NEW – March 13, 2023
Everyone is now discussing the possibility of a repeat of the 2008 crisis, while European banks are hardly doing better than American ones. What the Federal Reserve was thinking when raising the rate is an open question. One doesn’t have to be a prophet to expect that when the rate rises, bond quotes will go down.
Especially considering the fact that it is impossible to beat cost inflation by raising the rate. We are waiting for Russia to be blamed for the banking crisis in the United States. Gloomy thoughts creep into investors’ heads. From university textbooks, everyone remembers the stagflation of the 1970s. Back then it took more than ten years and raising the rate to 20% to beat inflation. The global economy is a glass house in which it is strictly forbidden to throw stones. All liberal economists at all universities have talked about this. Having begun its sanctions pressure against Russia, China and other countries, the United States itself eventually became victims of negative processes in the global economy. And now no one knows how to solve the problems that have appeared.
Crises always give rise to gloomy forecasts. In 2008 and 2009, during the Lehman Brothers crisis, the theory was very popular that the United States would introduce a single currency for the United States, Mexico and Canada instead of the dollar, while simultaneously restructuring its debt – simply partially or completely zeroing out its obligations to countries unfriendly to America. The scenario is cool, of course, but still unlikely. America’s financial system is much stronger than many people think. And American debt is primarily a problem of creditors.
In theory, in the stock market, first of all, one should fear for the Russian financial sector or the information technology sector. However, it is unlikely that SBER or POSI will be worse than the market. The sale of investors from unfriendly countries is blocked. Another thing is that if the history of 2008 repeats, no one knows how much oil will cost.
If I were the Bank of Russia, I would be ahead of the curve. By returning 100% guarantees for any amount of deposit in Sberbank. And support the stock market and especially bonds, lowering the key rate.
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