Silicon Valley Bank Collapses - Page 1
Forum section: electronics / general

author: Rick Law
author_rank: Super Contributor
timestamp: March 12, 2023, 03:28:49 am
content: This info is not exactly about technology, but I think knowing it is beneficial to a tech person.Silicon Valley Bank (SVB) has collapsedand as of Friday, it is shutdown and taken over by regulators. SVB has been in business for 40+ years funding technology startups and being the banker for many firms in the Silicon Valley area.For example: Ruko just filed with regulators that they have about $1.9b cash but at this time uncertain the exact amount they have in SVB account(s). Rumor (unconfirmed reports from CNN, Hollywood Reporters...) has it that Ruko has about 1/4 of its asset in SVB account. It is unknown if any of it will be recoverable and if so, when? For sure Ruko is not the only tech/media firm to be caught in that mess.SVB like most banks in the USA is covered by FDIC insurance. But it is only $250K per account. For many tech firms, $250K is not even a day's operational expenditure.Expect some or perhaps plenty of smell all over the valley now that the stuff hit the fan... Closures, layoffs, what not.Do you have an order with a company located in Silicon Valley or banking at SVB? If so, perhaps look again before you send a purchase order or a payment for yet-to-arrive items...

author: Rick Law
author_rank: Super Contributor
timestamp: March 12, 2023, 03:47:22 am
content: Quote from: karpouzi9 on March 12, 2023, 03:35:40 amIf you have money in SVB, it is too late -- doors already lock. If you are merely planning on ordering, just wait a couple of weeks after the dust clears if you can.Not sure about SVB, but when I had my already-cashed checks back each month, the receive bank name is stamped on the back. "Had" because now I moved to accounts that doesn't send me my cashed checks. But even without image, when I had a service provide claiming non-payment but my check was cashed. Tracing the check with my bank, my bank was able to tell me exact date and bank it was deposited to.So if your supplier can't tell you and you have used them before (prior payments occurred), check with your own bank.EDIT: adding this below:At the very least, if you know you are ordering something from a valley company,alert your procurement departmentin writing. It is far less trouble writing an email to purchasing than explaining to your boss afterward that the $100K or whatever you asked purchasing to send when into the abyss.

author: jonpaul
author_rank: Super Contributor
timestamp: March 12, 2023, 04:25:59 am
content: 1/ never have over THE FDIC limit total, in any bank per person/SS number2/ check list of 20 most at risk US banks3/ pay invoice, vendors after goods are,recievedJon

author: bdunham7
author_rank: Super Contributor
timestamp: March 12, 2023, 04:48:09 am
content: I'd wait until Monday evening to panic, but I suppose not completing any orders for a day won't hurt. The Fed is having an emergency meeting Monday. That's a mistake, they should be having it tomorrow (Sunday). Lots of banks don't have the issue that SVB did but are still vulnerable to runs if something doesn't change quickly.And look for immediate layoffs next week if the bank isn't acquired--and it may not be. Usually they line that up ahead of time, but this is a WaMu level event that happened suddenly and was not initiated by the FDIC, so perhaps they're still trying.Anyone here affected by this? I'm guessing so...

author: jonovid
author_rank: Super Contributor
timestamp: March 12, 2023, 10:04:25 pm
content: news just in- Silicon Valley venture capital losspatreon and others tech venture capital lossSilicon Valley bank runshttps://www.forbes.com/sites/qai/2023/03/12/investors-wiped-out-as-bank-run-causes-collapse-of-silicon-valley-bank/?sh=1707ed63e95chttps://www.wsj.com/articles/investors-startups-work-to-find-cash-lifelines-after-silicon-valley-bank-collapse-1b7c9cebis this the 2008 financial crisis part 2?

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 12, 2023, 10:06:55 pm
content: Uh, the new financial crisis has been going on for a good while now. It's just handled in a different way so that impacted people tend to suffer just as much, but they are told to look elsewhere.Just a thought.

author: coppice
author_rank: Super Contributor
timestamp: March 12, 2023, 10:09:32 pm
content: I found it interesting that so many companies in one area had a large part of their cash holdings in the same place. Don't these people know what SPOF means?

author: nctnico
author_rank: Super Contributor
timestamp: March 12, 2023, 10:12:30 pm
content: Quote from: coppice on March 12, 2023, 10:09:32 pmI agree. Even a Dutch company had tens of millions of pounds and dollars at that bank. If you do business like that, you'd at least choose a big bank that is financially healthy. But maybe the beancounters thought it was a better idea to choose a small bank with lower costs over financial security... Penny wise, pound foolish.

