Silicon Valley Bank Goes Under, Won't be the Last...

2023 Mar 10, 9:47am   5,231 views  278 comments

by NuttBoxer   ➕follow (0)   💰tip ($0.10 in tips)   ignore  

To get out of the collapse in 2008, apparently the plan was to never raise interest rates again. Now that it's impossible, the bubble is moving to banks. Funny thing is, I had applied for an open position with them about a month ago. Now I know why I never heard back...

Oh yeah, and to once again blow away the bullshit about everyone being insured, read the article about how some depositors will have to pray dividend sales will someday return their deposits to them.

For some fun search bank run and see what some of the top images are.


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225   mell   2023 Mar 15, 12:28pm  

Bd6r says

Credit Suisse is next, apparently. If they goes under, it will be much worse.

There have been plenty of bad banks constantly rumored to fail, SVB, 1st Republic, Credit Suisse, Deutsche Bank are the usual suspects and shit banks. But if they are big enough they will be bailed out every single time, and I count CS and DB as too big to fail, at least not without some sort of depositor bailout.
226   Patrick   2023 Mar 15, 12:51pm  

Patrick says

Collin Rugg
BREAKING: Gavin Newsom failed to disclose personal ties including his bank accounts at Silicon Valley Bank while lobbying for their bailout.

This is illegal.

228   zzyzzx   2023 Mar 16, 5:11am  


NY Multifamily Fears Fallout from Signature Bank Collapse: One condo developer said panic also grew around condo deposits this weekend, as many law firms used the bank’s escrow services.

Days before Signature Bank collapsed, Danny Fishman was scrambling to move hundreds of his buildings’ deposits. The goal: have no more than $250,000 — what the federal government insures — in any account.

Fishman, whose New York-based Gaia Real Estate has over 18,000 apartments, clocked 18-hour days this weekend yanking funds from regional banks, including Signature, and moving money into larger institutions he hoped would be better insulated against the turmoil in the financial sector.

229   zzyzzx   2023 Mar 16, 5:24am  


SVB’s Collapse Shows the Yield Curve Is Always Right
230   NuttBoxer   2023 Mar 16, 8:24am  

Sounds like Credit Suisse is about to go under, or the Euro is on it's way to hyperinflation, SNB bailout not working...

Also First Republic going to be the 3rd bank shuttered, likely this week or next.

And then there's this:

231   ad   2023 Mar 16, 8:55am  

After reading reports about how small tech startups have been withdrawing more bank deposits to financially survive, I thought about what richwicks said about government funding (i.e., Pentaon/intel agencies, etc.) is what is keeping Silicon Valley no better than semi-solvent. Then I read this article which goes to what he mentioned.


233   clambo   2023 Mar 16, 9:33am  

Above: "Get those numbers up!"
237   Patrick   2023 Mar 16, 10:50am  


Silicon Valley Bank offered nearly $73 million to Black Lives Matter-related social justice organizations in the years preceding its failure, while Signature Bank gave $850,000. A database maintained by the conservative Claremont Institute reveals that SVB contributed over $73,450,000 to the movement and other social justice organizations in an effort to improve its Environmental, Social, and Governance grade. In the meantime, New York-based Signature Bank gave a total of $850,000 over the course of several years prior to its failure on Sunday.

From https://dc.claremont.org/blm-funding-database/


I don't see any explicit mentions of donations to BLM, but do see a lot of wokeness.
240   Patrick   2023 Mar 16, 11:11am  


Go woke go broke! SVB hired board obsessed with diversity, invested $5BN for 'healthier planet' and held month-long Pride celebration - but had NO chief risk officer for eight months last year
Silicon Valley Bank had an A rating for its Environmental, Social and Governance policies as it increased diversity and invested in sustainability startups
But for eight months last year, the bank did not have a chief risk operator
At the time, it was investing clients' money in low-interest government bonds and securities that saw their value fall when interest rates rose
241   Patrick   2023 Mar 16, 11:29am  

A relative pointed out that no one seems able to document the "$73 million to Black Lives Matter-related social justice organizations" and that it's misinformation put out by Fox News. My response:

I can't find any confirmation of how much they gave to BLM, but it seems unlikely to me that they did not donate, given how openly woke they were:


I read a very convincing explanation of the psychology behind that here:


The point being that people in positions of great responsibility must be hired on competence alone, utterly without regard to race, not only for the protection of the public, but because discrimination in employment based on race is illegal, and because hiring based on race makes everyone rightly suspicious of the competence of minorities in positions of power.
242   NuttBoxer   2023 Mar 16, 12:55pm  

Patrick says

and that it's misinformation put out by Fox News.

