**Warnings From the Crypto Crash** **As the Federal Reserve withdraws liquidity to fight inflation, stablecoins won’t be the last casualties.** **By The Editorial Board, The Wall Street Journal, May 12, 2022**
**...** **Some $200 billion in crypto assets have blown up in 24 hours, led by the collapse of the so-called stablecoin TerraUSD. ... On Tuesday Coinbase disclosed that its customers would be unsecured creditors in the event of a bankruptcy, meaning their $256 billion in crypto and fiat currencies could be wiped out. Nice of Coinbase to tell us now....**
**The crypto market ballooned to $2.9 trillion last November from some $500 billion in November 2020....**
**The point is that there are always unexpected casualties when risk aversion returns with a vengeance. This is why junk bond prices are falling as concerns mount that some companies may struggle to roll over their debt, especially if the Federal Reserve’s tightening tips the country into a recession.... Leveraged loans are sensitive to interest rates and may cause bank losses. As rates rise, some could default. About $800 billion in leveraged loans in the U.S. were issued last year, 60% more than in 2019. Regulators won’t know who’s overextended until markets shake out....** [end quote]
Every boom has a great story (or stories), but the money comes from lax lending. When the lending tightens, the most overpriced assets deflate but usually the carnage spreads.
The Fed has chickened out before (2018) when the markets had a hissy fit due to a mild rise in the fed funds rate. Will rising inflation force Jay Powell (just reconfirmed as Fed Chair) to stick to his guns?
https://www.cnn.com/2022/05/12/investing/stocks-bear-market/…
More than $7 trillion has been wiped out from the stock market this year. And the Fed has only raised the fed funds rate once and hasn’t even begun to prune back its long-term bond assets.
Will rising inflation force Jay Powell (just reconfirmed as Fed Chair) to stick to his guns?
Since he’s been reconfirmed as Fed Chair, his independence has been restored. No need to wreck the economy to stay in the good graces of the deficit and inflation scolds.
What we really need is an armed SWAT team for antitrust enforcement. Lets treat the corporate price gougers just like the drug cartels. A few photo ops with a CEO being frog marched up the courthouse steps for his arraignment would do a world of good.
I’m not sure it was the market throwing a hissy fit in 2018 that changed his mind, but I can’t go further with my thoughts and not break the rules.
What we really need is an armed SWAT team for antitrust enforcement. Lets treat the corporate price gougers just like the drug cartels. A few photo ops with a CEO being frog marched up the courthouse steps for his arraignment would do a world of good.
Just one. I’m telling you, we just need to eat one billionaire. The rest will then fall into line. . But I agree with you. The JC’s have escaped with murder for far too long (decade at least if not far longer) and not held accountable. That has to change.
I am hoping Eth goes lower. Something tells me my art does not have to go lower in USD. NFT, non fungible. I will take more Eth in exchange any day.
We are closer day by day to a bottom in Eth and Bitcoin. Be ironic if the two major cryptos led the way up well in advance of anything else.
While I do not see them as currencies at all, the buyers might. Meaning if the USD is appreciating a few months from now the cryptocurrencies might be appreciating. Who knows? But that argument will be out there.
More than $7 trillion has been wiped out from the stock market this year.
I read that Musk is down $50 billion and is still the 2nd richest person on the planet, right after Bad Vlad Putin who is, coincidentally, the sole beneficiary of the recently deceased Russian oligarch’s estates.
As for me, thankfully I’m smart enough to be 100% invested in totally safe NFTs.