So now we’ve had 3 banks fail in the USA. A couple of them were very big. So why did they fail?
The short answer is “A few folks panicked and made a bank run on them.”
There wasn’t anything particularly bad, or poorly operated, about those particular banks. Two of them were involved with “crypto”, but not for the majority of their portfolio. Just enough to have “their community” panic about it when poked. The other one, Silicon Valley Bank (SVB), was concentrated in the Venture Capital arena. Several Venture Capital companies had their money in it, and they had their portfolio of companies put the company money in it. This, BTW, had it reporting exceptional above average earnings (which was, I’m sure, part of “the point” behind concentrating the VC wealth in the VC “preferred” bank…).
Now all that was well and good, until The Fed decided to raise interest rates from “nearly nothing” to “quite a lot” in way too fast a way… In Japan & Europe rates WERE zero (or even negative). In the USA we were at some fraction of a percent, somewhere near 1/2 percent. In just a few months, The Fed raised rates by about 5% (or 500 “basis points”). That’s about a 10 x of the original 0.5% rate. Going from 1/2% to 1% doubles your interest payments. At 2% it has doubled again to 4 x the original cost. At 4% you get another double (so now 8 x whatever interest costs you had before). The next 1% (to 5%) is a 25% increase in the interest payment ( 1% is 1/4 of 4% ).
So very very fast, The Fed dramatically raised the amount of cash folks had to pay as interest on any loans. This is intended to quash inflation by “cooling” the economy. Basically you try to crush new sales on credit and new investment in inventory or construction by raising the interest costs. (This, BTW, doesn’t stop inflation. Inflation is a consequence of too much money chasing the same goods. Causing an economic contraction to make less goods doesn’t fix that… but it does squash businesses and assets.)
A lot of old loans are now “variable interest rate” loans. So that portfolio of old loans starts to jack up rates too. This sucks a lot of money out of people’s pockets and that, too, reduces demand for products (so is expected to reduce demand and ease inflation rates…). This ignores that the factories are now in China and reducing our demand doesn’t do anything to US makers… What it really does is prompt folks to float more on their credit cards for things like food and fuel, increasing the money supply. (There’s some quibble about credit card balances and ought they be counted in M1, M2, whatever… but what IS clear is that when you use your card, you are essentially creating some money to buy something that did not exist before. Your bank will front it too you, and then go make sure that “asset” (your loan of that money) is capitalized in some market or other). So how that increase in “money in motion” is supposed to reduce inflation is a mystery to me… /sarc;
OK, that’s the background.
The Technical Hook
Banks have a LOT of assets that have value due to interest payments. Bonds. Car loans. House loans (mortgages). Business Loans. When you go to sell a debt instrument (be it a simple mortgage or a package of them) the value calculation looks at the net present value of that expected future income stream. An expected interest rate is applied (called a “discount rate”) to figure out that present value.
So imagine I promise to pay you 10% on $1000 if you loan it to me for a year. On the face of it, that’s worth $1100 at the end of the year. But what if other investments are only yielding 5%? Those others are worth only $1050. But then we have the “time value of money”. Money I can spend today has a lot less risk than a promise of money in a year… So we “discount” that money by some interest rate. Figure there’s a 5% inflation + risk of loss. That makes that 5% loan “net present value” essentially zero. I’ll give you my money for a year, and when (if?) you pay me back, the payment won’t buy any more than the $1000 today.
OK so far. But now make the interest rate The Fed is paying 1/2%. That makes a 5% note look really good, and a 10% note look great! Folks end up paying a couple of percent over that Prime Rate, so most likely you will be making loans at about 3% to 5%. But, OK, discounted by 1/2% your 5% loan is making you 4.5% “net present value” of that future return (yes, I’m cutting corners on the actual way you figure this. It is to get the idea across, not make you an economist or accountant…)
So you make a LOT of 5% loans and the world is FINE. You are posting “nice” earnings of 4.5% year over year.
