Charles Schwab owes 130% of their total equity capital to short duration FHLB loans that have to be paid back soon.
Total assets $350 billion… There's your September Lehman Brothers. https://t.co/Rr492EJgeN pic.twitter.com/7aFMIBq0a3
— Financelot (@FinanceLancelot) August 21, 2023
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The debt will be “rolled over”.
Loans this big are renewed, most of the time at a higher rate, instead of a liquidation at maturity. Too many players are owed that money. Student debt loans are over 1.77 TRILLION. Now THAT’s a problem.
Lehman was in the hole for 619 billion. SEC and the The Fed will not let that happen again. Everything is fake now so it’s way easier to kick the can down the road. In the grand scheme of things today, 350 billion is not that big a deal, “money” is nothing but binary code now. China is in worse shape than the US and they fudge their numbers way worse. My fear is that they go for Taiwan right before or after their economy tanks. That will be a moment.
The end is near but it won’t be this Sept. Football season will go on.
Interesting times
Agreed at this point they will just say whatever they want to say and put up whatever numbers they want to put up and move on.
As long as the banks keep lending at 7+% to whatever home buyer wants to buy a seriously inflated wood box in whatever shit hole city or town then they’ll keep giving it to them.
18 years, coming up on 19 yeas in real estate and the last 3 years have astounded me with run away price inflation.
A 1200-1500 square foot house that sold in 2019 for 285,000 now is selling for 433,000. That is a THIRTY FIVE PERCENT increase. I am not talking about brand new homes then versus brand new homes now. I am talking about a house built around 1900-1920, in a small town with about 9400 people. Interest rates in 2019 were 4.51 percent. They now stand at 7.48%.
2019 payment on a 30 year fixed rate home: $1512
Today: $2772
A difference of $1216 per month, almost a whole second mortgage payment in 2019
Salaries in this town:
$89,026 as of 2019 (average)
$153,349 today
$64,323 difference
I would like to point out that if you are in the $153,349 tax bracket, you will end up with $106,405 after taxes. So let’s see:
$8867 per month in salary
– $2772 in mortgage
-$975 per month in groceries
-$275 per month in home heating oil/gas
-$281 per month in electric
-$700 per month in gasoline
-$100 per month in internet
-$150 per month in cell phone (that’s generous, most people spend more, I am using average)
-$750 per month car payment (assuming you have ONE car payment. Most families have 2)
-$200 per month car insurance
-$161 per month on clothing
-$1000 per month on homeowners insurance, medical insurance, things like this. I didn’t even bother including entertainment.
Leaving you with $1503 per month to try and save for such things as retirement, vacations, braces, repairs, whatever. This Mr. or Mrs. Average are literally one hot water heater away from zero. A new electric hot water heater is $1000-$1800 installed. Four new tires? $1000. New stove? $800.
Please keep in mind this is AVERAGE. It is probably more for some and maybe less for others depending on where you live.
So salaries are up, but the cost of living is outpacing any gains. So a family of 4 now must certainly have two earners to have any freedom of saving, traveling, or being prepared for an emergency.
If you increase the housing costs to the AVERAGE ($650,126) for this same town the numbers go up. I just used a ‘modest’ housing purchase in this town. Yeah, $433,000 is considered modest. With a mortgage on a $650K home (and that’s assuming a $130,000 down payment HA HA) you’re now talking $4421 per month. That six figure salary doesn’t even cut the monthly base line anymore.
You cannot purchase a home in my area for under $300K that is livable. Rents are, on average, $1700 per month for a two bedroom including nothing. And I am not talking city here either.
We are fucked.
Where I’m from $1,700 gets you a cot in a converted garage in graffiti-ville.
Yes, we are fucked but I think there is still some time left to prepare or at least try.