author: coppice
author_rank: Super Contributor
timestamp: March 12, 2023, 10:15:11 pm
content: Quote from: SiliconWizard on March 12, 2023, 10:06:55 pmIts not really a new financial crisis. They never really dealt with the old one. That band aid is just starting to fall off.I was amused to see that SVB was one of the key lobbiers who successfully loosened bank regulation in 2016. They said they were super safe under the existing regime, and things didn't need to be so tightly regulated.

author: coppice
author_rank: Super Contributor
timestamp: March 12, 2023, 10:16:07 pm
content: Quote from: nctnico on March 12, 2023, 10:12:30 pmIt wasn't small. $175B in assets is pretty big by most standards.

author: TimFox
author_rank: Super Contributor
timestamp: March 12, 2023, 10:25:25 pm
content: Side bit of amusement:A big problem with this bank failure is that most of the deposits were commercial, rather than personal.In the US, bank deposits are guaranteed up to $250 k USD per depositor (joint account), but the commercial accounts were much, much larger.Many companies have been caught short, and will have difficulty making payroll while their accounts are frozen.That's not funny, but the US newspapers discussed the related closure of this bank in the UK, and reported the legal limit there as "$204,544", a rather precise value, which I assume is really 170 k GBP (for a joint account)?This reminds me of when banks were robbed the old-fashioned way: an American newspaper would report a robbery in UK as being "$2,350,000", because the UK police had reported "about a million pounds".

author: bdunham7
author_rank: Super Contributor
timestamp: March 12, 2023, 10:25:35 pm
content: Quote from: nctnico on March 12, 2023, 10:12:30 pmSVB was 1/3 to 1/2 the size of Credit Suisse (IOWhuge, just not JP Morgan huge) and up until last Wednesday it had top grades for capitilization and overall soundness according the the first level of metrics currently in use. You have to dig a little to see what the problem was, although now that everyone is talking about it I'm sure it will be claimed that it should have been obvious.

author: tom66
author_rank: Super Contributor
timestamp: March 12, 2023, 10:26:24 pm
content: Quote from: coppice on March 12, 2023, 10:15:11 pmIt's a really weird financial "crisis" though, if you think about it:- Record high employment / low unemployment- Some companies are laying off but net employment increasing and time to fill a vacancy climbing, with the effect that salaries (at least for joiners) are being pushed up- Productivity staying broadly similar per worker- Inflation biting everyone but spending still remaining pretty solid in discretionary sectors- Property prices and stock market still staying reasonably steady (a 'slump' but not a 'collapse')IMO we are seeing the impact more from Covid/Ukraine than the after effects of QE. It just happened that the economy was such a feather touch due to a decade of QE that when an actual crisis did happen, banks had no where to go. They couldn't really increase money supply more than they already had and ECB were worried higher interest rates would kill off weaker economies.The US Fed has done well being that they started relatively high (peak of 2.5% lending rate pre-Covid) so returning to that baseline and going a bit beyond it was not a dangerous from a monetary policy perspective. The Bank of England on the other hand has had a real battle against politicians convincing them that 0.5% lending in an inflationary crisis is a bad move.

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 12, 2023, 10:30:50 pm
content: Quote from: coppice on March 12, 2023, 10:15:11 pmTrue, same causes and nothing fundamental was done to address it.I call it "new" in the sense that this time, most people don't seem to realize it's ungoing.

author: EEVblog
author_rank: Unknown
timestamp: March 12, 2023, 10:31:44 pm
content: MOD: Two different threads merged

author: EEVblog
author_rank: Unknown
timestamp: March 12, 2023, 10:38:19 pm
content: Reports that :SVB did not have a chief risk officer for most of 2022And the new Chief Risk Officer was Managing Director at Deutsche Bank during 2008 AND led credit ratings in 2007And Twitter is abuzz about her focussing on DEI initiatives instead of risk.And SVB's Chief Administrative Officer was CFO of Lehman Brothers' Investment Bank when it collapsed.Many people are going to get pushed under the bus today!

author: EEVblog
author_rank: Unknown
timestamp: March 12, 2023, 10:39:38 pm
content: Quote from: TimFox on March 12, 2023, 10:25:25 pmOfficial reports that something like 95%+ of accounts were not covered under FDIC insurance. i.e. greater than $250k.

author: themadhippy
author_rank: Super Contributor
timestamp: March 12, 2023, 10:44:14 pm
content: Quotewhat like an icelandic bank?

author: coppice
author_rank: Super Contributor
timestamp: March 12, 2023, 10:44:44 pm
content: Quote from: TimFox on March 12, 2023, 10:25:25 pmI think it used to be 85k for a single, or 170k for a joint account. It has been reduced to 75k for a single account, but its also mixed in with some bail in legislation that might make even that protection meaningless.

