim eiselehttp://somethingscrawlinginmyhair.comnoreply@blogger.comtag:blogger.com,1999:blog-22301740.post-90154266671161151102016-02-13T09:33:24.154-08:002016-02-13T09:33:24.154-08:00Yes. It's frightening that the central banks&#...Yes. It's frightening that the central banks' only solution to the crisis they created is to make everyone eat the seedcorn.<br /><br />As to your question about banks and interest rates, most banks tend to be "asset sensitive" as opposed to "liability sensitive," meaning their loans are more subject to interest rate changes than their deposits, so rising rates increase their net interest margins.<br /><br />More discussion on that <a href="http://www.valuewalk.com/2015/06/why-is-asset-sensitivity-up-at-u-s-banks/" rel="nofollow">here</a>.WC Varoneshttp://www.wcvarones.comnoreply@blogger.com