Jump to content

Recommended Posts

Posted (edited)

The beginning of the next great depression, or another govt bailout. This is serious business.

 

https://www.cnbc.com/2023/03/10/silicon-valley-bank-collapse-how-it-happened.html

 Interesting read on what the people who ran the bank were fixated on, no surprise.

 

https://12ft.io/proxy?q=https%3A%2F%2Fwww.zerohedge.com%2Fnews%2F2023-03-10%2Flulz-svb-website

 

 

 

Edited by Unforgiven
  • Like (+1) 1
  • Thank you (+1) 1
Posted

Just your friendly reminder that everything - the “experts,” credentialers, the fourth estate, etc. - it’s all BS all the way down. You can safely ignore them. 

  • Like (+1) 1
Posted

 

WHY SILICON VALLEY BANK FAILED

By John Hinderaker

 

 

Economist John Phelan offers this succinct explanation of how government policies contributed to the collapse of SVB:

 

On Friday regulators shuttered Silicon Valley Bank (SVB) and seized its deposits in the largest U.S. banking failure since the 2008 financial crisis and the second-largest ever. We shouldn’t be surprised. Neither should we relax.

 

To recap: Between June 2006 and December 2008, the Federal Reserve’s target for the federal funds rate was cut from 5.25% to 0.00-0.25% as the economy crumbled and it stayed there until December 2015. By the end of 2019 it was still only at 1.50-1.75%.

 

Then, in 2020, the Federal government borrowed vast sums of money in the name of fighting COVID-19. To keep the cost of all this borrowing down, the Federal Reserve printed a load of money and used it to buy Treasuries, effectively capping the government’s borrowing costs. This infusion of new money led to inflation, with the year over year change in the Consumer Price Index rising from 0.2% in May 2020 to 8.9% in June 2022. To fight this, the Federal Reserve is now stamping hard on the monetary brakes: the target range for the federal funds rate has been raised from 0.00-0.25% on March 16, 2022, to 4.50-4.75% now.

 

As monetary loosening pushed Treasury yields down in 2020, so tightening has pushed those yields up in 2022. The Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis, has risen from less than 1.00% through 2020 to over 4.00% more recently. These gyrations have roiled markets and led to the collapse of SVB.

 

A financial institution, like SVB, essentially raises funds either wholesale (from capital markets) or retail (from depositors) at a rate of X% and makes loans that generate a return greater than that. When it seeks to raise funds, it is in competition with, among others, the Federal government. The government cannot go bankrupt – it can always get the Federal Reserve to print the money needed to cover its liabilities – so the rate at which the government borrows is a benchmark: If the government will pay you 4.00% to borrow with no risk of default (nominal, at least), you won’t lend to anyone at a rate below that. So, as Treasury yields – the price government has to pay to access capital – have risen as a result of the Federal Reserve’s monetary tightening, financial institutions find that the price they have to pay to access capital is rising also.

 

This is the squeeze that caught SVB. Catering to fintech companies which, like the rest of the tech sector, have been taking a battering recently – look at all those job losses – SVB found that its depositors were withdrawing their capital

 

More at the link: https://www.powerlineblog.com/archives/2023/03/why-silicon-valley-bank-failed.php

 

 

.

Posted

 

@B-Man SVB failed because they made risky long-term bets at 0% interest rates and weren't prepared for the Fed to raise rates so quickly to combat inflation. Guess what...they're not the only one. This is Wall Street getting addicted to free money and thinking it would never end. Their risk is all interconnected too. This has been brewing since 2008.

 

I say eff em this time. Bail nobody out and let them fail like they should. The days of privatized gains and socialized losses need to end now.

  • Like (+1) 2
Posted
5 minutes ago, Gene Frenkle said:

 

@B-Man SVB failed because they made risky long-term bets at 0% interest rates and weren't prepared for the Fed to raise rates so quickly to combat inflation. Guess what...they're not the only one. This is Wall Street getting addicted to free money and thinking it would never end. Their risk is all interconnected too. This has been brewing since 2008.

 

I say eff em this time. Bail nobody out and let them fail like they should. The days of privatized gains and socialized losses need to end now.


You don’t understand. Something bad happened, so it has to be the fault of liberals somehow. 

  • Like (+1) 1
Posted
52 minutes ago, Gene Frenkle said:

 

@B-Man SVB failed because they made risky long-term bets at 0% interest rates and weren't prepared for the Fed to raise rates so quickly to combat inflation. Guess what...they're not the only one. This is Wall Street getting addicted to free money and thinking it would never end. Their risk is all interconnected too. This has been brewing since 2008.

 

I say eff em this time. Bail nobody out and let them fail like they should. The days of privatized gains and socialized losses need to end now.

https://thehill.com/homenews/sunday-talk-shows/3896422-porter-on-silicon-valley-bank-collapse-you-cant-bet-on-interest-rates-staying-low-forever/

  • Like (+1) 1
Posted

 

1 hour ago, ChiGoose said:


You don’t understand. Something bad happened, so it has to be the fault of liberals somehow. 

more projection, how about an original thought ...all you nazis go knee jerk with trump being the epicenter of everything.

it was a libtard run company in any case.

lol@you

  • Like (+1) 1
  • Haha (+1) 1
  • Thank you (+1) 1
Posted
49 minutes ago, Unforgiven said:

 

more projection, how about an original thought ...all you nazis go knee jerk with trump being the epicenter of everything.

it was a libtard run company in any case.

lol@you

 

Did he not repeal the regulations that would have prevented this after SVB lobbied for it? How is that fact knee-jerk?

Posted

Isn’t blaming Trump for this bank failure akin to blaming Obama for the depleted national stockpile of ventilators? Shouldn’t Joe, Chuck or Namcy have fixed this already? Or is that too logical for everyone? 

  • Thank you (+1) 1
Posted
1 minute ago, BillStime said:


Don’t bother - Stanford is too DEI for the cult. 
 

 

I've given up on edumacating them.  I thought some actual smart people would like more info on the outlook for the economy from a perspective of knowledge

×
×
  • Create New...