A] I can't really speak to real-estate, but generally as a consumer I find the market incentives are misaligned to what should be socially desired results. There's too much darn rent seeking.
For a bank, these better investments are available to its depositors if they leave. The bank’s borrowing costs have gone up (or will soon) and that’s the difference between profits and losses. The losses will happen sometime (unless interest rates go down again), but when they get recognized is a matter of accounting.
So the bonds were risky, as is any fixed-income investment when your borrowing costs are variable. (Though it’s clearly not as bad a loss as it would be if the bonds defaulted.)
The mark-to-market decline of long-term loans wiped out an entire category of financial services (the Savings and Loans service). Remember "A Wonderful Life??" George Bailey? That was "Savings and Loans".
Gone, the entirety of the entire sector was wiped out, despite the 30+ year bonds still being "good on their money".
Bailey ran a savings and loan. The run in the film was not a reference to the S&L crisis, seeing as the film predates it by decades.
I assume you meant the right thing, but there's enough ambiguity that I could see a reader being confused.
It's kind of hard for the American Dream to be a rent seeker, and for their not to be a lot of rent seeking...
Apparently 10y US T-bills are now financial weapons of mass destruction according to the HN hivemind.
> (a) loans to office buildings that cannot be repaid in full,
This is a big problem with CMBS but I'm not aware of those being significantly involved in any of the recent blow ups. AFAIK this is still next-year's financial crisis that is only just starting to simmer.
No, no they're not. Not even close. Please read up about this before propagating outright falsehoods.
The S&L industry in the 1980s was doing FTX type nonsense: using depositor funds for very risky investments. This worked great when the markets were going up. Not so much when the market crashed in 1987.
Banks now are holding excess liquidity and funds they otherwise can't lend out (within their risk limits) in US government bonds. The problem is they took long term bonds for slightly higher yield at a time when interest rates were near-zero. And then interest rates went up and created a loss if it were realized. Many companies have been undone by this kind of penny-pinching. It's bad risk management.
Even in the case of SVB, it had more assets than depositor funds and despite the vast majority of deposits (by value) being uninsured, every depositor got their money back and it cost the taxpayer nothing.