US Regulators Flag Climate Change, Stablecoins As Potential Systemic Risks (reuters.com) 70
An anonymous reader quotes a report from Reuters: Climate change, the rapid growth of "stablecoins" and financial innovations that led to frenzied trading of GameStop shares early this year are threats to the U.S. financial system that merit closer scrutiny, a Treasury Department-led regulatory panel said on Friday. In its annual report, the Financial Stability Oversight Council (FSOC) added that while the U.S. economy has improved since the onset of the COVID-19 pandemic, risks to the financial system are higher than prior to the health crisis, with the outlook for global growth still uncertain.
The report marked the first time the body, which was created in the wake of the 2007-2009 financial crisis to spot looming threats, has flagged climate change as a major risk, reflecting President Joe Biden's push to address rising global temperatures. The FSOC, which comprises the Treasury and other financial regulators, said the physical risks posed by more frequent severe weather events and government policies transitioning away from carbon-heavy industry could dent asset values and weaken institutions, it wrote, echoing an October FSOC paper. "If these changes occur in a disorderly way owing to substantial delays in action or abrupt changes in policy, their impact is likely to be more sudden and disruptive," the FSOC said.
Similarly, the body reiterated concerns flagged in November that stablecoins, a fast-growing type of digital asset pegged to traditional currencies, could become a threat if widely adopted. While that market is currently only worth about $127 billion, its market value has ballooned more than 500% over the past 12 months and may be vulnerable to runs if investors lose confidence in the asset class's reliability, the FSOC said. The body also noted a surge of volatility earlier this year sparked by retail investors, who coordinated on social media and used zero-commission trading apps to fuel sharp rises in a handful of stocks, including videogame maker GameStop. The episode suggested financial innovations and social media are changing market participation, raising the risk of sudden asset price movements unrelated to fundamental news. That "could represent a vulnerability if they lead to cascading impacts by causing asset liquidations or putting stress on financial institutions," the FSOC wrote.
The report marked the first time the body, which was created in the wake of the 2007-2009 financial crisis to spot looming threats, has flagged climate change as a major risk, reflecting President Joe Biden's push to address rising global temperatures. The FSOC, which comprises the Treasury and other financial regulators, said the physical risks posed by more frequent severe weather events and government policies transitioning away from carbon-heavy industry could dent asset values and weaken institutions, it wrote, echoing an October FSOC paper. "If these changes occur in a disorderly way owing to substantial delays in action or abrupt changes in policy, their impact is likely to be more sudden and disruptive," the FSOC said.
Similarly, the body reiterated concerns flagged in November that stablecoins, a fast-growing type of digital asset pegged to traditional currencies, could become a threat if widely adopted. While that market is currently only worth about $127 billion, its market value has ballooned more than 500% over the past 12 months and may be vulnerable to runs if investors lose confidence in the asset class's reliability, the FSOC said. The body also noted a surge of volatility earlier this year sparked by retail investors, who coordinated on social media and used zero-commission trading apps to fuel sharp rises in a handful of stocks, including videogame maker GameStop. The episode suggested financial innovations and social media are changing market participation, raising the risk of sudden asset price movements unrelated to fundamental news. That "could represent a vulnerability if they lead to cascading impacts by causing asset liquidations or putting stress on financial institutions," the FSOC wrote.
Financial innovations? (Score:5, Insightful)
and financial innovations that led to frenzied trading of GameStop shares early this year
There was no innovation. Some big hedge funds made a big mistake. Individually they didnt think they were making a mistake, but because all of them were doing a lot of shorting, the combined shorts were on the hook for over 100% of the shares on the market, and that is a vulnerable position to be in.
Unless they mean the innovation where some people werent allowed to buy gamestop shares, because the hedge funds somehow can boss around 3rd party brokers to make it so. THAT innovation?
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Re:Financial innovations? (Score:4, Informative)
isn't naked shorted illegal? how could they short more than 100% of the stock available?
90% of the shares of Zeta Corp have already been sold short.
Ann owns 10% of the shares in Zeta Corp.
Bob wishes to short Zeta Corp. He borrows all of Ann's shares and sells them to Carl. This is a short sale, but not a naked short (it's covered by borrowed shares).
Shorting is now at 100%.
Denise also wants to short Zeta Corp. She borrows all of Carl's shares (N.B. Carl has no way of knowing that the sale to him was short) and sells them to Eric. This is a short sale, but not a naked short (it's covered by borrowed shares).
Shorting is now at 110%.
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isn't naked shorted illegal? how could they short more than 100% of the stock available?
90% of the shares of Zeta Corp have already been sold short.
Ann owns 10% of the shares in Zeta Corp.
Bob wishes to short Zeta Corp. He borrows all of Ann's shares and sells them to Carl. This is a short sale, but not a naked short (it's covered by borrowed shares).
Shorting is now at 100%.
Denise also wants to short Zeta Corp. She borrows all of Carl's shares (N.B. Carl has no way of knowing that the sale to him was short) and sells them to Eric. This is a short sale, but not a naked short (it's covered by borrowed shares).
