Without a doubt, the collapse of Silicon Valley Bank will be a cue for every Keynesian on earth to pound the table and call for more regulation, as if too much freedom is what causes businesses to go bust. As economist Daniel Lacalle points out, SVB did exactly what banks had been told to do post 2008. Its collapse was the result.
SVB was the poster boy of banking management by the book. They followed a conservative policy of adding the safest assets -long-dated Treasury bills- as deposits soared.
SVB did exactly what those that blamed the 2008 crisis on “de-regulation” recommended. SVB was a boring and conservative bank that invested the rising deposits in sovereign bonds and mortgage-backed securities and believed that inflation was transitory as everyone except us, the crazy minority, repeated.
SVB did nothing but follow regulation and monetary policy incentives and Keynesian economists’ recommendations point by point. SVB was the epitome of mainstream economic thinking. And mainstream killed the tech star.
Let’s see how the spinners will claim it’s Trump’s fault.
Twitter turned what was a manageable liquidity problem into a full throated bank run. It’ll be interesting to see what happens this week after Yellen shot off her mouth spooking depositors everywhere.
Talking about two-faced crap…
https://www.cnbc.com/2023/03/12/regulators-unveil-plan-to-stem-damage-from-svb-collapse.html
On the one hand “regulators said depositors at both SVB and Signature Bank in New York, which also has been closed, will have full access to their deposits.”
On the other hand “there would be no bailouts and no taxpayer costs associated with any of the new plans.”
These banks have seen significant losses to their holdings yet all depositors will get their money back. Right… with no bailouts … or costs to taxpayers … right …
WT HOLY FKK !!?? What kind of Double speak is THIS coming from the saggy pie hole of Janet Yellen?
Federal Reserve announces that ALL depositors at SVB will be protected … but she’s not bailing out the bank?
https://www.wuwm.com/economy-business/2023-03-12/janet-yellen-says-the-federal-government-wont-bail-out-silicon-valley-bank
The FDIC doesn’t protect these depositors more than $250k. This IS ABSOLUTELY a bail out!!! OK … the bank executives will need new government jobs at the SEC for high six-figures … while the taxpayers get to pay $Billions to investors (like Oprah) who made a bad bet on this woke bank. More DISGUSTING policy benefitting leftist IDIOTS … paid-for by the flyover country.
pfffft! I spit on that LIAR Janet Yellen
Mmm, this doesn’t look kosher. Lots of insiders dumping stock lately. Maybe the troubles weren’t superficial after all.
https://unusualwhales.com/insiders/trades?limit=50&ticker_symbol=SIVB&transaction_codes%5B%5D=C&transaction_codes%5B%5D=D&transaction_codes%5B%5D=E&transaction_codes%5B%5D=F&transaction_codes%5B%5D=G&transaction_codes%5B%5D=H&transaction_codes%5B%5D=I&transaction_codes%5B%5D=J&transaction_codes%5B%5D=K&transaction_codes%5B%5D=L&transaction_codes%5B%5D=M&transaction_codes%5B%5D=O&transaction_codes%5B%5D=P&transaction_codes%5B%5D=S&transaction_codes%5B%5D=U&transaction_codes%5B%5D=V&transaction_codes%5B%5D=W&transaction_codes%5B%5D=X&transaction_codes%5B%5D=Z
IIRC, the “insiders” held on until flags were raised publicly that there might be a liquidity problem. Once that information went public, those insiders bailed out as best they could.
It doesn’t seem to violate insider trading rules, but their actions just might have added momentum to the meltdown.
How are you supposed to keep it real with fiat currency anyway?.. They are just numbers on a spread sheet.. I keep hitting the button like I did yesterday.. I have no idea why its not working anymore :).. Sleep tight..
Strange that welfare and foreign aid never runs out of money?.. Why cant our banks operate with their bottomless pit business plan?.
They (for now) can’t take your money without a gun.
Government only uses gun.
Did someone forget that liabilities should align with assets, not just in riskiness but also in duration?
Exactly. That’s why the quoted article is bullshit.
This bank was poorly managed (see the diversity hire in charge of risk management). Not managing short term lending against long term investment and getting short squeezed by rising rates is banking 101.
Agree. I was totally confused by the logic in this article.
“SVB did not mark bonds to market price but rather kept at book price. So grossly overvalued ” thank you for noticing.
They also had a shit-load of mortgage backed securities, because presumably these never cause problems if you forget the unpleasantness of 2008. They also hold a ton of mortgages in and around Silicone valley and presumably San Francisco, and undoubtedly many of those mortgages are under-water.
In the end the greatest folly was believing Janet Yellen, as the article states. The over-riding message is who would hold shitty US government bonds, expect a major sell-off of US bonds from overseas tomorrow.
“But I think there will be a flight to quality and that includes US bonds” That is the saddest comment on the world as it exists. The only real quality should be nations which have things people actually need, most obvious and fungible of those is oil.
If the Saudis, Russians, Chinese and Iranians become successful in large scale petroleum transactions denominated in say….yuan, the actual quality of western fiat currency will be revealed…..White Swan anyone?
One of the things that is happening is that office buildings aren’t repricing their space in order to get tenants, because if they drop their prices, the bonds backing them will be called since the value of them is considerably less than original, so in order to retain value there is a perverse incentive to keep the rent at the same level without a tenant than reducing the price and getting a tenant. This is a big problem for California and especially when companies are decamping for cheaper jurisdictions
I wonder what the stress tests the banks must pass look like.
Did they include a 425 basis point rate hike in 8 months?
Manufactured crisis.
In case no one has noticed the uniparty is hell bent on burning America and the west to the ground.
I’ve noticed. And the Queers will inherit the remnants?
The queers have what they want; they want to be queers, so they have that. They can inherit their significant others member and have it prepared by a taxidermist.
But I will not agree to suicide.
Gold $1,917. UP
Lol. Fractional reserve banking. It’s funny how it’s always a “surprise”.