I would absolutely underwrite your "externally" determined "fate" of the U.S. economy. That is pretty clear to me.
The 'crats served it and the people ate it. The majority prefers socialism while the ROW detests it. The US doesn't believe that USSR went about it in the right way. The US will be the last nation to squander its future on stupidity.
in providing "security"
All other major nations can do it just as well. The circumstances coming out WW2 set the stage for the US to take the policeman role. ROW should help pay the cops though.
or "technical excellence" (the high-end R&D that hopefully spawns the next wave of ventures... call it the next Cymer)
I'm a physicist. The US has squandered its advantage there too. It throws big money at bad science and has little to show for it. The best physicists are coming out of Brazil, Italy, India, all sorts of places. Nada comes out of the US, all due to John 'crat Dewey theory of socialist education.
Getting variables correctly assigned..
Just do it.
What yield curve I was referring to (in the conext of regional banks)
This clause is already wrong.
I meant the yield curve for US Tbond - Tbill
Ok. All structural, macro, in Europe too.
I do know that the regional banks refinacne from the FED and also from the Federal Home Loan Board.
Well,...it's irrlevant in the scheme of things to make such a trivial separation. In the private sector regional banks work within the confines of conditions created by the majors. A regional can't cut a big project loan that will be competitive against the majors. They wouldn't do that anyway. It's against unofficial loan law to go for C&I loans. They try to get the guaranteed stuff, you know, the loans which are collateralized by smart money real estate.
The NIM in their quarterlies of the "dull, safe regional banks" are 300-400bp. Obviously parts of their refi is at higher prices (CD, deposit) while other parts are virtually cost-free (checking accounts) because they are non-interest
No longer true, and not usefully true before this week. Banks in the US haven't wanted to make loans for a decade.
Oddly enough some of these "dull banks" as you seem to describe them (not explicetly though)
I'll accept "explicitly".
But they indicate it is indeed possible to be growing and avoiding excessive exposure to "toxic" leverage.
It's true now as fo the last month. The RE sham is over. RE is a cold, out-of-pocket loss. Without inflation it's a total loser unless the only nice feature of RE has finally come back. It's called locality. All RE is local. That hasn't been true for 50 years and thus for 50 years RE hasn't been a valid investment up to true locality factors. FED kept it propped up.
I cannot decipher this statement of yours correctly
(maybe because English isn't my native language).
Yes. That will be a big problem since I lean on a fine knowledge of the King's language.
So let me try to probe to get it right:
Good attitude will overcome the King.
First you mention "MY" yield curve. Do you mean my implied return that I would "demand" for an investment ?
No. I mean whatn you're referring to in your yield curve which apparently is Tbill - Tbond spread and thjeir various maturity distributions, that is, there are n different curves in any yielding curve set.
Moral harard ?
Look it up in wikipedia. Something like "unintended and usually negative consequences from actions done to do good".
"If I read your components of yield curve correctly, I think those entities are losing in that environment because they're chasing away biz or not going after better margin biz. They're being "safe". Safe gets you sunk. It is always possible to take bad risks, but surprisingly the environment you think optimizes R/R, doesn't. You have to take prudent risks. The environment under your yield curve indicates imprudent, moral hazard, risk avoidance".
The yield curve spread isn't being caused by the pursuit of loans. It's being caused by ancillary factors which have little to do with the purpose behind making loans: promote commerce for a profit. Basing loans on RE is NOT promoting commerce, for nothing comes from RE loans that leads to increased GDP growth. No, homebuilding does not. It's a wash, just as all 'crat spending to pump up final demand is nothing but pure waste of capital.
Why that for these "safe banks" I wonder what you are inferring here.
Not inferring, referring to.
I'm stating that these banks avoid risk in imprudent ways.
Look, I have not invested in such entities yet, just wanted to scope out and find some mispricings out there.
They surely exist but it isn't my bag. Has no sex appeal. If you want to take risk, take it, don't talk. Stocks are risky. If you take risk, you should be commensurately paid. I referred to "avoid risk in imprudent ways" above as a standard say, regional bank, corporate strategy. They take unplumbed risk thinking that they're safe, but if they come out alright, they don't get a return commensurate to the risk they took. These banking entities tried to hide the true risk of their schemnes by attaching them to mortgages, the badge of security that had most duped after 50m yuears of FED guaranteed inflationary returns. God, the people loved that. If it would just have gone on and on = eternal prosperity. Most still think that.
I heard some sort of your argumentation line some time ago in my economic classes in college.
I doubt it. They only told you what seems to sound like what I say. They won't debate me. I already whipped the best they had 30 years ago. Why can't they win? They're immersed in socialism and they can't see it. Same as with the medieval church. That church oppressed millions yet it thought it had the truth, the light, and the way.
Reminds me of Robert Lucas, "rational expectations" ... does this fit ?
Lucas represents the establishment. It's like the mass of physicists hiding in black holes. They have to publish or perish so they right about what really can't be measured nor contested.