{"id":37765,"date":"2018-09-14T06:09:48","date_gmt":"2018-09-14T11:09:48","guid":{"rendered":"http:\/\/olduvai.ca\/?p=37765"},"modified":"2018-09-14T06:09:48","modified_gmt":"2018-09-14T11:09:48","slug":"as-the-fed-raises-rates-the-ghost-of-lehman-bros-lingers","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=37765","title":{"rendered":"As The Fed Raises Rates, The Ghost of Lehman Bros Lingers"},"content":{"rendered":"<div class=\"thumbnail-wrap article-thumbnail-wrap\"><img loading=\"lazy\" decoding=\"async\" class=\"attachment-post-thumbnail size-post-thumbnail wp-post-image\" src=\"https:\/\/palisade-research.com\/wp-content\/uploads\/2018\/09\/titanic-e1536894608894.png\" alt=\"\" width=\"525\" height=\"374\" \/><\/div>\n<h3><a href=\"https:\/\/palisade-research.com\/the-ghost-of-lehman-bros\/\">As The Fed Raises Rates, The Ghost of Lehman Bros Lingers<\/a><\/h3>\n<p>In just two days <em>\u2013 September 15<\/em> \u2013 it will be the <a href=\"http:\/\/www.abc.net.au\/news\/2018-09-14\/lehman-brothers-timeline-a-race-to-the-bottom\/10242912\">10-year anniversary<\/a> of Lehman Brothers collapse. The date they filed bankruptcy.<\/p>\n<p>With nearly $620 billion in debts, it was the largest bankruptcy in history.<\/p>\n<p>Now, a decade late \u2013 it appears the mainstream\u2019s learned nothing.\u00a0And many have forgotten the crisis that was 2008. . .<\/p>\n<p>The banks are bigger and the damage of them crashing will be <em>even greater<\/em> this time around.<\/p>\n<p>The elites \u2013 led by the Federal Reserve \u2013 have since 2008 told banks to continue lending and for consumers to continue borrowing. They did this by cranking interest rates down to zero (technically 0.25%). This allowed funds and \u2018shadow banks\u2019 to borrow huge amounts on margin.<\/p>\n<p>It also kept commercial banks continually lending out loans. And at the end of the day if they lent out too much and didn\u2019t have enough legal \u2018reserves\u2019 (deposits) to close, they\u2019d simply ring up another bank (or the Fed) and borrow the amount needed.<\/p>\n<p>\u201cHey BofA, we need $26 million.\u201d<br \/>\n\u201cOkay Citi, sounds good.\u201d<\/p>\n<p>Borrowing at near zero and lending out at higher rates was very lucrative. And basically<em>, free money<\/em>.<\/p>\n<p>Banks can ultimately borrow from the Fed for 0.25% and lend out to the U.S. government for a solid 2-3% nominal return. Or even better, they\u2019ll lend out to consumers who want a new house at a higher interest rate. Students that need debt for college. Auto loans. Or Emerging economies that need funding.<\/p>\n<p>There\u2019s more to it \u2013 and I\u2019ll highlight it more in-depth in later articles. But aslong as interest rates are low, <em>the game continues<\/em>.<\/p>\n<p>But the problem is \u2013 and just like before 2008 kicked off \u2013 short term interest rates are now\u00a0<em>rising<\/em>.<\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As The Fed Raises Rates, The Ghost of Lehman Bros Lingers In just two days \u2013 September 15 \u2013 it will be the 10-year anniversary of Lehman Brothers collapse. The date they filed bankruptcy. With nearly $620 billion in debts, it was the largest bankruptcy in history. Now, a decade late \u2013 it appears the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[19913,303,8222,431,5415,19915,3650],"class_list":["post-37765","post","type-post","status-publish","format-standard","hentry","category-economics","tag-adem-tumerkan","tag-fed","tag-great-financial-crisis","tag-interest-rates","tag-lehman-brothers","tag-palisade-research","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37765","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37765"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37765\/revisions"}],"predecessor-version":[{"id":37766,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37765\/revisions\/37766"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37765"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37765"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}