But then The Fed raises the prime interest rate. In fact, in just a few short months it jacks it up to 5%! OMG! Now you have this BIG portfolio of 5% loans that are NOT going to make you any money (when the net present value is discounted by 5%). IF you want to sell them, you will need to have MORE than 5% return to induce anyone to buy them. That means selling a $1000 note for, say, $995. They get the $5 “bonus” when the note is paid off plus the $5 interest. Making $10 on $995 is “worth it” to them even with a 5% discount rate.
OK, got that?
When interest rates go up: Interest bearing instruments like mortgages and loans and bonds GO DOWN in market value.
Now this isn’t much of a problem if you can just hold that $1000 note to maturity and get paid the full $1000 principle. But it IS a problem if you must sell before maturity and at a discount.
So The Fed also tells banks how much liquid assets they must carry to cover their cash needs. In the prior 2008 Banking Crisis a key bit was a change to the mandated accounting rule to say assets must be “Marked to Market”. I don’t know if they went back to the older way of face value, or not; but the effect of dropping asset value is the same.
The Fed says “you need more capital that is liquid (cash) or can be sold rapidly”. You need to raise more, or you get a Federal Proctology exam and potential closure.
So in their Investor Call, SVB said they intended to raise an added $2.5 Billion or so of “capital” (this on about a $200 Billion capitalization, so not that extreme). They also refused to say they might not come back to raise more (what bank would?). This spooked the VC Community and all those Venture Capitalists pulled their money AND called their portfolio of companies and told THEM to pull there money too. An over night $42 BILLION bank run happened.
SVB had to liquidate assets to raise the cash AND do it in the highly liquid “right now” markets that demand a deeper discount to hand over cash instantly. In the end, SVB took about a $1.8 Billion haircut on raising that $42 Billion of cash. This put them in even worse posture on “capitalization” and resulted in a Fed takeover.
Now, had those VCs (and their portfolio companies) NOT concentrated their deposits in that one bank, this run would not have happened. Had they not panicked over a relatively normal capital raise, this run would not have happened. AND: Had The Fed raised rates more slowly and judiciously, everyone would have had time to adjust and the capital shortfall most likely would not have happened.
Oh, and dumping completely the “Mark To Market” rule for things like bonds and mortgages can help prevent this too, as you don’t have to say your $42 Billion of bonds is only worth $40 Billion today because The Fed ran rates up too fast to sell them and Mark To Market won’t let you count them at face value as you hold them to maturity and actually GET face value for them….
For the 2 “Crypto Banks”, it was a similar thing in that the too rapid Fed rate hike caused a nominal capital shortage, but in this case it was the association with “Crypto” (tainted by the FTX debacle) that caused the spook / panic and bank runs.
Implications For Retail Banking
There’s a lot of folks running around, hair on fire, shouting that the general banking system is going to melt down in 60 days or less and to get your money out now. NOTHING could be worse than doing that.
Retail banking (folks like Chase, Wells Fargo, etc.) are posting nice earnings and not having bank runs.
Now, realize that a General Panic can cause a bank run on ANY bank; and NO bank can liquidate their portfolio of 30 year mortgages, 5 year car loans, and 20 year bonds at full real value in just a few days.
Yes, the US Financial System is not in great shape, and The Fed is doing stupid things. But there isn’t a lot better out there right now. China pegs to the $US, so their currency inflates at our rate too. Europe is in worse shape. Japan is in worse shape in terms of debt and economic performance. Sometimes you just lose a few percent to inflation.
Frankly, I’d have my money in a Swiss Bank except that they folded on Bank Secrecy to the US and now there are painful reporting requirements for overseas banking. Then they have decided to not be Neutral during a time of European War…
Do I think there will be more bank failures?
Yes. Especially if Mark To Market is still being used. The rapid jump of interest rates by 500 basis points (1/100 of a % per point) or 5% over a very short time was just dumb and will hurt a lot of banks financial numbers. Especially those who are in odd niche markets like Venture Capital Funding and Crypto Banking. But I expect your major Retail & Commercial banks (along with your local Credit Unions) to be Just Fine.