It wasn't "put out" by Fox, but by the organization you linked to above. If you search you'll see this story was picked up by the NY Post, UK Dailymail, Newsweek, every propaganda organization on the planet. So your relatives assertion, while correct about the SVB BLM connection being unproven, definitely belies their strong false paradigm world outlook, with all it's bullshit close-mindedness.
244   ad   2023 Mar 16, 4:16pm  


from USA Today

"Ohio's State Teachers Retirement System took the biggest hit losing $27.2 million. But that's just 0.03% of its portfolio."

245   ad   2023 Mar 16, 4:18pm  

Patrick says

The point being that people in positions of great responsibility must be hired on competence alone, utterly without regard to race, not only for the protection of the public, but because discrimination in employment based on race is illegal, and because hiring based on race makes everyone rightly suspicious of the competence of minorities in positions of power.

this is where ESG (environmental, social and governance) comes into play and controls how the company operates ... most are going full Woke because of pressure and also to buy favoritism from the angry left (i.e, Democrats) ...

going ESG is like protection money ... you won't see an Al Sharpton or Jesse Jackson boycotting it... you won't see the NY Times hit pieces against it... you won't see AntiFa firebombing one of its buildings....

246   Patrick   2023 Mar 16, 8:12pm  

Kind of like the BLM signs in stores that didn't want their windows smashed in riots.

"Nice window you have there..."
247   Patrick   2023 Mar 16, 8:12pm  


One of America’s leading audit firms, KPMG, is defending giving both Silicon Valley Bank (SVB) and Signature Bank a clean bill of health just days before they collapsed last weekend.

The banks imploded when customers rushed to withdraw their savings in panic-fueled bank runs.

The two banks collapsed shortly after their respective annual reports were certified by KPMG.

KPMG is one of the so-called “Big Four” accounting firms.
248   Patrick   2023 Mar 16, 9:02pm  


Why do those seven words matter so much?

The reason that depositors started pulling money from Silicon Valley Bank last Thursday wasn’t because they suddenly woke up and decided Silicon Valley had a weird-looking logo. It was because Silicon Valley had lost huge amounts of money buying low-yielding Treasury notes and mortgage-backed securities.

Bonds carry two kinds of risk, credit and interest rate risk. (Bearer bonds carry a third kind of risk, that they will be stolen, ala Die Hard. But bearer bonds don’t really exist anymore.)

Credit risk is obvious - if a company goes bankrupt and can’t pay back a bond, it’s worthless, give or take. Interest rate risk is more subtle. Bond prices rise as interest rates fall and fall as rates rise.

For a person who owns a bond and just plans to hold it until it matures, interest rate risk doesn’t matter much.

But for a bank, interest rate risk matters hugely.

A bank takes money from depositors and uses it to make loans or buy bonds (or other, more esoteric financial instruments). If the depositors want their money back, the bank has to give it to them. If it has to get that money by selling bonds when their value has dropped because interest rates have risen, it will lose money. A bond for which it paid $100 might only be worth $90.

But not to the Federal Reserve.

The Federal Reserve just told the world that it will pretend that a bond which is really only worth $90 is actually worth $100 - “par.” That’s what “these assets will be valued at par” means.

This program is similar to the way the Fed started to bail out banks in 2008, when it bought mortgage-backed securities that no one else would. That program, like this one, was supposed to be a temporary response to a crisis that threatened to destroy much of the banking system.

How’d that work out for us? Before the banking crisis of 2008, the Fed had under $1 trillion in assets. In bailing out banks that fall, it more than doubled the size of its balance sheet - to over $2 trillion.

Today the Federal Reserve has over $8 trillion in assets - loans and bonds that it has taken from banks (and since Covid, from companies directly). It is a larger and more crucial backstop to the banking system than it was 15 years ago.

For a long time, all that extra help didn’t seem to matter. Yes, interest rates were artificially low, mightily benefitting to the richest people in the world - on Wall Street and in Silicon Valley. But inflation was also low.

In 2021, though, the bill came due. Inflation suddenly spiked, and it has stayed high since.

To get inflation under control, the Federal Reserve has had no choice but to raise interest rates - and even more importantly, to reduce the size of its balance sheet and thus the amount of money in the banking system.

