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Re: Silicone Valley Bank Meltdown [Re: Boco] #7819049
03/12/23 01:59 PM
03/12/23 01:59 PM
Joined: May 2010
Posts: 9,720
mn north of blakely
S
Steven 49er Offline
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Steven 49er  Offline
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Posts: 9,720
mn north of blakely
Originally Posted by Boco
Get your money and spend it.


Get hard assets.


"Inflation is always and everywhere a monetary phenomenon". Milton Friedman.
Re: Silicone Valley Bank Meltdown [Re: Dirt] #7819051
03/12/23 02:00 PM
03/12/23 02:00 PM
Joined: May 2010
Posts: 9,720
mn north of blakely
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Steven 49er Offline
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Steven 49er  Offline
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mn north of blakely
Originally Posted by Dirt
If we want to blame the Fed, maybe we can blame them for keeping interest rates at record lows for 14 years. Also keeping MBS rates low and Treasury rates low by printing money and buying so many at low rates.



All predictable under a debt backed standard and with more to come.

Last edited by Steven 49er; 03/12/23 02:00 PM.

"Inflation is always and everywhere a monetary phenomenon". Milton Friedman.
Re: Silicone Valley Bank Meltdown [Re: yotetrapper30] #7819066
03/12/23 02:21 PM
03/12/23 02:21 PM
Joined: Mar 2007
Posts: 34,362
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

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Joined: Mar 2007
Posts: 34,362
McGrath, AK
Originally Posted by yotetrapper30



Yes Yellen said no bailout. But she also has said that the FDIC, with the Treasury and the Fed, may setup other facilities to "backstop" depositors...uninsured or not. In my mind that is a bail out

At least that is my interpretation of what CNBC has posted online


"One potential option could be to use the FDICís systemic risk exception tool to backstop the uninsured deposits at SVB. Under the Dodd-Frank Act, that move would need to be made in concert with the Treasury Secretary and the Federal Reserve."

https://www.cnbc.com/2023/03/12/heres-what-could-happen-next-for-silicon-valley-bank-customers.html

Last edited by white17; 03/12/23 02:28 PM.

Mean As Nails
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819072
03/12/23 02:34 PM
03/12/23 02:34 PM
Joined: Dec 2010
Posts: 10,212
Armpit, ak
D
Dirt Offline
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Armpit, ak
The story is the Federal government recouped all the bailout money from 2008 and made a profit for the taxpayers?


Who is John Galt?
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819123
03/12/23 03:35 PM
03/12/23 03:35 PM
Joined: Feb 2010
Posts: 17,614
pa
H
hippie Online content
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Joined: Feb 2010
Posts: 17,614
pa
I saw some talking heads claiming the run on the bank is what sunk it because their losses on bonds was only 1% of their ho!dings. Is this true?

Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819145
03/12/23 03:55 PM
03/12/23 03:55 PM
Joined: Mar 2007
Posts: 34,362
McGrath, AK
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white17 Offline

"General (Mr.Sunshine) Washington"
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Posts: 34,362
McGrath, AK
Lots of moving parts here and some complex.....not intuitive............constructs of financial instruments complicating things.

Cliff notes.

Banks take deposits from customers and pay a fraction of a percent interest. They invest those funds in long term ...30 years.... treasury bonds and MBS paying 4.1 %....if held to maturity. Just an example.

Now the Fed starts raising rates and the depositors realize they can earn 5% on 90 day T-bills (annualized rate) so they pull their deposits and reinvest in Tbills. This is referred to as cash-sorting. Bottom line is the bank is losing its deposits in the space of HOURS..........whereas its revenue from the bonds it has purchased will be realized over decades. This is the mismatch of duration that I mentioned somewhere above. The bank no longer has that source of cheap money from its depositors.
It needs to raise cash to meet the depositor's demand. So the bank starts selling its MBS and Treasury bonds. But since interest rates have gone up, those bonds are now worth less than they paid for them.
( as interest rates rise, the value of a bond declines)

The treasuries and the MBS are easy to sell but only at a loss. Should be able to do that in a day.

The loans that are assets to the bank could take months to sell.......again at a loss.

I don't know whether the difference was 1% or 15 %. But clearly they could not raise enough capital to make everyone whole.

A complete breakdown of risk management by the bank. But, by doing what they did.....it made the bank appear more profitable on paper than it really was.


Mean As Nails
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819155
03/12/23 04:03 PM
03/12/23 04:03 PM
Joined: Dec 2010
Posts: 10,212
Armpit, ak
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Dirt Offline
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Armpit, ak
The bank should have raised their rates to be competitive; then depositors would not move their money. In the past, when the fed raises rates, banks follow. Of course slowly.


Who is John Galt?
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819158
03/12/23 04:07 PM
03/12/23 04:07 PM
Joined: Dec 2006
Posts: 13,770
MN, Land of 10,000 Lakes
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Trapper7 Offline
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Joined: Dec 2006
Posts: 13,770
MN, Land of 10,000 Lakes
How will the stock market react to this?


We are living in a time when people with common sense are silenced so stupid people won't be offended.
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819159
03/12/23 04:07 PM
03/12/23 04:07 PM
Joined: Mar 2007
Posts: 34,362
McGrath, AK
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white17 Offline

"General (Mr.Sunshine) Washington"
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McGrath, AK
Exactly right Dirt. That would not have solved the issue of the bonds being underwater but it would have likely not induced the run.