Unless, of course, everyone panics and demands all their money, in cash, right now!…
IF you are worried, AND have over $1/4 Million of actual cash in the bank, just split it up into $250,000 chunks and put one in each bank account. That’s the Federal Insured Amount. Very few folks have that much cash laying around….
Note that The Fed has already stepped in to assure customers of SVB get all their money back. No, I don’t know what will happen to companies that had way over the $1/4 Billion insured amount, but we will know very soon. Stockholders and Bond holders will likely get wiped out, so I’d not be holding a lot of Bank stocks or bonds…
But your grocery money is likely fine…
In Canada the amount is $100,000
I mean that the government ( or the CDIC) promises you ll get if the bank fails
and 100,000 Canadian is roughly only 70,000 US dollars
@EM: “IF you are worried, AND have over $1/4 Million of actual cash in the bank, just split it up into $250,000 chunks and put one in each bank account.”
I may be wrong on this, but I think that the $250,000 is per person per account. In other words, if you have two people on a joint account (you and the wife, for example) then you are insured up to $500,000. In theory.
In the real world, they will do whatever they will do. “I AM What I AM”
That phrasing has been used in the past, and for the same conceptual self-image.
I appreciate the explanation.
I wonder if the interest rate increase is not about inflation at all. It could be about funding the Democrats deficit spending by borrowing from the Japanese and the Chinese, the chief holders of US treasuries. With local bonds still close to zero interest in Japan, US treasuries must look attractive.
The worry is that as interest rates fall, like 1% on the 2 year treasury notes over the last week, the value of the US dollar falls with it. Value of the US dollar has fallen by 10% since October. If I was thinking of investing in two year treasuries, and me being Australian, the idea is unattractive. The current 4% could easily be wiped out by further depreciation in the US dollar.
The Feds guarantees to prop up the banks don’t have to depend on the supply of funds from willing lenders. Now that could be inflationary.
If funds are badly allocated because interest rates are wildly swinging, driven by govt budgetary considerations this will play havoc with national productivity. Falling production and rising prices is a condition described as ‘stagflation’.
The failure of GNP to increase at a rate greater than the rate of inflation in a situation where the labour market is tight indicates misallocation. Capitalism is not working as it should. The market is skewed so as to encourage waste. Waste like pursuing ‘Net Zero’. Like ESG objectives. Like silly tech ideas to do with batteries, hydrogen and the unproductive involvement in looking at screens for entertainment.
Looks to me that the biggest bubble is in the Nasdaq. That index is holding up as the US 30, blue chip companies struggle to keep their market capitalization.
When fossil fuel producers are forced to waste cash on carbon sequestration, we have misallocation of resources.
Could be that in a general collapse, energy will become cheap. But, if the Asian Tigers lead the way, that collapse may not be as severe as it could be. Coal looks good to me.
@ The True Nolan
Answers are here:
So yeah, it is “per depositor” and “per bank” and “per ownership category” (whatever that is… but I suspect things like ‘in trust’ vs personal vs corp vs… )
So if held in common with the spouse, you are already at $1/2 million.
I suspect you can also play a bit of a game by having “his, hers, and theirs” accounts, so 3 “ownership types” of single and in common, and get that up to $1 Million that way (each personal account $1/4 Million then the in common being $1/2 Million).
That would work well for me & the spouse as we have our pot of money “in common” and we each also have separate “spending accounts” where we move bits of it when we want to write a check and spend it. So with a mouse click (AND with-OUT causing any actual withdrawal contributing to a bank run…) we could hive off a chunk into the personal accounts.
Now all I need is the $Million to make the strategy something I would need ;-)
(After Cap Gains Tax this year’s taxes will leave us under the “in common” coverage anyway… so a nice hypothetical solution if only I had enough money to need it…)
But frankly, if you have over $1/2 Million of cash sitting in the bank doing nothing in particular, you probably ought to have an accountant or lawyer or somebody you work with for estate planning that can assure your stuff if covered…
I’m more worried about the 10% to 15% of value evaporating each year due to Biden / DNC Inflation than much of anything else…
Oh, and further on that FDIC page: They go out of their way to state that they add up all accounts Of A Type and For A Depositor and then apply the limit.
So, for example:
Say you have $1 Million in your personal Savings Account. You decide to be clever and divide it into 4 personal Savings Accounts. You still get just $250,000 of coverage since they are all for one person (the same personal saver) and all of the same type (savings).
The rules on Trust Accounts vary by revocable vs unrevocable and are different; so if using a Trust, visit their page and try to figure it out yourself ;-)
If one must have a great deal of their portfolio in cash, and various situations can cause that to happen, then that 250 k per individual is of course, very important. One can also consider that all direct obligations to the US treasury are likewise guaranteed to whatever the amount held is. I-Bonds, Treasury notes, etc, are effectively cash, paying interest minus deflation. (Monetary deflation of course varies relative to what you are going to specifically buy, not the general rate.)
For instance food may be increasing at 10 to 20 percent per year, yet housing prices may be dropping, so those Treasury funds earning say 4 percent, if one year later used for a house that dropped in value 10 percent, are doing very well indeed. (Unless of course said house drops another 25 percent after purchasing.) ( Of course if it is the home you want to live in, and you are not selling, you can expect many changes over decades of ownership, and you are paying off principle all along, the renter is not.)
EM and others have commented a bit on the expanding BRICS movement from the petrol dollar. In conjunction with this, there is also recognition of a potentially strong and popular global backlash against the US policies for the past two to three decades. (Are we the baddies?)
( I did take issue with some of what EM wrote in a comment there https://chiefio.wordpress.com/2023/03/11/are-we-the-baddies-corruption-of-the-western-governments/#comment-163351 as I maintain our reasons changed from rational and not purely selfish, to GEB insanity over the past seven decades)
Yet I am trying to understand the potential effects of a likely global backlash against the US, and inflation, and the likely loss of the US international currency status, and is a debt jubilee and monetary restructure in the cards. Will CBDC happen, will millions move to barter, etc. (I am guessing the situation is too chaotic to predict)
SVB had all its cash invested in Treasuries and other Fed-backed notes. Interest rates went up. The value of the bonds went down. Depositors and inverters noticed, and the rest is history.
Individuals have no such mark to market demands. SVB essentially loaned long term at very low rates, while borrowing short term at ever rising rates, with no time to build their portfolio of loans at a matching higher rate.
Exactly. Borrowing short to lend long (by the way, that’s what all fractional reserve banking does, particularly if they are lending against demand deposits) is always risky. Values exist as opinions in minds, and those are subject to rapid change and herd effects.
Any decently run bank would have to know that interest rates could not be zero or near zero nominally (and below zero functionally) for extended periods of time. A bank that is insufficiently diverse in its holdings, certainly is at more risk when market conditions change than one that is sufficiently diverse in its holdings. I will quibble about them having insufficient time. A decently run bank would have anticipated market condition changes, within some limits and made hedging moves in anticipation of them. That said, decisions are made under uncertainty and you’ll never get it exactly right. It just has to be good enough.
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@EM: Thanks for the clarification on multiple accounts and joint accounts.
Looks like the FDIC knew this was coming a couple months ago and decided that the BIG investors could figure it out themselves, and the little schmoos didn’t need to know.
Tucker on this
“BIDEN CRISIS: Moody’s Downgrades Banking Segment to “Negative”, Assets in US Banks Are $2 Trillion LESS than Their Balances”
Credit Suisse was in trouble before SVB, but it’s tanking big time today. It may not be a going concern for long.
FWIW, Securities are insured under a different agency. SIPC. It has a $500,000 limit of which $250,000 can be cash. So, if you just move some of your cash into your trading account, it gets you another $1/4 million of coverage…
https://www.sipc.org › for-investors › what-sipc-protects
From another ian’s comment just above:
” Assets in US Banks Are $2 Trillion LESS than Their Balances”
Oh, what they hey. Let’s just send another $100 billion to Ukraine. If the banks need bailed out, we’ll just print more money. What’s another couple of $trillions? pffft!
Had a conversation with my son last night. He’s pretty much up on the issues we discuss here.
What was interesting is that he seems to think the timeline for collapse here in the US is out about 10 years. IMO, the GEBs are on an accelerated timeline just in case a way to stop te election stealing gets figured out and implemented. Got to git-R-done soonest.
I also mentioned the BRICS+ (Saudis and Iran looking to get in on that) and he thinks the US dollar will remain the world’s reserve currency. He can’t imagine what it will be replaced with and doesn’t see any of the BRICS’ currencies replacing the dollar.
I don’t think we have 10 years, but then predictions are hard, especially about the future.
Credit Suisse had 2 major issues. First, they “found” reporting irregularities. (Meaning, I think, they figured out they were stepping in regulatory goo…) Then their biggest Sugar Daddy, the Saudis, said they could not buy more shares to prop them up due to “regulations”… (i.e. they were not going to indulge in more “irregularities” to step in the goo…).
This double whammy spooked both investors and depositors, and The Mini-Run is on!
Now C.S. says their balance sheet is fine and they have lots of money. We’ll see when the curtain goes up…
So there you have it. Again we have long term bonds at near nothing interest from Governments busy making inflation destroy the long term capital return value; then the same governments raise interest rates so far so fast it exceeds the rate at which folks adjust, and the banks end up with massively shrinking “collateral value” in those bonds… so have to go do “Capital Raises” due to regulatory requirements (also set by the same Governments). And the news gets out, the run starts, the capital shortfall gets worse as those underwater bonds must be sold at “Market Rip You Off Price” immediately.
This banking crisis brought to you by Incompetent Government Control of Banking intersecting with Lazy, Stupid, Greedy Bankers who know they will get their bonus before the bail-out happens…
I think you are right about the speed up. Trump scared the bejeesus out of them so they had both a need to “catch up the 4 years of lost schedule” and the need to accelerate and get it done in one Biden term before another Trump came along…
So, IMHO, we’re getting about 12 years worth in 4 years. (4 waiting for Trump to be run out of town, slid back 4 by Trump policies, and 4 of more “Progressive Progress” under Sirrah Bidet Biden… )
These folks are All In on DESTRUCTION, be it cultural, governmental, social, economic, legal, etc. They are imbued with the notion of Creative Destruction and on a mission to remake the world by sweeping away all that stands in front of their “Vision!”…
Either we get them corralled and out of the picture or the place is destroyed well before 12 years. Netherlands will be the bellwether. IF they succeed at driving the Netherlands Farmers out of farming, abandon all hope for the UK, EU, and USA (honorable mention for New Zealand, Canada, and Australia destruction too…)
The BRICS+ reserve currency will not be any of their national currencies. They have already set up the mechanism and chosen the means. Like the IMF: A basket of national currencies, actual Gold, and other assets “contributed” by the members; then the Basket Shares (whatever they end up calling them) can be used for settlements between members.
So, say, each contributes £1,000,000 of value of their currencies & gold. Each, then, gets a £1,000,000 of value of BRICScoin (or whatever they call it). Then if, say, Russia is owed £40,000 for oil from China, it can “settle” that debt with that much value of their BRICScoin currency.
Same system is used by the IMF (International Monetary Fund) for SDRs (Special Drawing Rights). Mostly Gold, $US, €, £ and some ¥Yen IIRC.
FWIW, I’m looking into the question of how to get some of my portfolio moved into BRICS land without too much pain and risk. Presently thinking either ETFs (Exchange Traded Funds that buy a basket of stocks in another country – like EWZ does for Brazil) or ADRs (American Depository Receipts) for stocks like RIO (formerly RTP – Reo Tinto) that is, I think, Brazilian at the moment (and dropping fast for no good reason I can see… but when it bottoms…)
THE big problem is that most of those kinds of instruments are, brrrruuump!, the product of BANKS. So when a bank or brokerage makes one, is it any more secure than the bank or brokerage? iShares, for example, was created by Barclays Bank, but got sold to BlackRock in 2009. So when created, were they any safer than Barclays? And now, do you trust BlackRock? Can you depend on them to preserve YOUR value in a financial crisis? Hmmm?
And just who backs up an ADR?
And if that bank is liquidated, what happens to your ADR in, for example, Rio? Eh?
So it’s taking me longer than usual to work through all the entanglements.
FWIW, Today I made sure our “cash in the bank” was well below the FDIC limit, and moved a chunk to the trading accounts where it is under SIPC limits. I’ve also bought some shares in ETFs (Exchange Traded Funds) in Gold, Silver, and TIPS (Treasury Inflation Protected Securities) DESPITE my reservations about the viability of ETFs and ADRS in a general bank failure scenario… but it was only a small amount. About 2% of each. Just enough for me to feel like “I’ve done something”…
So, at this point, I’ve got three levels of protection.
1) FDIC on bank deposits.
2) SIPC on stock / bond / trading cash deposits.
3) My broker has private insurance to higher limits above those (though I won’t reach that point in any account).
My major risks (other than market risk that a security might drop in price) is just the question of what happens if the originating Bank / Broker goes under?
Over the next few weeks we are going to move about 3 or 4 months “living money” cash to our “spending accounts” at our Credit Union. NCUA insures deposits at Credit Unions for up to $250,000 so that money will be under Yet Another Insurer. Then, at some point, I’m thinking of moving more cash into either Hard Assets (actual gold, silver, and “brass & lead” in the vault) and / or buying “stuff” with it (to include perhaps a bug out acreage and RV…) We’ll see…
That’s the broad strokes of my “coping plan” at present.
Do I think the banking system is up for a full on collapse? No, I don’t. But my confidence in the Biden Administration to NOT screw things up more before they start to fix things is low… so taking some prudent protective actions…
I’m thinking maybe it’s time to do a full on financial markets posting… I’d stepped aside from these for a few months (years?) due to a couple of things:
1) Machine Trades dominate markets at over 70% of all trades, so things are a bit screwy to predict.
2) Biden & The Dim Dems screwing around with everything making ANY investment a bet on Political Games picking the winners & losers.
3) The selling out of California means a LOT of personal Capital Gains Taxes and other complications; so just left things fallow until the dust settled (including about $1/4 Million of Cap Gains Taxes… ) and I knew how much money would be left for ME. We’re near that point as the payment will happen about 1 April. So maybe it is time again…
4) Markets indicated a Hard Top (and have been on a down trend since… DIA Dow 30 are at almost exactly the same price as 2 years ago…)
I’ll see if I can “Get ‘er done!” this week, but doubt it. FWIW I’m going to be on a boat in the Bahamas next week… My boat in the Bahamas ;-) When the world is going to hell in a handbasket, get on your boat and sail away ;-)
I have no idea if I will have any internet at all. I do know that during The Crossing we have nothing. No cell towers in the Gulf Stream… Thus my “financial prep work” shoveling money around today. I won’t be able to react, potentially for a week, if things go way sideways, so “rigging for rough weather” today… IF it doesn’t come, well, beach time is my friend ;-)
With people such as those ( see link below ) being put in charge of important things and having the power to make (bad) decisions, maybe the entire Western Civilization will crash economically and in other ways too in the next 10 years or earlier.
Signature Bank held seminars on the use of the pronouns Ze and Hir months before it collapsed days ago…to them those things are more important than being competent at handling Billions of dollars.
and this mental illness is spreading everywhere, from Ford to Coca Cola to Banks to the governments of pretty much all Western Nations,
They all hire people based on their skin color, gender or their sexual orientation and competence is at the bottom of the list of priorities
Many are already losing money, more will as the Woke mental illness is spreading faster than Covid 19
More evidence that they now hire people based on their skin color, their gender, their sexual orientation…or their being good little democrats, but that to those woke leftists competence is considered unimportant,
Just one member of Silicon Valley Bank’s board of directors had a career in investment banking, while the others were major Democratic donors, it has been revealed.
