Friday, March 10, 2023

Bank Run!


Is this the end of the world as we know it? Maybe, if you're an uninsured depositor with SVB (Silicon Valley Bank) which collapsed following a liquidity wipeout brought on by an underwater balance sheet and panic-stricken clients pulling their money out of the fiscal black hole. 

Long story short, SVB was out of cash and the FDIC called game over today and shut the bank down. Via Zerohedge:

Last week we detailed BofA's Michael Hartnett's warning that "The Fed will tighten until something breaks". Well, something just broke... SVB's collapse - the second biggest US bank failure in history - dominated any reaction to this morning's mixed bag from the BLS (hotter than expected earnings growth, rising unemployment (especially for Latinos), better than expected payrolls gains).



Things started off badly as SVB crashed 65% in the pre-market before being halted. SVB bonds were puking hard and when the FDIC headline hit, the bonds collapsed further... (and) A number of small/medium sized banks were clubbed like a baby seal...



So far that'd be PacWest Bancorp, Western Alliance Bancorp, First Republic Bank/CA, and Signature Bank/NY. Will the contagion spread? That'd depend on people waking up to find their banks, too, are heavily invested in, ahem, safe havens like T-Bills, which are great until interest rates rise and then they're not.

So let's see how this bizarrely sudden Lehman style fiscal implosion plays out. In the meanwhile, smart investors are going full on into ammunition companies, precious metal and DOGE$. OK, that last one's a long game and a good one.

Beware the Ides of March,



Anonymous said...

I'm sure the Demoncrats will find a way to blame our real president. Donald J. Trump

Well Seasoned Fool said...

Another reason to use credit unions instead of banks.

Beans said...

And what makes you think Credit Unions are any safer than banks? Unless it is a small community owned and controlled credit union, which might be safe, any other financial institution is subject to fail as this bank did.

And don't think that precious metals are safe either. Remember, FDR's administration made private ownership of gold and silver, other than in jewelry, illegal and also fixed the price of gold and silver.

Well Seasoned Fool said...

Credit Unions operate under different rules and regulations. Like any financial decision, due diligence.

LL said...

First Republic Bank/CA - I have stories. Few recall SAFRABANK and some of the scandals going back to the laundering scandal that was disclosed as a result of Operation: Polar Cap. I was undercover in Polar Cap at their counting house in the PROSEGUR penthouse suite in Los Angeles.

Some of these "institutions" need to die for all time.

Infidel de Manahatta said...

Is it time, as one of the Simpsons' episodes said, "To cut open peoples heads and feast on the goo inside"?

It's getting closer.

Paul M said...

Wells-Fargo had a “payment processing issue” this week (euphemism for ‘major cash flow problem”). SVB may be a red flag event. Will other banks “have an issue” as well. Is this the next thing to force govt vapor-money on everyone so DC and their state operatives can control us further? Ol Joey’s loose lip moments have said as much….like he said with NordStream “going offline”, then it happened.

The real question is can I report a 1040 loss if someone steals my looted pile of flatscreens? Apparently the IRS has said I now can.

LSP said...

Well yes, Anon, it's all his fault.

At some point the narrative ceases to support itself. Are we reaching a tipping point?

LSP said...

I'm with you, WSF. Don't trust banks, hence safe.

LSP said...

Beans, you beat me to the metal point.

Is there a safe haven? Bullets? Food?

Hmmmm. Fast getting late Roman Empire in the West, eh?

LSP said...

What can I say, Mr. Wolf, Herberto Gut?

Maybe we could apply POLAR CAP on a wider scale? Just a thought.

LSP said...

It sure is, Infidel.


LSP said...

Contagion, Paul? Surely not.

In the meanwhile, safeguard those flatscreens.