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 12, 2023, 10:46:39 pm
content: Anyway, it's not the first bank that has collapsed and my little finger is telling me that it's not going to be the last one.

author: tom66
author_rank: Super Contributor
timestamp: March 12, 2023, 10:48:25 pm
content: Quote from: coppice on March 12, 2023, 10:44:44 pmNo, it's still £85,000 per person per banking licence. £170k for joint, and protection up to £1m for balances up to 6 months in certain circumstances, e.g. sale of a house or inheritance funds.https://www.fscs.org.uk/what-we-cover/The reality is that if a bank did fail in the UK it's very likely the full amount would be covered because it would massively hammer confidence in the banking system if this did not occur.

author: bdunham7
author_rank: Super Contributor
timestamp: March 12, 2023, 10:50:36 pm
content: Quote from: EEVblog on March 12, 2023, 10:39:38 pmBy my calculations, ~86% of overall deposits were uninsured. For all the details, I've attached their Dec 2022 call report. The information on why they failed (off balance-sheet losses wiped out capital reserve) is on forms RC and RC-B and the info on uninsured deposits is on form RC-O. They had $151B in uninsured out of a total of $175B.

author: EEVblog
author_rank: Unknown
timestamp: March 12, 2023, 10:50:54 pm
content: Quote from: jonovid on March 12, 2023, 10:04:25 pmHow is Patreon involved?

author: coppice
author_rank: Super Contributor
timestamp: March 12, 2023, 10:52:03 pm
content: Quote from: tom66 on March 12, 2023, 10:48:25 pmWatch out for that bail in legislation. There are some interesting conditions which have been added to bank conditions in the last 3 or 4 years. Things like them reserving the right to refuse deposits. So far they don't seem to have given any indication about the scale of balance they are likely to refuse.I suspect that if one of the big UK banks had any serious trouble, it would be the end of London as a major financial centre, and perhaps the UK. The government had issues coping with RBS last time. Another of the big banks being in trouble, when the government's own borrowing status is not in great shape, is probably something they just couldn't cope with.

author: coppice
author_rank: Super Contributor
timestamp: March 12, 2023, 10:58:01 pm
content: Quote from: EEVblog on March 12, 2023, 10:50:54 pmWho do (did) they bank with?

author: EEVblog
author_rank: Unknown
timestamp: March 12, 2023, 11:07:06 pm
content: Quote from: coppice on March 12, 2023, 10:58:01 pmWell I assume that if they are involved. But anyone got a link?

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 12, 2023, 11:10:25 pm
content: I also have read hints that Patreon was linked to SVB, but I can't find any definite proof of that. This far, Patreon seems to be silent about it.

author: EEVblog
author_rank: Unknown
timestamp: March 12, 2023, 11:13:32 pm
content: Roko, Rublox caught shorthttps://techcrunch.com/2023/03/11/roku-roblox-and-others-disclose-their-exposure-to-svb-in-sec-filings/

author: jpanhalt
author_rank: Super Contributor
timestamp: March 12, 2023, 11:21:46 pm
content: There will certainly be a ripple effect. An article on Market Watch compared several US national banks. Unfortunately, it has decided to restrict access to that article now to subscribers only. I really do love capitalism. (no sarcasm intended)One of the metrics it used was AOCIQuoteClear as mud, but SVB had a very large percentage of net as AOCI. I spent a little time today checking my banks. You can find the AOCI quite easily.As for FDIC, there are some things to be aware of:1) When a bank fails, all deposits per depositor are lumped, e,g,, CD's, savings, and checking for the limit for the same account type and holder.2) An IRA is a different type, so far as I know (no guarantee).3) FDIC may not cover interest anticipated on instruments such as CD's and payment can take quite a while.4) Relative to #3, if you have an IRA and are subject to MRD, you may want to consider the effects of a late payment. I am looking into that tomorrow (Monday).5) One way to extent the limit is to add individuals (e.g,, children) as beneficiaries on death. That can get you to 1$million aggregate (again, that is not financial advice).As financial markets in the US showed dramatically in 2009, it is a house of cards.