Shorting is now at 110%.
I know it's an example set-up, but in practice a company's shares are not loaned out (shorted) to 90% levels. Clearinghouses should and do maintain a buffer of real shares to avoid being overexposed.
But even in this example where 90% of the shares are being shorted, once Ann loans her shares to Bob and it clears (by the clearinghouse) any subsequent loaning (shorting) should not clear. The transaction should fail (at the consumer-facing brokerage) and there would be no naked shorting.
Re:Financial innovations? (Score:4, Insightful)
Re: Financial innovations? (Score:1)
Explain how redditors are able to pump and dump of GME securities and the rest of humans would be sued / thrown in jail for the blatent SEC violations.
Pumping up stocks for the purpose of dumping is illegal:
- The Securities Exchange Act of 1934â(TM)s Rule 10b-5, which prohibits the use of misstatements and omissions related to the buying and selling of securities.
- The Securities Act of 1933â(TM)s Section 17(a), which bars anyone from selling or offering securities as part of a scam to defraud oth
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I agree that some pumping (and presumable dumping) occurred and continues to occur at WSB (Reddit). In the GME situation I would characterize their communication as whistle-blowing though. They exposed a sort-of fraud occurring in the financial sector that exposed the wider market (us) to a potential major harm (systemic risk).
Fortunately for the wider economy the market maneuvered through the exposure unscathed by essentially screwing the little guy (by blocking buying and increasing margin requirement
oh well (Score:1)
crypto is a threat, totes because of environment (Score:2, Insightful)
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It sounds like you're attempting a sarcastic response to this report but at no point does it suggest that it's environmental concerns that make crypto a threat. It notes a number of separate threats one of which is climate change and another is the potential consequences of a loss of confidence in 'stablecoins'.
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Why shouldn't governments assess the risk of things? For democratically elected governments, that's what I elect them and pay them to look out for.
Are you saying governments shouldn't look into things? That they should let every fucking thing run wild and free?
Whatever gave you that idea? (Score:2)
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Whales currently do have too much influence, but they cannot "take over" anything, for decentralized cryptocurrencies like Bitcoin anyway. At most they can cause price fluctuations, at the expense of their assets.
And the regulations also have big downsides like barriers of entry, which means banks have less competition and therefore can have the better of customers. I do not say some regulation is not necessary, even in the case of centralized stablecoins, which are in fact covert unregulated banks, but t
I should make a hotkey. (Score:1)
Professional baristas` (Score:2)
Congress is professional baristas, lawyers, schoolteachers, and dentists; not economists.
And for even more fun, in a body whose job it is to pass LAWS, the barista seems to have more influence than most of the lawyers.
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LOL
"experts"
(lobbyists)
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You've never seen a legistlature work, have you? It's cute that you think it's a bunch of wise people, sitting down with experts to carefully consider issues. That's really adorable.
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The experienced professionals don't know what they are doing. Some random /.er will save us.
I believe that there is considerable evidence in the wisdom of the masses. That is that there will be people that choose wisely, those that get things halfway right, others getting things halfway right but for the wrong reasons, people that get things right by chance, people that choose poorly for themselves but get things right for everyone else, and then those that just screw up horribly. Not everyone needs to get everything right for an economy to grow and the tide lift all boats. We just need enough
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I believe that there is considerable evidence in the wisdom of the masses.
Unless those masses don't want nuclear.
Then you need to show them the error of their ways at every opportunity.
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It's a Christian thing in a nation of people that are nominally Christian
No, it's a Catholic thing, and the USA is not predominately Catholic. It's not really observed much amongst Catholics anyway.
Re:#1 threat conspicuously absent (Score:5, Insightful)
have been fucking with the economy with lockdowns
Diseases don't care about the economy, and if pieces of shit like you fucking obeyed the rules in the first place, lockdowns would have been short. Cunts like you prolong the lockdowns and cause the economic damage.
Re:#1 threat conspicuously absent (Score:5, Insightful)
Humans spread diseases, and COVID spread by respiration, so the way to stop disease while vaccines are being developed is lockdowns.
No one likes lockdowns, you dumb piece of shit. That's why we would prefer them to finish as early as possible, which means FOLLOWING THE RULES TO REDUCE THE SPREAD.
It's retarded dipshits like you who can't follow simple science and logic is what makes lockdowns longer, and requiring more harsher rules put in place. People like me wanted to end this as quick as possible, to reduce the need for prolonged strict measures.
Do you feel like an idiot yet? Because you fucking should.
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So did you get the apple flavor?
Re:#1 threat conspicuously absent (Score:5, Insightful)
If there's one thing I can count on, are nerds whose only knowledge of the world is informed by 1984 and Nazis. Completely disregarding that DISEASES are REAL THINGS. DISEASES are EASILY defeated, and does not require concentration camps.
You don't have the fucking balls to actually go through what people in Nazi concentration camps actually went through, so don't try to portray yourself as the hero of a resistance. You're pathetic, and siding with real life Nazis who are making a comeback TODAY.
