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by pjc5019 hours ago |
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upvoteby nixon_why6919 hours ago|
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Also there is a ton of debt flying around, its not just equities hurting VC funds, real banks are facing risks now.
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upvoteby inigyou19 hours ago|
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That's the reason RAM companies aren't expanding. Worst case, they can sell their normal production to gamers.
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upvoteby londons_explore19 hours ago|
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Fail to deliver, and they get bankrupted...

Do deliver and they don't get paid because the buyer purchased with money that doesn't exist.

Lose-lose situation!

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upvoteby inigyou19 hours ago|
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But they don't get bankrupted, because it's an ordinary year for them, only with different customers.
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upvoteby londons_explore18 hours ago|
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Fail to deliver, and they get bankrupted because a court would not simply unwind the deal - a court would demand compensation of the market price of the goods not delivered on delivery day - which will probably be very high.
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upvoteby 18 hours ago|
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upvoteby eru19 hours ago|
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What kind of default risk?

What we got in 2008 was central banks (eg Fed and ECB) willfully collapsing nominal GDP in their economies. Have a look at the dot-com bust or Black Monday for comparison.

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upvoteby pjc5019 hours ago|
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> willfully collapsing nominal GDP

What on earth are you talking about?

The credit risk was a very real problem; Kaupthing, Anglo Irish, RBS, Lehman etc.

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upvoteby eru18 hours ago|
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We just had a string of bank failures, like Silicon Valley Bank, but you will not see any impact in the macro-economic data (like unemployment), because the Fed kept nominal spending on track.

In 2008 they didn't. Instead they actively tightened monetary policy by eg introducing interest on excess reserves. The ECB even hiked interest rates.

Companies defaulting on debt doesn't need to bring down the economy.

For the US, you can also see how the construction sector had been winding down for years (eg as measured in construction employment) without an impact on overall unemployment. The crisis was entirely avoidable.

See https://www.cato-unbound.org/2009/09/14/scott-sumner/real-pr... for a bit more background.

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