Same as where I live. Dumpy housing, old black mold ridden dumps that people put new paint on, is all that can be afforded. Wages are very low because we are ag and tourist driven, so seasonal. Rentals are near impossible to get, you have to know someone that is either moving out or a landlord that has a unit and willing to tell you when it comes available. Rentals, for a small one or two bedroom shack run 1500 and up.
What about the other 90 percent of the county that makes less than 50 percent of that ?
Mortage rates were above 9% from at least 1970 until 1991 and then slowly went down not reaching 7.3% until 1993. Rates didn’t breach the 5% line until 2003 when the housing prices had already climbed into crazy land during the late nineties.
The rates didn’t really decline that much until the housing market became the next get rich quick scheme in the nineties. Just like today, people could no longer afford to buy the inflated priced houses at the higher rates, so problem-solution; lower rates as much as possible and qualify as many people as possible. Let the good times roll!
It’s all coming home to roost now ehh?
Bought 1st house in April 1977. 10% down, so they added 1% to the normal 8% rate (20% down). No variables back then. But were in 1988 when I bought a house after divorce, so I did. Everyone said I was crazy except for one person. It saved me thousands, no 10s of thousands.
Debt free today, except for CCs, which are paid off monthly.
My parents first house was a small two-unit in a small town in CT. Purchased with the old Yankee Mac loan which was the precursor to the VA loans. This was 1975-76. Purchase price was $21,000 with a 14% rate. Income from the upstairs was probably $105 per month. Mortgage would have been around $265 per month.
My parents drove a Vega they owned out right and really no one had credit cards back then unless you were fabulously wealthy.
We went camping for vacations, didn’t eat out except once in a great while, didn’t have cable TV (That didn’t even come to CT until the late 80s anyway). Our clothes came from Kmart and Ames, school shopping was done at Sears when they had a sale or JC Penney and that was it. We had one winter coat until we outgrew it. One pair of sneakers, one of boots, one of shoes.
Used bikes. Toys…well you break it it was broke with no replacement.
Dinner was what mom made and if you didn’t like it then you went to bed hungry.
We brought our lunch to school.
Movies were usually the drive in or matinee and we shared a big bucket of popcorn.
Now? Shit….kids have cell phones worth 500-1000 bucks. Game consoles that are 500+ dollars, lap tops, iPads, hover boards.
They eat out at least once a week. Multiple coats, shoes, hats, boots. Dirt bikes, electric scooters. Every room has a TV.
Consume, consume, consume.
We stopped buying toys or anything like that for the grandkids for the holidays. It’s all experiences now, like camps, lessons, or educational trips, museum membership and aquariums.
I see now we are here to stay. Time to take a serious look around.
edit to my post: the 350 billion is assets, so if they owe 130% of that they owe 455 billion.
My bad, but I still think that will be rolled over or someone/something will buy that debt.
Sell off the 350 and kick the 105 billion down the road. Elon can swing that on his lunch break.
Lots of widom in the whole interview.
Home Sales Plunge Further as Demand Vanished at these Prices. Even Cash Buyers Pull Back. Supply Keeps Rising
Prices drop month-to-month and from peak (June 2022). Days on the market jump. Homeowners with 3% mortgages vanished as buyers and sellers in equal measure, entire market shrank…
This drop in demand is further documented by the plunge in mortgage applications, indicating that closed sales for August, when reported a month from now, will look even worse than those in July, reported today.
Yet again, gold for the win. Debt free on top, golden.
Gold ETF’s and other gold “investments” are a ponzi scam.
Physical gold is fine and dandy but it will be barter and black market only in the future and don’t get caught.
It will probably be confiscated or at least illegal to use as a medium of exchange.
Anon- We will take our chances, BTW…. only idjits put $$$$$ into ETF’s.
Yep. I think the value of my gas powered Keene gold dredge just went up astronomically!
From the Balance Sheet (in thousands)
Total Assets: 551,772,000
Total Liabilities: 515,164,000 (includes losses from long term bonds)
Total Equity: 36,608,000
As of May Schwab had borrowed about 25 billion in FHLB
https://www.thinkadvisor.com/2023/03/27/schwabs-7t-empire-is-showing-cracks/
some one is going to need a Lawyer.
