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   Bread up, Bro (sickburnbro@poa.st)'s status on Thursday, 11-May-2023 22:51:20 JST Bread up, Bro

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   • JSDorn ??
   @JSDorn yeah, they factor that all in, that's also in part why the fed inflation target matters
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     JSDorn ?? (jsdorn@poa.st)'s status on Thursday, 11-May-2023 22:51:20 JST JSDorn ??

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     @sickburnbro honestly sounds like the economy depends way too much on usury
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     Zealist (zealist@poa.st)'s status on Thursday, 11-May-2023 22:51:20 JST Zealist

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     • JSDorn ??
     @JSDorn @sickburnbro
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     Bread up, Bro (sickburnbro@poa.st)'s status on Thursday, 11-May-2023 22:51:21 JST Bread up, Bro

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     • JSDorn ??
     @JSDorn right. because if they lower rates, loans become cheap again and everyone then takes loans thinking that prices will keep going up.
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     JSDorn ?? (jsdorn@poa.st)'s status on Thursday, 11-May-2023 22:51:21 JST JSDorn ??

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     @sickburnbro but the banks get screwed too when inflation goes up because the debt gets cheaper and cheaper
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     JSDorn ?? (jsdorn@poa.st)'s status on Thursday, 11-May-2023 22:51:22 JST JSDorn ??

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     @sickburnbro "calling in commercial real estate loans"
     
     Is this all because of the FED keeping interest rates so high? I feel like there has to be more to it
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     Bread up, Bro (sickburnbro@poa.st)'s status on Thursday, 11-May-2023 22:51:22 JST Bread up, Bro

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     • JSDorn ??
     @JSDorn so the FFR is the driving thing the fed moves. It's how much a bank gets paid to put excess funds with them. That means for a bank to borrow money from another bank, they have to exceed that rate ( since it has more risk ). This means that rates of new loans are then higher because it is more expensive to get liquidity. But that also means less loans are written because prices are high .. and many regional banks need to write loans as their main business.
     
     When the rates are low, it means liqudity is cheap, so a bank can sit on non-performing loans and hope they start performing. As liquidity becomes harder to get they need to start making hard choices, CRE is one where the loan amounts are high, so you can in theory get a lot of liquidity with a smaller amount of paperwork.
     
     What is going to happen at some point is people are going to say "this CRE thing isn't going to get better any time soon, I need to cut my losses"
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     JSDorn ?? (jsdorn@poa.st)'s status on Thursday, 11-May-2023 22:51:22 JST JSDorn ??

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     @sickburnbro this makes sense and seems unavoidable if they don't lower rates, all other things being equal.
     
     But they won't lower rates because they don't want inflation to go back up
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     Bread up, Bro (sickburnbro@poa.st)'s status on Thursday, 11-May-2023 22:51:23 JST Bread up, Bro
     so anyway in case you haven't been playing along in monopoly: banks lose your money edition, what the fear is, is that banks will get so pressured that some of them have to call on their commerical real estate loans that aren't performant, and that will cause sales at huge loses and then, THEN it will be real fun times.