Mean As Nails
Re: Silicone Valley Bank Meltdown [Re: Dirt] #7819166
03/12/23 04:17 PM
03/12/23 04:17 PM
Joined: May 2010
Posts: 9,720
mn north of blakely
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Steven 49er Offline
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Steven 49er  Offline
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Joined: May 2010
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mn north of blakely
Originally Posted by Dirt
The story is the Federal government recouped all the bailout money from 2008 and made a profit for the taxpayers?


It's possible but at what cost. Those bailouts are partly responsible for what is and has been going on.

Also The Fed is losing money at the rate of at least 2 billion a week. We will be bailing them out soon enough.


"Inflation is always and everywhere a monetary phenomenon". Milton Friedman.
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819167
03/12/23 04:17 PM
03/12/23 04:17 PM
Joined: Dec 2010
Posts: 10,212
Armpit, ak
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Dirt Offline
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Armpit, ak
Those bonds are more than likely not to be underwater forever. I predict the FED will go back to zero when they have to due structural problems in the U.S. economy and continued deficit spending by Uncle Sugar.


Who is John Galt?
Re: Silicone Valley Bank Meltdown [Re: Steven 49er] #7819169
03/12/23 04:19 PM
03/12/23 04:19 PM
Joined: Dec 2010
Posts: 10,212
Armpit, ak
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Dirt Offline
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Dirt  Offline
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Armpit, ak
Originally Posted by Steven 49er
Originally Posted by Dirt
The story is the Federal government recouped all the bailout money from 2008 and made a profit for the taxpayers?


It's possible but at what cost. Those bailouts are partly responsible for what is and has been going on.

Also The Fed is losing money at the rate of at least 2 billion a week. We will be bailing them out soon enough.


On paper they are losing money. In reality you can't lose money that you just make up. Just make up more.


Who is John Galt?
Re: Silicone Valley Bank Meltdown [Re: Dirt] #7819182
03/12/23 04:27 PM
03/12/23 04:27 PM
Joined: Mar 2007
Posts: 34,362
McGrath, AK
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white17 Offline

"General (Mr.Sunshine) Washington"
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McGrath, AK
Originally Posted by Dirt
Those bonds are more than likely not to be underwater forever. I predict the FED will go back to zero when they have to due structural problems in the U.S. economy and continued deficit spending by Uncle Sugar.



That's right. If rates go back down those bonds will increase in value


Mean As Nails
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819185
03/12/23 04:30 PM
03/12/23 04:30 PM
Joined: May 2011
Posts: 1,349
Kansas
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Kansas Cat Offline
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Yellen is good at parsing words but, in my opinion, is not the right "face" to instill confidence in a scenario like this. She projects weakness and timidity. That is precisely what we don't need right now.

Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819186
03/12/23 04:30 PM
03/12/23 04:30 PM
Joined: May 2010
Posts: 9,720
mn north of blakely
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Steven 49er Offline
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If the Fed doesn't hold it's guns ala Voelker it's over IMHO, inflation will get away from them.

Tuesday's numbers should be interesting.


"Inflation is always and everywhere a monetary phenomenon". Milton Friedman.
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819200
03/12/23 04:45 PM
03/12/23 04:45 PM
Joined: Mar 2007
Posts: 34,362
McGrath, AK
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white17 Offline

"General (Mr.Sunshine) Washington"
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Joined: Mar 2007
Posts: 34,362
McGrath, AK
X2


Also agree Yellen is a poor poster girl for resolve and competence


Mean As Nails
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819203
03/12/23 04:48 PM
03/12/23 04:48 PM
Joined: Jan 2014
Posts: 19,883
North East Kansas
Marty Offline
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the current government is not weak and timid they are the opposite...strong, bold and woke. Maybe they want to burn down rome and rebuild a new utopia...


E
'Honey Badger Militia'
Sleep, the anti woke adote.
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819259
03/12/23 06:28 PM
03/12/23 06:28 PM
Joined: Jan 2007
Posts: 1,882
B61-12 vicinity, MO
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TreedaBlackdog Offline
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transitory inflation - still waiting for that....

Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819262
03/12/23 06:30 PM
03/12/23 06:30 PM
Joined: Jan 2018
Posts: 4,072
MN
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Donnersurvivor Offline
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Posts: 4,072
MN
I'm just glad Yellen got the visit to Ukrain and climate change speeches done so she can actually do her job now.

Remember guys, if we don't have the most competent government atleast we can hang our hat on the diversity of our government. Remember that if we go into a crisis.

A friend had a month of landscape work cancel this weekend, this may hit harder than people are expecting

Last edited by Donnersurvivor; 03/12/23 06:33 PM.
Re: Silicone Valley Bank Meltdown [Re: Chancey] #7819280
03/12/23 06:54 PM
03/12/23 06:54 PM
Joined: Apr 2010
Posts: 3,761
Ohio
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stinkypete Offline
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Ohio
The Feds have stepped in. Futures are up this evening. Still will be an interesting week. Sun will set tonight. Will rise tomorrow. Another crisis will be on the horizon grin

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