{"id":937,"date":"2023-03-16T22:05:57","date_gmt":"2023-03-16T22:05:57","guid":{"rendered":"https:\/\/floydsplace.us\/wpress\/?p=937"},"modified":"2023-03-18T17:02:04","modified_gmt":"2023-03-18T17:02:04","slug":"first-republic-receives-rescue-deposits-from-other-banks","status":"publish","type":"post","link":"https:\/\/floydsplace.us\/wpress\/2023\/03\/16\/first-republic-receives-rescue-deposits-from-other-banks\/","title":{"rendered":"First Republic receives rescue deposits from other banks"},"content":{"rendered":"\n

I saw this in the news today. I’m not going to reiterate the details (see the news links below for those) or try to predict what will happen in the economy. (I am not predicting a crash by making a parallel to the 1929 events.) I just want to point out the similarity to an event in late October 1929. After some initial large market drops several large banks got together, Morgan, Chase, and National City Bank to buy up shares above market value to try to halt the crash (this also involved funds from the Rockefeller family and William C. Durant that made his fortune off of the US auto industry). It seemed to work temporarily but not for long (see the Wikipedia 1929 Wall Street Crash link in the list below). <\/p>\n\n\n\n

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A 1932 bank run on American Union Bank.<\/figcaption><\/figure>\n\n\n\n

However, this strategy did appear to work during the Panic of 1907. There was a large drop in the markets and runs on banks. Several bankers, including J. P. Morgan, added cash and increased the banks’ liquidity. However, the market is complex and unpredictable; I am reluctant to point to single actions in retrospect and say that is why it did or didn’t work, even if it makes intuitive sense. This is something that irritates me in business news. There are frequent statements along the lines of “markets went higher today because of confidence from (fill in the blank with something positive in the news from that day)” or “markets dropped today from investor concerns about (fill in the blank with something negative)”. I am not saying that markets are not influenced by forces such as investors’ feelings about the economy, but I don’t give any credence to these kinds of storytelling statements that are not rigorously predictive. <\/p>\n\n\n\n

If anything, my inclination would be to buy bank stocks right now (they are comparatively cheap with low P\/E ratios and pay good dividends) if I were in a position to do so, but I am also confident in my ability to be just as capable of making investing mistakes as anyone else. (Full disclosure, at the time of writing this, I do not own shares in any of the companies mentioned above, but I do have a small amount of stock in Fifth Third Bank, FITB, which has also had shares plummet in recent days.) <\/p>\n\n\n\n

Links<\/p>\n\n\n\n