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Ah, the first resort of the idiot. If there's one thing I can count on, are nerds whose only knowledge of the world is informed by 1984 and Nazis. Completely disregarding that DISEASES are REAL THINGS. DISEASES are EASILY defeated, and does not require concentration camps. You don't have the fucking balls to actually go through what people in Nazi concentration camps actually went through, so don't try to portray yourself as the hero of a resistance. You're pathetic, and siding with real life Nazis who are making a comeback TODAY.
You on the other hand would be all to glad too put me in there. National socialists, real socialists, same fcking fascist scum thorought history.
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Tyranny is always resolved by obeying.
Get bent. Ask yourself this; what if it had been the "Other" team that told you to stay home, don't work, close your business and hide your kids, don't see your loved ones, take these extraordinary medical interventions...can you honestly say you would have the same opinion?
I know I would. I don't care if it's Trump or Biden laying on the bullshit, I know it for what it is.
You? Well, you can lie to yourself I suppose, but I know damn well you'd be part of the "resist
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Go kill yourself.
Re: #1 threat conspicuously absent (Score:2)
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Does it? Masks don't show up in real world data. There is, apparently, a negative correlation between vaccination and the latest variant ( which makes sense if you actually understand how viruses work ).
Truth be told, there is not a single real world dataset which show any efficacy in our mitigation efforts.
Ask yourself this; why, after 2 years, do physicians not have a recommended "early" intervention protocol other than "wait and see"? Doesn't that seem odd? There are plenty of known therapeutics avai
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Introducing the VeryStableGeniusCoin! (Score:3)
Invented by a "very stable genius" who always "has the best words." In uncertain times such as these, only Dear Leader can provide assurances of safety, e.g., "They are dying. That's true. And you -- it is what it is..."
Then do something about it already. (Score:2)
The US successfully shut down Liberty Reserve back in 2013, and outfits like Tether are waaaay more shady.
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Tether, Ltd. isn't incorporated in the United States. It's incorporated in Hong Kong. U.S. regulators couldn't "shut it down" if they wanted to. Most they could do would be to bar American exchanges from offering trades or services with USDT, which is fine since USDT is terrible anyway.
Sadly I don't think they would even go that far.
The whole of the blockchain market would be better off using something like DAI that has transparency wrt its collateralization. DAI also has no direct ties to non-blockchai
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Liberty Reserve was based in Costa Rica, and the US had no trouble spearheading what was actually an international effort to bring their operation down.
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You think they could pull that off in Hong Kong? Today? I doubt it.
Regulators are NOT disinterested parties (Score:1)
It's always the same solution. They want more government power and control.
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I'll have people claim this data is "outdated" but its from 2020, how much more recent data can there be? They claim that this is "debunked", but it's from multiple (and again recent) sources that agree with each other (at least in terms of order of magnitude) from organizations like Lazard, IPCC, IEA, and IRENA.
So you are finally reading your own links and noting that Lazard didn't agree with your previous spiel, but you are still soft-soaping it with 'order of magnitude'? It's progress, I suppose.
Something else odd... (Score:1)
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USDT would go to $0 if the USD goes to $0 (as indexed in 2021 dollars). In fact, so would all the other stablecoins. People would have to switch to StableEuro or something . . . ?
Oh look, Bitstamp has the EURt. How clever.
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He drives a better car than you do.
Continuing with the Germany references, so did Hitler. So what relevance does his car have to the veracity of his statements?
An existential threat (Score:2)
Climate change is an existential threat, a threat to our very existence. It us a threat to all of us that cannot be ignored, it must be treated as seriously as crimes against humanity or genocide. Those that perpetuate it, need to regarded as criminal.
Re: An existential threat (Score:2)
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This is a wildly overblown statement, not supported by the science. Please take just a single day out of your life and read "Unsettled: What Climate Science Tells Us, What It Doesn't, and Why It Matters [amazon.com]", by Steven Koonin. The thesis of the book is that what the actual climate scientists are saying is not aligned at all with what the political and media classes are saying. The actual science, which is dispassionate and honest about what is known and unknown, has been transmogrified into "The Science", a sel
Koonin is a discredited shill for big energy (Score:2)
I'll stick with what the climate scientist actually say.
The real experts like the UN Intergovernmental Panel on Climate Change [www.ipcc.ch] and the Met Office [metoffice.gov.uk].
It people like Koonin,taking bribes to parrot already discredited propaganda, to lie that should be prosecuted.
Interesting (Score:1)
Lol retail investors (Score:2)
LOL retail investors some kind of threat. Massive funds with trillions of dollars not at all a problem, a few retail investors noticing gaping holes in what is supposed to be a professional trading strategy and exploiting that using social media it's not at all a problem. I consider it a good check and balance.
Their whole spiel reads like a corrupt crony pissed that his corruption is unable to go as far as he wanted.
I still do not understand (Score:2)
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If it's fully-backed (not leveraged) then there is no counter-party risk.
So yeaaaah, about that...
monetizing debt is the risk ! (Score:2)
How many by politicians printing money?