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

2023 Mar 10, 9:47am   5,221 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.


« First        Comments 244 - 278 of 278   

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.
265   NuttBoxer   2023 Mar 18, 3:33pm  

Apparently UBS is in the process of emergency bailout of Credit Suiesse to prevent economic meltdown Monday.

BTW, contagion is a medical term, specifically used in relation to pandemics(real ones, not the fake BS we just saw). So why the fuck use it to describe banking collapse? See one health conspiracy for details.
266   NuttBoxer   2023 Mar 19, 9:51am  

Sounds like UBS bailout is not happening, on to plan B, destroy the Euro!
267   mell   2023 Mar 19, 10:14am  

NuttBoxer says

Sounds like UBS bailout is not happening, on to plan B, destroy the Euro!

That would be OK. The EU unelected crony traitors have done nothing but harm to the countries. The EU should have been a purely economic union with the Euro as additional common currency, the EU countries should have never given up their currencies and sovereignty.
268   mell   2023 Mar 19, 10:17am  

UBS to buy CS for 2 billion, a fraction of its 8 billion close on Friday. UBS and CS shareholders will be shafted as no vote allowed. Probably all in all a positive development as some losses, bad spec money and debt will be flushed out.

270   NuttBoxer   2023 Mar 19, 4:19pm  

mell says

UBS to buy CS for 2 billion, a fraction of its 8 billion close on Friday. UBS and CS shareholders will be shafted as no vote allowed. Probably all in all a positive development as some losses, bad spec money and debt will be flushed out.

Looks like 3 million was the final number. Exchange on the shares is over 20/1.

Also saw central banks opening up some "currency swap" lines, whatever the fuck that's supposed to mean. These guys seem fucking nervous..
272   NuttBoxer   2023 Mar 22, 8:19am  

First Republic continues to circle the toilet, seems likely they will not last another week.
274   Patrick   2023 Mar 22, 9:41pm  


The former chair of the Federal Deposit Insurance Corporation (FDIC), Sheila Bair, has criticized the Biden administration’s “bailout” of Silicon Valley Bank (SVB).

Bair denounced the Biden admin’s decision to guarantee all deposits at the failed SVB, labeling the move an “overreaction.”

Bair made the comments during a recent appearance on “The Washington Post Live” series.

She stated that insuring all deposits at SVB and at the failed Signature Bank was an unnecessary “bailout.”

Bair warned that the move would be paid for by extra fees on all banks, even well-run community and regional banks.

The former FDIC chief also threw cold water on proposals to waive the current $250,000 deposit insurance lid and for the FDIC to provide unlimited guarantees for all deposits across the entire $17.5 trillion U.S. banking sector.

“We need market discipline to complement the supervisory process,” Bair said.

I think market discipline should be the supervisory process. No bailouts, ever. No FDIC. If you put money in a bank, you should be WARNED in big letters that you are making an unsecured loan to the bank. The bank officers and shareholders should all be personally legally liable for all the deposits.
277   NuttBoxer   2023 Mar 24, 9:32am  

Sounds like after all that Credit Suisse is still going under...

« First        Comments 244 - 278 of 278   

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions