Anyone watching the collapse of SVB?

wae said:

I'm not sure that I believe that their stated goals for that are just to keep large employers from suddenly not being able to make payroll.  But for the sake of the argument, let's say it is.  What other action could the bank's customers have taken to protect their cash?  What lesson are we not teaching them by not enforcing the $250k insurance limit?  Is the argument that they should have done more due diligence when they chose the bank that held their cash?

I totally understand that the folks invested in and running the outfit should get nothing.  I don't need to chew on that at all.  Bad business and investment decisions should be rewarded with massive and unrecoverable losses no matter how big you managed to get on your malfeasance.

It's not just payroll -- if those companies aren't paying rent or other creditors then they'll go out of business just the same as for payroll, it'll just take a few more weeks.  The individual employees will still be out of a job.  And as I mentioned it's also about restoring confidence and stopping this from happening to a half dozen or more OTHER banks, with their own sets of customer companies that then won't be able to make payroll, etc.

As for the "what else can I do", splitting $10M up into $250K chunks at 40 different banks just isn't workable.  What would happen is that every company out there will move their money to a "too big to fail" bank like BofA, Chase, Citibank, or Wells Fargo.  Which will ALSO probably push a whole bunch of the small banks into failure...

BTW, all of the discussion about Credit Unions?  They are also fractional reserve banks and are subject to all of the same "bank run" problems if people lose confidence in them.

GIRTHQUAKE said:

I should look up that dude's video history to see how many times he's claimed the USA was gonna collapse. Eventually you go off some kind of cliff where that seems to be the only thing you can talk about, that and...

AnthonyGS (Forum Supporter) said:

Stampie said:

In reply to AnthonyGS (Forum Supporter) :

Why would you compare the US national debt to a metal who's only usefulness is it conducts electricity and doesn't tarnish?  Might as well compare it to the value of all the diamonds in the world.

The silly metal has been accepted my ch longer.  As a matter of fact US currency was backed by that metal longer.  There was once a legal definition of the dollar based on the silly metal.  Now it's based on zilch.  So what do you compare it too?  Unicorn tears?  
 

Maybe go read why they wanted to do away with that legal definition and why.  Maybe all of this isn't just some random freak accident but an actual foreseeable consequence of a lot of bad decisions.  
 

Not one bank can cover their obligations with cash.  I guess a few people finally figured that out.....  

 

Funny thing about the govt debt too.  If I did my accounting the way they do, I'd get Enroned into prison.  If they did it the way they require corporations too the debt is well over $100 trillion.  
 

Good news though!  The world needs the "silly metal" and "it's all okay" types to keep this charade going!  Enjoy!

... returning to a gold standard, which I can't tell if this comment is demanding it or not.

I'm not sure that's possible.  And I don't demand anything.  I provide simple information most anyone should already know.  Crazy thing, most don't know.  
 

The system is now pure fiat currency,  history shows how that normally works out.  None of this should surprise anyone anymore than a sunrise and sunset, but it sure does create a lot of shock.  
 

How you do get a fentanyl addict off fentanyl?  How do you get all of them off of fentanyl all at once at the same time?  That's probably an easier problem to solve.  It's also why I'm against bailouts, more taxes, etc.  Show me one time where giving more addictive substances to addicts cured them.  Giving more cash to morons and promising my kids (who can't vote yet) will pay it back is just pure evil.  It just creates a bigger problem and shifts it a generation at best.  It's also why I'm sick of listening to older people on economic policy.  That policy hurt millennials, hurt Gen Z more and harms future generations even more.  
 

There is no going back to a gold standard without a full blown economic meltdown.  The current system requires the stupid people to believe all the money in all the banks is real, safe and secure.  Anyone with an IQ over 120 that has thought about it knows it isn't true.  The great news is that IQs are falling faster than ever, so soon only people with IQs over 130 or 140 will see reality.

We have major cities in the US now that have zero students that can do grade level math!  Surely utopia will be achieved soon.   

AnthonyGS (Forum Supporter) said:

 

I'm not sure that's possible.  And I don't demand anything.  I provide simple information most anyone should already know.  Crazy thing, most don't know.  

I don't really even know what point you're trying to make half the time, and frankly I think I'm one of many. Speaking as a friend- but also someone who's active in politics- acting egotistical about information you have over someone is never a good look. Brevity is the soul of wit brother.

The system is now pure fiat currency,  history shows how that normally works out.  None of this should surprise anyone anymore than a sunrise and sunset, but it sure does create a lot of shock.  

Literally no nation in history has tied their currency to their market access, stability and military that America has.

How you do get a fentanyl addict off fentanyl?  How do you get all of them off of fentanyl all at once at the same time?  That's probably an easier problem to solve.  It's also why I'm against bailouts, more taxes, etc.  Show me one time where giving more addictive substances to addicts cured them.

You aggressively target why they got onto opioids and what they were attempting to self-treat. You transfer them to methadone to prevent physical symptoms (side affects from opioid withdrawl can kill you, and I've seen it in field) assuming they didn't get addicted treating actual pain symptoms (which methadone CAN do, but if you needed fent there was a damn reason). I'm not against comparing running on debt to opiate dependence at all, but understand that suddenly cutting opiates has terrible side effects.

 Giving more cash to morons and promising my kids (who can't vote yet) will pay it back is just pure evil.  It just creates a bigger problem and shifts it a generation at best.  It's also why I'm sick of listening to older people on economic policy.  That policy hurt millennials, hurt Gen Z more and harms future generations even more. 

I understand that completely. I'm very tired of this current system of corporate socialism but brutal capitalism for everyone else.

There is no going back to a gold standard without a full blown economic meltdown.  The current system requires the stupid people to believe all the money in all the banks is real, safe and secure.  Anyone with an IQ over 120 that has thought about it knows it isn't true.  The great news is that IQs are falling faster than ever, so soon only people with IQs over 130 or 140 will see reality.

We have major cities in the US now that have zero students that can do grade level math!  Surely utopia will be achieved soon.   

The US economy and it's currency is backed by metal, but it's not gold- it's metal in guns, in military, and the capacity to force everyone to use the dollar through various screwed up ways. You're partially right in that it has value only in that it's a dream- but it's not a dream that all Americans are having, its a dream the whole world has, because 70+% of all liquid currency on the planet are in Washingtons and until COVID relief inflation/some moron tries to default the US Government for a political game, it'll remain that way.

GIRTHQUAKE said:

The US economy and it's currency is backed by metal, but it's not gold- it's metal in guns, in military, and the capacity to force everyone to use the dollar through various screwed up ways. You're partially right in that it has value only in that it's a dream- but it's not a dream that all Americans are having, its a dream the whole world has, because 70+% of all liquid currency on the planet are in Washingtons and until COVID relief inflation/some moron tries to default the US Government for a political game, it'll remain that way.

OT to the SVB issue, but i guess we'll see if China is successful in getting the world to go to petroYuan instead of petroDollar.

So I got some push-back on my "don't guarantee past FDIC" comment. That's fair amd I'm not unsympathetic to the plight of an employee who doesn't get a check because their employer put money in a risky bank that failed. 

Let's assume that we want to prevent this in the future. How? Do we regulate banks so heavily that it can't? Because I think that's about as likely to happen as fixing any of our other major partisan issues like healthcare. What other options are their when we continually espouse "the system" and the importance of personal responsibility but expect the government to step in anytime it goes bad. I sympathize with our hypothetical employee going unpaid but maybe the employer should have been more responsible and banked better. That's how we keep saying that the system is supposed to work but what keeps happening is, as others have said, corporate socialism at best. (When does it become an oligarchy?)

Let's take airlines for a quick example. They get in a bad way, the govt steps in and gives them money because "think of the jobs", and they just keep plodding along doing whatever they want because they can't fail. Why would they change? Beyond that we're missing innovation in, among other things, business practices through these bailouts. If the system is as robust as we think, let the business fail, cover FDIC (for a bank), and let choices matter. Who knows what could grow up from the rubble, it might even be a new Golden Age. Just like the Fed putting the squeeze to 99% of America to fight inflation, the beatings will stop when morale improves. 

Error404 said:

So I got some push-back on my "don't guarantee past FDIC" comment. That's fair amd I'm not unsympathetic to the plight of an employee who doesn't get a check because their employer put money in a risky bank that failed. 

Let's assume that we want to prevent this in the future. How? Do we regulate banks so heavily that it can't? Because I think that's about as likely to happen as fixing any of our other major partisan issues like healthcare. What other options are their when we continually espouse "the system" and the importance of personal responsibility but expect the government to step in anytime it goes bad. I sympathize with our hypothetical employee going unpaid but maybe the employer should have been more responsible and banked better. That's how we keep saying that the system is supposed to work but what keeps happening is, as others have said, corporate socialism at best. (When does it become an oligarchy?)

Let's take airlines for a quick example. They get in a bad way, the govt steps in and gives them money because "think of the jobs", and they just keep plodding along doing whatever they want because they can't fail. Why would they change? Beyond that we're missing innovation in, among other things, business practices through these bailouts. If the system is as robust as we think, let the business fail, cover FDIC (for a bank), and let choices matter. Who knows what could grow up from the rubble, it might even be a new Golden Age. Just like the Fed putting the squeeze to 99% of America to fight inflation, the beatings will stop when morale improves. 

 

I agree, though it makes me feel like the kid who did his homework on time before the rest of the class got an extension.

If you did business with a higher risk profile, such as not even bothering to insure the deposits, then you took on that risk. If you didn't, it wasn't your risk. If a ton of people do it, a la 2008, then we all took on that risk for you, but you are the only one who reaped the profits while there were any, then we paid the price when they stopped.

Error404 said:

Let's take airlines for a quick example. They get in a bad way, the govt steps in and gives them money because "think of the jobs", and they just keep plodding along doing whatever they want because they can't fail. Why would they change? 

Once again, the FDIC did not bail out the bank.  SVB has failed, it is out of business, the shareholders got zero, the execs are out of a job.

If you wanted to draw a parallel to the airlines, it would be as if rather than giving them money, the govt let them go bankrupt but continued to run the planes for a month so that people who had already bought tickets could still take their trips.  They didn't do that, obviously, but it's very different from saving the company and doesn't pose anything like the moral hazard that a true bail out does.

So European banks are being affected now, looks like we're doing the whole global banking collapse thing again...whatever, bring it on, I'm a millennial, not only is this not my first rodeo, my whole working life has been nothing but rodeo.

GIRTHQUAKE said:

Literally no nation in history has tied their currency to their market access, stability and military that America has.

Have you heard of the Sterling? It was the reserve currency currency before WW2. They had the largest economy and one of the strongest militaries. They suspended the gold standard in 1912(?), then reinstated it after the war, to finally go full fiat in 1931, and then be replaced by the 2nd largest currency at the Bretton Woods Conference in 1944.

You could also look at Rome, while they werent fiat, the routinely debased the currency even though it was still based on precious metal, and that is attributed, by some, to be part of why the roman empire failed.

GameboyRMH said:

So European banks are being affected now, looks like we're doing the whole global banking collapse thing again...whatever, bring it on, I'm a millennial, not only is this not my first rodeo, my whole working life has been nothing but rodeo.

In reply to eastsideTim :

Seriously, right there with you.  And it hasn't even been long enough for new people to rotate in and *start* to forget why it all happened.  Biden, Yellen, and others were the administration in the GFC; the banks have to go back to the SAME people and be like, "Hey, remember how we said this was completely unprecedented and will NEVER happen again if you bail us out just this one time?  Yeah.......we did the same thing we said we wouldn't do in less than 15 years (liquidity crisis vs. CDOs, but still), can we have more money?"

Fingers crossed BankingCrisis2.0 goes down a different way and maybe we'll prune some deadwood this time around. 

Flynlow (FS) said:

Fingers crossed BankingCrisis2.0 goes down a different way and maybe we'll prune some deadwood this time around. 

but but but.....the little guy

eastsideTim said:

For me, you can add in the tail end of Vietnam, Watergate, the energy crisis, the Cold War, and the 1987 stock market crash. Oh, and disco.

Anyhow, I concur. So many things the media makes out to be apocolyptic events, and yet this big old world keeps spinnin' round, doesn't it?

Opti said:

Flynlow (FS) said:

Fingers crossed BankingCrisis2.0 goes down a different way and maybe we'll prune some deadwood this time around. 

but but but.....the little guy

Just like last time, good thing we got rid of people who kept profiting after and during diasters that they created:

https://www.nytimes.com/2023/03/13/business/barney-frank-signature-bank.html

https://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-freddie-mac-and-fannie-mae.html

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. 

Opti said:

Well E36 M3.

guess I'm going to open some short positions tomorrow

JPM short position is up 10x this morning.  

Nothing to see here

First comment, wonder how bad the run would have been without twitter.  Yes they made poor choices in investing but that is not what did them in.  It was that words spread at the speed of light now and people panic when it comes to their money.  

Second the over 250K coverage is something that most of us never considered.  Big companies have big payrolls and that money needs to be very available.  After this a smart bank would offer their own insurance for 1M + accounts with a much lower interest return specifically for these situations.  FDIC/government will not keep bailing this group out.

Third most of us people do not need over 250K coverage and if we do just spread it out in a number of accounts and/or banks.  

So far I am pretty happy with how this is being handled.  The guys up top are losing their jobs and very likely their big bonuses that were just handed out.  The ones who sold off their stock right before this will not get out clean either.  I bet a year from now most of that money will be with the lawyers or back with the bank via stiff fines.

I posted this in the inflation thread, but it's probably more relevant for this thread:

Frontline's most recent episode starts and ends with SVB (so very current):

https://www.pbs.org/wgbh/frontline/documentary/age-of-easy-money/

A very good watch (or even listen).  I think the most relevant quote that applies here are a few mentions of Moral Hazard in that the fed's and government actions effectively encourages risk (see banks) and punishes those who don't.

And so... all this coverage of investments will be paid for by the fee's banks pay into the FDIC....

... I wonder where the banks get that money to pay those fees...

...hey, look, a new fee on my checking account!  What a strange coincidence!

Pretty sure we had this kinda thing covered before some greedy individuals decided that they had a better idea of how to separate people from their $$$. 

What Is the Glass-Steagall Act?

The Glass-Steagall Act, passed in 1933, forced commercial banks to refrain from investment banking activities in order to protect depositors from potential losses caused by bank speculation in stocks. Glass-Steagall was largely repealed in 1999

LOL:

https://www.theonion.com/financial-experts-recommend-investing-in-businesses-gov-1850232999

Isoney more secure in a credit union?  I know they do not fdic protection.

They have ncua protection.  Would the ncua be able to guarantee that much money if a credit union failed in this manner?

The Treasury is looking into how deep the US's investments into derivatives linked to Credit Suisse and other banks that deal with CS.

There it is.  There's your next way to gamble.  Which way are derivatives gonna go.

In reply to Mr_Asa :

While I have a surface level understanding of derivatives, I am not knowledgeable enough to be able to judge the risks at a level I am comfortable with, so I'll leave that for others.

In reply to Tom_Spangler (Forum Supporter) :

Disco?  

A disc jockey blew up disco records back in the day at Comiskey Park - Steve Dahl.  He worked hard at letting everyone know.  

In 1979 my buddy wore a "Disco Sucks" t-shirt to our public high school and he had to turn it inside out - too offensive. 
 

In reply to Datsun310Guy :

I started hitting the bars when disco was hitting its peak. Say what you want but girls sure liked dancing to it. This was me...