Re:The crash of 2016?
by neffy on Saturday February 13, 2016 @02:17PM
(#11095271)
The problem with these kinds of analysis is that they forget one key element in the entire deposit creation mechanism - loans are also repaid. (The economists just leave that part out). In fact a bank lives in the middle of continuous streams of loan repayments coming back on its loan book.
Banks default when their annual losses are more than ~1% of their loan book. Anything else is illiquidity, and that is solvable.
Banks default when their annual losses are more than ~1% of their loan book. Anything else is illiquidity, and that is solvable.