March 24 2023
Raw Notes
- Chamath and Friedberg both having sea salt and vinegar pistachios
- JCal getting paid for moderator gigs
- Fed hikes rates
- Raised by 25 bps
- Market went up
- Fed claimed 5.1% surprise print of May 2021 was transitory - started rate increase in March 2022 - so late to react by 9 months or so
- Now late to realize what stress the economy is under right now
- Tremendous stress on the banking system due to unrealized losses from hiked interest rates on long dated bonds and maybe soon to come unrealized losses on mortgage and housing issues
- Fed seems to have done the worst thing possible which is take the middle path
- Fed can raise and lower interest rates but they also have a balance sheet that can absorb assets
- Quantitative Easing
- Last June they started Quantitative tightening - restricting tools in the system
- Chamath thinks they should have raised interest rates 50bps and ended the problem
- We know from Volcker era that we need to raise interest rates high until inflation is killed - they are not doing a good job right now
- Commercial property debt is a big problem right now
- There is no credit available - banks don’t want the business
- Themselves hunkered down in a defensive posture
- There is no credit available - banks don’t want the business
- Unrealized losses in commercial real estate loan portfolios is astronomical
- Pinterest, Facebook, Amazon have written off some office rents/leases
- The risk in the system is now getting priced in
- The banks will just abandon all these assets
- In general this is really bad for risk assets
- 30-40% of the SF commercial real estate market is vacant
- Real estate owner can’t make their debt service covenant ratio
- When the loans were underwritten SF had 5% vacancy rate - now its much higher
- Tax base collapses in the city because so much of the tax base depends on commercial real estate
- Debt in general forces growth - without growth, debt fails
- Most of the population in the US has most of their asset values in their homes
- MMT in hindsight is clearly idiotic
- If you print money then you can say no one is a loser - some people win more of course
- Balaji bets on Bitcoin $1M - BTC will reach $1M in 90 days - he said this March 17 2023
- Made best against a pseudonymous twitter user - James Medlock
- Regional banks are insolvent
- Will lead to hyperinflation
- He was right about his last prediction - Covid
- Predicted Jan 30 2020 - a whole bunch of consequences he laid out - they all came true mostly
- He has a pedigree and a track record
- Crypto is a hard place to be though right now
- Wells Notice to Coinbase
- Do Kwon was arrested in Montenegro
- Kraken won’t let you get money in or out
- Some asset manager Friedberg knows says - people are moving assets away from US dollar and to businesses that do business in non-dollar denominated industries
- Debt ceiling vote coming up
- Think of all the entities around the world holding USD - all of them need to agree to get out of the dollar for this bet to come to fruition
- Nic Carter piece on Pirate Wires - explains how government is planning to ban crypto
- Government under FDR already seized Gold a while back - so why not crypto?
- So Gensler is making a hard pivot from FTX and relationships there to being anti-crypto - these are all conspiracy theories going around right now
- Why hasn’t BTC absolutely ripped - its not broadly available, its not an off ramp
- FDIC
- Just insure a higher limit so people stop moving money around
- Bank can’t put that money in a higher risk investment
- The more you insure at this point - the cheaper the insurance will be - because it will reduce probability of money moving around
- May - Fed will release their investigation into SVB and Signature
- What consumers think they are getting and what the banks are doing - are not aligned
- From the bankers’ standpoint - your deposits are their leverage
- G-SIBs - Global - Systemically Important Banks - Bofa, Citi, JP Morgan Chase, Wells Fargo
- Tiktok hearings
- Divestiture or shutdown - to an American company
- How to divestiture with audit that can appease legislators - so might have to shut it down
- Secondary app from Tiktok called Capcut is also popular in the US that legislators might want to shut down again
- Ratchets up tension between US and China
- Relativity Space shoutout
- Successful launch - 85% 3D printed rocket
- Proved structural integrity
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