jayson

HOW THE FED F’ED INSURANCE It’s quite likely that many insurance companies are underwater. But if so, that’s the fault of the Fed, not Florida. Why? Well, one of the insurance companies named below is American Coastal. And Weiss Ratings reports[0] they put 77% of their portfolio into safe, investment-grade bonds. Problem is, thanks to the Fed, bonds are no longer safe. See, many institutions bought supposedly safe bonds from the government in 2021.[1] But then that same government did a massive surprise devaluation[2] of all of the bonds it had just sold — screwing over its biggest customers, from banks to insurance companies, causing the largest losses in bond history[3], and saddling institutions what Stanford researchers estimate to be literally trillions[4] in unrealized losses. These bond losses remain “unrealized” so long as people don’t come looking for their money. But when they do — like during a bank run when banks must pay out, or during hurricane season when insurance companies must fork over cash — then bad assets are sold and losses become “realized.” And then we all “realize” that the poor dumb institutions that bought US government bonds in 2021 are actually insolvent — unless the Fed prints to paper over a bond crisis the Fed itself caused. Which it will do, over and over again, until the crisis devalues the dollar itself. Anyway, this is what happened in March 2022 when five huge banks died[5] in quick succession, followed by a quick print[6] to cover up the Fed’s failure. This is why Roubini[7] is saying “most” banks are insolvent, why Germany’s central bank apparently has negative equity[8], and why Bank of America has $100B in unrealized losses[9]. This is all just the tip of the iceberg. Jerome Powell and Janet Yellen are bond villains. They destroyed every institution that trusted their words in 2021. They said inflation was transitory and that they’d keep rates low[10]. They sold billions in bonds on that false pretense. Then the Fed executed a surprise rate hike, devaluing all the bonds the government had just sold, and turning Treasuries into the new toxic waste. I wrote all this up here[2] and here[11], even mentioning insurance companies as bust months ago. The thing to understand is that this financial hurricane won’t be limited to Florida. [0]: weissratings.com/en/insurer/… [1]: archive.is/2021.08.31-173051… [2]: balajis.com/p/too-fake-to-te… [3]: cnbc.com/amp/2023/01/07/2022… [4]: siepr.stanford.edu/news/many… [5]: americanbanker.com/list/10-w… [6]: blog.bitmex.com/kaiseki/ [7]: marketwatch.com/amp/story/mo… [8]: ft.com/content/46d3952a-5ee2… [9]: ft.com/content/df4f343c-5666… [10]: xitter.gq/balajis/status/1… [11]: xitter.gq/balajis/status/1…