I see dozens of Reddit posts (to be fair, many on r/wallstreetbets) claiming the sky is falling and the whole system is insolvent and is worse in 2023 vs 2008.
Based on my understanding (which could be totally off), banks in 2007-2008 held huge amounts of risky assets such as subprime NINJA loans (in other words, total s*it). Compared to today’s situation, my understanding is that the banks are holding allegedly high quality bonds that are understandably priced at 95-96 cents on the dollar due to the recent rapid interest rate increase, which leads to liquidity issues and perhaps a legitimate downward adjustment of bank stock market value.
I realize the situation can’t be simplified to one type of asset. I would really appreciate some commentary as to whether there’s a legitimate chance that September 2023 will look like September 2008.
Leave a Reply