But the interest rate increases have caused a massive problem for banks. Over the last decade, they grew addicted to paying nothing - as in zero percent interest - on more deposits than they knew what to do with. They parked the money in Treasury notes and other low-risk bonds.

Low credit risk, that is. Those bonds had interest-rate risk like all the others. And when the Fed began to raise interest rates, they lost value. Some banks did a better job managing that risk than others, and - coming back to last week - Silicon Valley Bank did a particularly bad job.

As of last week, the bonds that Silicon Valley held were worth about $16 billion less than it had paid for them.

Coincidentally, Silicon Valley’s entire equity capital base - all the money it had to backstop depositors against all losses - was also about $16 billion. Thus Silicon Valley was effectively broke before the run on its deposits started.

The only question was who would get out whole and who wouldn’t. ...

What happens next? Where and how does all this end? I don't know. But it WILL end. Eventually these excesses will have to be unwound, gradually or suddenly. When they are, you can bet that all the people who have made fortunes from cheap cash for the last 15 years will be reaching into someone else’s pockets to save themselves - just as they did over the weekend.

And the only pockets left will be the federal government’s.

In other words, yours.
250   AmericanKulak   2023 Mar 16, 11:45pm  

Biggest Banks Bail out First Republic Bank

Probably because it's the recorder for a shitload of debt they own. Also, guaranteed the Fed/Fed Gov is going to comp the big banks for this.
251   zzyzzx   2023 Mar 17, 8:07am  

This article somehow seems appropriate for this thread:

"What if your entire worldview was just because of near-zero interest rates?"
252   charlie303   2023 Mar 17, 9:02am  

Size of American Bank Failures, Adjusted for Inflation
255   Patrick   2023 Mar 17, 12:27pm  


As if all the operations around finance in this land were not already unsound and degenerate enough, the alleged president just cancelled moral hazard altogether. It’s now official: from here forward there will be no consequences for banking fraud, poor decision-making, fiduciary recklessness, self-dealing, or any of the other risks attendant to the handling of other people’s money. Bailing out the Silicon Valley Bank and Barney Frank’s deluxe Signature Bank means that the government will now have to bail out every bank every time something goes wrong.

The trouble, of course, is that the government doesn’t have the means to bail out every bank. Its only resort is to ask the Federal Reserve to summon new money from a magic ether where the illusion of wealth is conjured to paper-over ever greater fissures in the splintering matrix of racketeering that America has become. That will quickly translate into US dollars losing value, that is, accelerating inflation, which is how nature punishes you when your government lies and pretends that it has a bad situation well-in-hand. ...

The disorder may go on for quite a while, but eventually the survivors will synergetically fix their circumstances themselves working in-step with the emergent mandates of reality. Having lived through a reality-optional period of history, it will come as an ecstatic shock to learn that the world requires us to pay attention to what is really happening and to act accordingly. We’ll find ways to get food, make some things work, and shine some lights in the darkness, if perhaps not by means we’re familiar with now.

In the meantime, expect more disordering tragi-comedy from the “Joe Biden” led psychotic regime ruling over us with its drag queen commissars, lawless Lawfare vandals, race hustlers, agents provocateurs, informers, censors, prosecutors, inquisitors, jailers, and propagandists — the worst collection of imbeciles, grifters, and villains ever assembled into political party.
258   AmericanKulak   2023 Mar 17, 4:21pm  

The economy is heading towards correction for sure now!

Get Mila at a discount!

259   Patrick   2023 Mar 17, 4:33pm  


SVB Went Woke, Then Broke, Then Got a Bailout
Americans can’t afford food, but leftist and Chinese companies get bailed out.
March 17, 2023 by Daniel Greenfield
260   Eric Holder   2023 Mar 17, 6:26pm  

Patrick says

Americans can’t afford food

Eh? Americans most definitely can afford more food then they need. Look at that beach picture someeone posted in the funny pictures thread.
261   NuttBoxer   2023 Mar 17, 9:48pm  

Eating processed garbage does not count as food.
262   RWSGFY   2023 Mar 18, 7:58am  

NuttBoxer says

Eating processed garbage does not count as food.

That's mostly because of laziness, not cost of basic ingredients. An 8 oz bag of Lays at Safeway costs $4.47. A 5 lbs bag of Russet potatoes at the same store costs $3.99. Same $3.99 buys a pound of organic chicken drumsticks.

Processed shit is waay more expensive.

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