UST Stablecoin Loses Dollar Peg

Re:UST Stablecoin Loses Dollar Peg by SkyMarshal on Tuesday May 10, 2022 @01:32PM (#31329857)

Two obvious reasons - 1) the market cap of all cryptocurrencies (prior to the ongoing crash) was only around $2-3T. And 2) there’s relatively little leverage in cryptocurrency at this point (compared to Wall St prior to GFC).

Tiny market cap + comparatively low leverage = no systemic risk in the same league as the banking system leading up to the GFC.

This is not so difficult to see or understand that you need some authority to claim it to believe it. $RANDOM_INTERNET_COMMENTER is sufficient. Easily verifiable.

There’s also actual empirical evidence - Bitcoin has lost 50%+ of its value five times now (counting the most recent crash), a massive loss. But it doesn’t collapse the entire global economy and require trillions in govt and Fed bailouts to prevent the end of civilization. Even in this current crash with stablecoins like UST failing, it won’t collapse the entire economy or require bailouts.

Whatever systemic risk there is in cryptocurrency right now is not remotely in the same league as in the banking system.

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Re:UST Stablecoin Loses Dollar Peg by bb88 on Tuesday May 10, 2022 @09:03PM (#31334662)

Thanks for replying back. I'm not saying your stupid, because you're most likely not. What I am saying is that a lot of smart people were misled during 2007/2008. And most likely $RANDOM_INTERNET_COMMENTER is not hired by wall street -- not on this board anyway. And even if you were, you probably missed signs anyway as you drank the wall street "everything is turning up Milhouse" kool-aid.

What I find interesting is that the volume you're talking about is in that anal pucker range for systemic risk. $US1.6T of CDO's were issued between 2004 and 2007 [1]. That's still less than the number you're talking about.

[1] https://en.wikipedia.org/wiki/Collateralized_debt_obligation

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Re:UST Stablecoin Loses Dollar Peg by SkyMarshal on Tuesday May 10, 2022 @11:22PM (#31335510)

There was ~$1.6T of CDOs, plus some amount of separate MBS’s that weren’t re-securitized into CDOs, and over $30T of CDS’s, and the main Wall St. banks were over-leveraged up to 33:1, and Fannie and Freddie were over-leveraged by around 100:1. Between the banks and Fannie/Freddie, there was about $9T in over-leveraged debt with insufficient equity or collateral, almost half the US GDP at the time.

The conditions back then dwarf the current crypto market. But I am worried the crypto market is doing its best to not learn anything and to repeat those same mistakes anyway.

And I actually got lucky and in late 2006, as I was getting interested in investing for the first time, discovered an online community of forensic accountants piecing together from public filings what was happening with all the house flipping.

Shortly before I found them they had concluded it was a massive unsustainable bubble forming, which would inevitably end in collapse. Their research and evidence convinced me and formed my worldview before I even had a chance to drink the Wall St koolaid. All credit to them though, I just got lucky in discovering them.

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