The discussion of the SVB collapse and related bank runs, its causes and its likely consequences, has gotten sort of stuck on the "Biden good/bad president" thread. Yet the story is about both much more, and less, than Biden. So I allow myself to start a new thread. And I will start it with an interview of Richard Wolff on KPFA:

Don't you love another global crisis but it sort of pales into insignificance when compared to the mega lockdowns of Covid-19 and the War in Ukraine of recent years although some say were doomed anyway thanks to global warming.

Nevertheless for those that grew up as kids during The Cuban Missile Crisis & the years that followed with the Soviet Union together with the USA pointing an ever growing number of nuclear missiles at each other, I was sure the world was scheduled for global annihilation.
That's what I call global crisis and for those that need reminding - Threads and The Day After are still available on Youtube and Daily Motion.

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Surely the time has come for Boris to 'circle the wagons' for a bit of herd immunity ?

Can you summarize the points of the video?

Simple.
Banks: "We did a booboo and made a whoopsie. Bail us out!"
Government: "This is the last time!"

All profits are because of individual brilliance, hard work and pure genius
All losses must be socialised because.....duh
It must be great to be part of this casino....especially if you are the house.....
And now Uncle Sam can simply print more money to bail itself out....the rest of the world be damned....

It is not a bailout in the classic sense. The bank went under and all the equity got wiped out. It is a form of bailout because the cost (of guaranteeing all deposits above the standard 250k) is de facto socialized as other banks will pass through the cost to customers and at the end the Fed is still guaranteeing the whole thing. And any other bank in trouble will now get the same treatment.

I am not sure I would call this "The US banking crisis of 2023", but then it is only March and it is worrying to see how Credit Suisse is again struggling after the short-lived recovery with the SNB lifeline.

Claims that Goldman Sachs Group Inc lost around $200 million in the market turmoil after the collapse of Silicon Valley Bank, the Financial Times reported today.

Global banks shed $500bn in the market rout today so if it is not a crisis now then if there is no bounce back Monday .....

The timeline of the past week (US-centered).



Today, the parent company of SVB went into chapter 11. Some people were gutsy, or plainly confident that the government would bail them out further: "A number of hedge funds and asset managers have bought discounted bonds issued by SVB Financial, according to the Wall Street Journal, despite warnings from federal officials that investors will probably be wiped out."

Don't make me laugh unless it's the banking crisis version of Whoops Apocalypse !

Agree. Once you're into panic mode, fundamentals don't matter. ANY bank would be exposed if deposit holders panic. When the government tells me "don't worry, bank X is good!", the first thing I'd do is log into my online banking and move the funds elsewhere.

If you look at how many banks have had to be bailed out and to the tune of so much money in the last few decades it makes me wonder if banks are not more trouble than they are worth.

The moral of the story is, do not invest in banks. Never ever buy any bank stocks or bonds. It does not pay!

SVB execs sold millions of their company stock in lead up to collapse, federal disclosures show

"Less than two weeks before Silicon Valley Bank became the largest bank failure since the 2008 financial crisis, top executives at the company sold stock totaling several million dollars, according to federal disclosures obtained by ABC News.

Former SVB President and CEO Greg Becker sold over $3.5 million of his company stock holdings on Feb. 27, according to a disclosure made to the U.S. Securities and Exchange Commission filed on March 1.

Becker wasn't the only member of SVB's top brass to sell company common stocks. In a separate FEC disclosure, also filed March 1, SVB Chief Financial Officer Daniel Beck sold $575,180 in company common stocks on Feb. 27.

...."

https://abcnews.go.com/Business/svb-...ry?id=97937058

Indeed it was not a bailout in the technical sense. At least not a bailout of SVB's shareholders, who have been pretty much wiped out.

It was, however, a bailout of Private Equity firms. Tech companies were the largest depositors at SVB and if they had lost their deposits, they either would have been bankrupt or needed a round of emergency funding from their PE backers.

So, at least in the case of SVB, there was a bailout of some of the world's wealthiest people. It must be nice to have friends in high places.

To de-risk banks, the only solution anyone seems to have come up with in decades is to increase equity requirements. So you have have low returns and some risks, or plenty of risk, or the worst of both.
https://www.americanprogress.org/art...gnature-banks/

The other night some expert on CNN said that this is part of the problem that no one thought much about. Last time we had a big financial crisis, most people didn't have a phone in their pocket with a handy app to start moving money around any second they thought a crash was coming. Now, most people can and do react with their phones instantly.

That is the future all those frictionless payments apps were selling to us customers. VCs funded it, developers made it happen....now they're crying "don't use instantaneous payments like that"

Next up, First Republic, the San Francisco cousin to SVB. The $30 billion in cash from other banks did not suffice. And indeed SVB and FR share an issue in common: Wealthy, savvy customers who know how to move money fast.
https://edition.cnn.com/2023/03/17/b...cue/index.html
https://finance.yahoo.com/news/first...092758879.html

Maybe governments will finally figure out how to nationalize banks this time, proper?