Tom King, 63, was appointed to the board in September after previously serving as the CEO of investment banking at Barclay’s. He has had 35 years of experience in investment banking.
But he is the only one on the board with a career in the financial industry, while others are a former Obama administration employee, a prolific contributor to former House Speaker Nancy Pelosi and even a Hillary Clinton mega-donor who prayed at a Shinto shrine when Donald Trump won the 2016 presidential election.
The board is now being investigated by federal authorities after it failed to prevent the bank from going under while it was investing clients’ money in risky low-interest government bonds and securities.
It has previously been accused of being too focused on woke issues.
Sorry to be kind of “beating a dead horse” posting more about the same thing, but there is so much evidence that Woke Leftists are now in charge and are making decisions so bad that they will make the entire Western Civilization collapse…
…it is hard for me to stop because I never thought such mentally ill people would ever be in positions of power…
…I almost want to ask someone to pinch me as such imbecility cannot be possible, I must be having a bad dream ; people giving tens of Billions to BLM ???
It is not an epidemic of covid that we have it is an epidemic of imbecility !!! Woke leftist imbecility !!!
“… The Black Lives Matter (BLM) movement and related causes received an astonishing $82.9 billion from corporations, a new funding database from the Claremont Institute has found.
This number appeared very large at first glance, when sorting the data by the size of the contributions, it turns out the four of the top six donors are US Banks.
JPMorgan Chase and Co has donated over $30 billion. Bank of America donated over $18 billion. Goldman Sach donated over $10 billion and Fifth Third Bancorp donated another $2.8 billion. …”
In comments about the current Oz federal minister for Electricity etc
“Old ‘Helmet Head’s’ epitaph should read ..’Always in ERROR, but never in DOUBT’!”
Seems to me that there is a long line qualified for that!
Thus the Biden Buddy Billionaire Bailout.
I didn’t know he had the authority to override law, but I guess he does… Mr. Biden has ordered that ALL depositors be made whole, even if they hold more than $1/4 Million of deposits, in SVB. Oh, and SVB had 97% of depositors over that limit. Oh, and per Hannity’s program today, the average American depositor has $41,000.
So, in essence, Biden has mandated that ALL the folks using banks pay higher fees to their banks so that they can collect enough money to pay the higher Insurance Fees to cover this $Billions “gift” to Democrat Megadonors and their bank.
Per the nice folks ‘on the left’ seeming to be a bit insane and doing Crazy Stuff… well, it seems that they really ARE from Crazy Town. Liberal Women in particular are over 50% self identified as having had professional guidance…
Conservatives, Men in general, and minorities are far less likely to be Nucking Futz than White Progressive Women. Who would have thought… Karen…
I’m sure it’s been said here already, but SVB was funding a lot of “green” projects. Probably some merely woke ones also, I’m guessing.
FWIW on the banking scene
“Swiss Central Bank Steps in to Backstop Credit Suisse Amid Financial Collapse – The Larger Geopolitical Dynamic is Clear
March 16, 2023 | Sundance | 13 Comments”
“This is where we need to keep the BRICS -vs- WEF dynamic in mind and consider that ideologically there is a conflict between the current agenda of the ‘western financial system’ (climate change) and the traditional energy developers. This conflict has been playing out not only in the energy sector, but also the dynamic of support for Russia (an OPEC+ member) against the western sanction regime. Ultimately supporting Russia’s battle against NATO encroachments.”
“Russia, Saudi Arabia and China are geopolitically aligned in interest against the western financial system. As a consequence, when western banks find themselves in need of capital and cash, there is a layered geopolitical dynamic in the background to Saudi refusal that must be considered.”
“In the big picture we are seeing the ramifications of the ‘Build Back Better‘ agenda impacting the banking and finance sector which spearheaded it. I am not seeing this discussed anywhere, as the western governments of the collapsing banks are being forced to intervene.”
