Everything Everywhere All At Once Bubble

 

I find myself going through real estate advertisements, used automobile advertisements, used motorcycle advertisements, new home offerings, etc. from time to time and I thank my lucky stars that I am no longer in banking.  Making the decision to lend or not to lend in this environment would suck.  Valuations on collateral are nearly worthless.  Credit scoring models are skewed and somewhat unreliable.  Sorting out credit worthy candidates from posers and wannabes is murky.  

Collecting is going to be tough, especially if the long overdue Bankruptcy Code overhaul gains any traction in the House and Senate.  Liz Warren (Senator Pocahontas) is pushing a revision to the Code that would allow underwater and overindebted "Great Americans" to include student loan balances in their new "Chapter 10" Bankruptcy petitions.  This is overdue.  I am in agreement with the allowance of student loans as unsecured debt - it never should have been excluded in the first place but thanks to the likes of then Senator Joe Biden of Delaware (banking hub), student loans were expressly excluded from being capable of discharge in Bankruptcy.

Anyway, this bubble was brewing prior to all of the Covid 19 nonsense from the Federal Reserve.  But, once people in power at the Fed got their way and shoved TRILLIONS of newly printed dollars into an already warm economy, the Everything Everywhere All At Once Bubble was off to the races.  A lot of banks, credit unions and other lenders are going to find themselves holding a lot of shitty paper and hoping to God Almighty that their debtor finds a way to keep squeezing out the monthly payments.  Many of them will not.  The Siren Song of Bankruptcy is too hard to resist.  A lot of them will throw in the towel and go visit with Moustache Pete (our 1990's office name for then famous St. Louis Bankruptcy attorney T. J. Mullen).

Moustache Pete