How much debt does Charles Schwab have?
Charles Schwab net current debt for the twelve months ending June 30, 2023 was $75.224B, a 1921.61% increase year-over-year. Charles Schwab annual net current debt for 2022 was $12.191B, a 151.26% increase from 2021. Charles Schwab annual net current debt for 2021 was $4.852B, a INF% increase from 2020. They have to Roll it or it will capsize…. Remember they are paying 5.5% on the lastest
If you watch David Stockman’s video series on The Financial Panic of 08/09, he said that there was no crisis but it was a panic. There certainly was not panic in the Midwest State where I lived. People went to their jobs and shoped at Wally world like nothing was wrong. One Video I watched said that Paulson forced the Banks to take the Federal Bailout Money even though the Banks said they were fine financially.
October. It blows up in October and Schwab is just another log on the fire.
Student loan interest clock starts again in Sept and 1st payment is due in Oct. R’s will blow wind and do a government shutdown that doesn’t actually shutdown anything, also in October.
Things will go belly up & D’s will get to blame R’s for the house of cards crumbling. Those dopes are walking right into it. As an added bonus they may impeach Biden saving D’s from putting him out to pasture and motivating D voters at the same time.
Also, Dr. Michael Burry is betting 90% of his 2008 winnings – about $1.6 billion – shorting stocks:
https://www.google.com/search?q=Dr.+Michael+Burry+is+betting+90%25+of+his+2008+winnings+-+about+%241.6+billion%2C+IIRC+-+shorting+stocks.&sca_esv=559545509&source=hp&ei=rqLmZJrRMO2w5NoPgOyZsAY&iflsig=AD69kcEAAAAAZOawvrdbfo9XjusKQGATolwhKgdqbSHx&ved=0ahUKEwia4N6-g_SAAxVtGFkFHQB2BmYQ4dUDCBA&oq=Dr.+Michael+Burry+is+betting+90%25+of+his+2008+winnings+-+about+%241.6+billion%2C+IIRC+-+shorting+stocks.&gs_lp=Egdnd3Mtd2l6ImNEci4gTWljaGFlbCBCdXJyeSBpcyBiZXR0aW5nIDkwJSBvZiBoaXMgMjAwOCB3aW5uaW5ncyAtIGFib3V0ICQxLjYgYmlsbGlvbiwgSUlSQyAtIHNob3J0aW5nIHN0b2Nrcy5IAFAAWABwAHgAkAEAmAEAoAEAqgEAuAEMyAEA&sclient=gws-wiz
When I was growing up, most people believed in Murphy’s Law, ” if something can go wrong, it will, and at the worst possible moment”. This attitude came from very bitter memories of the great depression, and the consequences of being in a vulnerable position.
That attitude had a big influence on peoples financial behavior. No one that believes in Murphy’s Law, puts themselves so far in debt, that they stand to lose everything if things go south for a few months.
Over the past 20 or 30 years, people have been convinced that the road to wealth is built on leveraged debt. The vast majority live under the mistaken belief that nothing will ever go wrong. They have no understanding that the past 30 years have been a anomaly fueled by the blowing of a massive inflationary bubble, and not the normal economic function of a free market. Because of their lack of understanding of the laws of action and reaction, most of them have placed themselves in a very vulnerable position.
When (not if) the bottom does fall out of the economy, they will lose everything. But that is, after all, the plan.
The plan is to create a economic disaster, one in which most people will lose everything due to the fact they are overleveraged into assets that are over valued. When the real estate and stock markets fail, all of their wealth will be wiped out. That is when the Government will step in with CBDC’s and UBI, and after that nothing will ever be the same. That will be the great reset, after which point, as Schwab said, you will own nothing, and be happy.
Grandpa’s law said Murphy was an optimist