“Again, I go back to the geopolitical map. The yellow nations with sanctions against Russia are also the yellow nations driving the ‘Build Back Better’ climate change energy policy. The grey nations are not in alignment with either dynamic. It is not a coincidence the banking issues are all within the yellow nations.”
“Team yellow is suffering the consequences of their own ideological policy as enacted. Team grey is not going to help team yellow get out of a crisis team yellow created, which was intended to hurt team grey.”
Speaking of females who – as you so politely put it – require professional guidance,
Gretchen Whitmer, Michigan governor , took Covid money and used it to teach CRT and crazy sexual stuff to kids such as what is a skoliosexual person!!!
” … She “allotted $1.4 million in CARES Act funds to Michigan State University College of Education and Michigan Virtual to create online social justice courses,” Clarey writes.
…In 2019, Whitmer created the Governor’s Education Advisory Council and chose all 15 people who would serve on it. She personally signed off on granting the money, according to the report.
They created courses like “The ‘Anti-Racism and Social Justice Teaching and Leadership’ that teaches educators “how to see racism and privilege and how they play out in school and society, analyze theoretical frameworks for anti-racist and social justice teaching, recognize system oppression and apply strategies to dismantle it and examine how to connect with staff and communities,” the report explained. “The material in that course asked teachers about how they could respond to a classroom situation in the most anti-racist way possible.” …”
“… Michigan’s Department of Education is now urging teachers to transition children behind their parents’ backs. …”
E.M. et al: Tomorrow, I will have been retired 1 month. Enjoying it very much!
Have a great trip to the Bahamas!
I would point you to two facts.
1) “Education” is dominated by Socialist / Progressives / Liberal Women.
2) The recent study that found over 1/2 of “Liberal Women” self identified as having had a ~’Medical Professional’ tell them they had mental issues…
So is it really any surprise than an institution dominated by a class of Crazy People acts Crazy?
(Note that the same study found no such effect in conservatives, and a smaller but extant effect in Liberal Men. It also found no effect in “minorities” only in whites… perhaps because the propaganda of the left is less common in Spanish and Chinese…)
About this time is when it starts to sink in… In about 6 months you will start wondering just what day of the week is it? And at about 1 year, what month is it again? ;-)
First Republic Bank gets $30 Billion bailout. Bank #4 to hit the wall …
Joe Blogs has a good analysis of this posted 2 hours ago.
FWIW, I’ve moved about 1/4 of my “cash” into a big basket of foreign currencies, gold & silver physical ETFs (i.e. not futures, options, derivatives but folks with metal in vaults), TIPs (mostly via a Schwab ETF not the TIP fund that puts cash in BlackRock who owns iShares now…).
I’m not dramatically worried, just being a bit prudent given that I’m going to be out of touch with the world for a week or maybe two and all sorts of crazy shit is going on…
IF I have internet in the Bahamas, I’ll try to do a more detailed posting on what kinds of instruments are available. The “Racing Stocks” page is seriously out of date. Several key funds have gone away (like Ruble and Rupee ETFs) AND the Bigcharts folks have once again changed their URL layout so those links all need an update / edit to generate a chart… But you can still use it to see some potential tickers to enter long hand into a charting system. I hope to start fixing it, too, if I have internet….
We also moved about 3 months “living money” (food, gas, entertainment, utilities, etc.) from the Bank to our Credit Union. Credit Unions with almost all deposits from individuals are at very low risk of a bunch of companies pulling $Millions out in one day and are insured by a different agency; so by diversifying this way, it is almost impossible that both the credit union and the bank would decide to restrict access on the same date.
This assures that if a SHTF moment hits the banks collectively when I’m 100 miles off shore, the Spouse is still able to get cash from the Credit Union. I don’t expect this, it is just a “belt and suspenders” thing for a few weeks / months.
But before I head out the door… has some insights on the Dems / DNC involvement with the Failed Banks and how they were a DNC Money Faucet:
run by people without banking experience… kind of like the whole Biden Government…
BTFP? Who knew?
Quite an interesting read and comparison.
“WHAT IS GOING ON AT DEUTSCHE BANK?”