New Tractor Sales Are Declining

[Torvy]

The Fed kept the Federal Funds Rate near zero for over a decade after the 2008 financial collapse and massive bank bailouts. The Fed knew this would cause severe havoc in our economy, it's their job. Now the Fed is escalating the Federal Funds Rate that is again causing severe havoc in our economy and probably one of the reasons for the recent bank failures, which will probably continue. Inflation was caused by the printing of trillions of dollars out of thin air in just the past two years.

If the Feds job is to regulate and protect our economy they failed and they have done the opposite. They are the experts on regulating economies. One can only conclude this was intentional.

We cannot really discuss the real problems with the Fed here on TBN. Nothing fundamentally bad about low interest rates. High interest rates are one way to shrink the money supply and combat inflation. You cannot fix inflation without economic problems. Prevention is key. Two main factors to Money Supply, Monetary Policy (Fed) and Fiscal Policy (Congress). There are many, many experts at the Fed. Then there are the 'not experts' who sometimes get put in charge. The Fed concept is sound. The individuals who have been appointed to lead the Fed get into taboo topics here.

 

[Hay Dude]

transitory​

adjective​

tran·si·to·ry ˈtran(t)-sə-ˌtȯr-ē ˈtran-zə-

Synonyms of transitory
1
: of brief duration : TEMPORARY
the transitory nature of earthly joy



Since all time is relative, you are 100% correct. Compared to millennia, yes transitory works. When we do our home budget, $20 is a big deal. When doing budgets in big companies, anything less than 6 (or 7) figures doesn't even show up on the variance page. Everything is relative.

 

[lman]

We cannot really discuss the real problems with the Fed here on TBN. Nothing fundamentally bad about low interest rates. High interest rates are one way to shrink the money supply and combat inflation. You cannot fix inflation without economic problems. Prevention is key. Two main factors to Money Supply, Monetary Policy (Fed) and Fiscal Policy (Congress). There are many, many experts at the Fed. Then there are the 'not experts' who sometimes get put in charge. The Fed concept is sound. The individuals who have been appointed to lead the Fed get into taboo topics here.

I don't see how inflation can ever be corrected as long as one agency tries to limit the supply of money to ease inflation and another division wants to print money like there's no tomorrow. It's the definition of insanity.

 

[2manyrocks]

I read one financial commentary yesterday that said the fed's history is to "tighten until something breaks."

Still very ironic that investing in treasury obligations considered among the safest debt instruments but which paid low rates led to this bank's failure when the current interest rate is still modest.

I'm wondering if any of the apparently academically stellar staff economists warned the higher ups this could happen before the fed lowered rates so much to start with or if they were so focused on math that they lost sight of any practical consequences that could ensue?

 

[riptides]

I read one financial commentary yesterday that said the fed's history is to "tighten until something breaks."

Still very ironic that investing in treasury obligations considered among the safest debt instruments but which paid low rates led to this bank's failure when the current interest rate is still modest.

I'm wondering if any of the apparently academically stellar staff economists warned the higher ups this could happen before the fed lowered rates so much to start with or if they were so focused on math that they lost sight of any practical consequences that could ensue?

These banks failed the basic rules check. Always diversify.

Their size allowed them to operate under the checks and balances set for larger banks.

SVB also seems to have lacked a person in the position to mitigate risk.

 

[Muhammad]

In other news, tractor sales are up in the first two months of 2023. Didn't see if anybody posted that data... if not I'll summarize it.

Edit: OPE sales broadly, not tractors.

 

[2manyrocks]

These banks failed the basic rules check. Always diversify.

Their size allowed them to operate under the checks and balances set for larger banks.

SVB also seems to have lacked a person in the position to mitigate risk.

The odd thing about the SVB failure is it doesn't appear to be a case of bad loans or insider theft or even making risky investments. They were apparently holding a lot of US Treasury obligations that were going to get paid.

The financial press is saying they had a mismatch between maturity of their investments versus their depositor's immediate right to withdraw. Apparently, they went long on their investment maturities. For some reason, depositors started asking to withdraw funds reportedly made worse because of social media communications in the tech world that was their customer base. They had to sell investments to meet withdrawal requests, but because those investments bore interest at lower rates than today's investment yields, they had to sell at a discount causing them to lose $2 billion quickly.

 

[rScotty]

I personally do not understand why they purchased low interest rate debt to begin with. But even more complexing is why they held onto it instead of selling it off when inflation began to rise.

That's a couple of good points. The SVB bankers are probably wondering the same thing.

The explanation - whatever it is - has to include that the people the bank trusted to buy securities were not good at their job. And they were allowed them to continue even after that was obvious.

That shows what may be a basic problem with hiring any money manager. The good ones probably work for themselves and are very quickly not for hire.

rScotty

 

[rScotty]

Buy a new tractor now or not?

Buy it when you need to do work with it.

Not only does the value of the work you will do with it far outweigh swings in purchase price, but the work done becomes a real asset while timing purchase price swings is always a gamble.

rScotty

 

[riptides]

riptides,

Psssst……..Credit Suisse.

Credit Suisse warns of ‘material weaknesses’ in financial reporting

Swiss bank’s shares fall as annual report reveals another blow to its bid to recover from string of scandals

www.theguardian.com

pssst...riptides. For the umpteenth time.

"Management did not design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements".

....effective risk assessment process.... a common denominator that seems to have escaped some banks.

Yeah so? Shoddy management. Seems like a lot of banks have this issue of late.