author: TimFox
author_rank: Super Contributor
timestamp: March 12, 2023, 11:33:49 pm
content: The Silicon Vallen Bank (SVB) failure is particularly nasty.According to the NY Times, not only tech companies are involved, but also the better winemakers in California.Normally, the US FDIC closes the bank, freezes its assets, and then arranges for a solvent bank to take over the business.The FDIC had to close SVB before the close of businessThe failure of Washington Mutual in 2008 (which apparently kicked off a large series of failures) resulted in the fire sale of the assets to J P Morgan Chase.Only 24% of WaMu's deposits were not FDIC insured, but 87% of SVB's deposits are uninsured.As of this writing, apparently no bank has agreed yet to the acquisition (although J P Morgan Chase may well be the solution).SVB is now the second-worst failure in the US, trailing WaMu in 2008.WaMu's problems were tied to property lending, i.e. subprime mortgages, but SVB's problem is different.The government predicts depositors will be good on Monday, and are talking about the full deposits amount, but denying it's a bailout.There seems to be another pile of cash, not in the FDIC but at the Federal Reserve, with which I was not acquainted.

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 12, 2023, 11:35:25 pm
content: 3 months ago:https://techcrunch.com/2022/12/08/spend-management-startup-tripactions-secures-400m-in-credit-facilities-from-goldman-sachs-svb/

author: Stray Electron
author_rank: Super Contributor
timestamp: March 12, 2023, 11:51:43 pm
content: Quote from: bdunham7 on March 12, 2023, 10:50:36 pmOne of my family members is on the inside of this mess (I'm not allowed to say how) but I can tell you that this has completely torpedoed a lot of SVB's commercial customers and they are SCRAMBLING to find other loans or investors and i suspect that most of them will be going out of business shortly. As others have already pointed out MOST of the money deposited in SVB is well in excess of the $250,000 FDIC per account insurance limit so a great many of the SVB's customers are probably not going to get their money back. Everyone involved is hoping that the US Gov will FULLY insure all of the deposits but I don't think that that's going to happen. Also several US politicians have already announced their opposition to such a move. Even if it does it will take months before the depositors get the money. I think that this will cause a lot of the smaller companies to fail and I'm wondering what effect that will have on other Silicon Valley companies and other US companies, suchas say someone such as one of the chip suppliers that supplies chips to Ford. I'm also wondering if this will precipitate a run on some of the other weaker banks.Monday is likely to be an interesting day! I think this whole business could very quickly go sideways!

author: EEVblog
author_rank: Unknown
timestamp: March 12, 2023, 11:56:43 pm
content: Quote from: Stray Electron on March 12, 2023, 11:51:43 pmYellen has already said there will be no bailout.If they find a buyer (the government will no doubt offer a sweet deal) then everything goes back to normal.Otherwise it's sounding like the big despositors will get a substantial haircut. I'm hearing talk of a $20BN shortfall.A lot will depend if assets have to be marked to market or not.In any case, all depositors will have access to at least $250k FDIC this morning, but for the big business that's not even going to pay a weeks wages. So if all their operating cash was tied up there, they won't be able to make payroll until a sale is made.

author: bdunham7
author_rank: Super Contributor
timestamp: March 13, 2023, 12:07:26 am
content: Quote from: TimFox on March 12, 2023, 11:33:49 pmSVB actually choked mostly on MBS (mortgage backed securities) but the the problem wasn't credit quality, it was duration/interest rate causing the current (market) value to drop. Because they had opted to designate these as HTM (hold to maturity) they weren't required to account for the interim drop in value on their balance sheet. Once they had to sell them to cover the deposits, the manure hit the spreader tines.There's an nice explanation from JP Morgan along with a comparison showing that SVB is(was) an outlier regarding losses in held securities (they had an unusually large amount) but that sort of glosses over the fact that lots other banks may have similar issues with their own internally-generated loan portfolio and none of them have to attempt to mark those to market. The picture from the .pdf shows their capital ratio from the balance sheet (blue) and then their capital ratio taking into account unrealized losses on HTM securites.https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/silicon-valley-bank-failure-amv.pdf

author: EEVblog
author_rank: Unknown
timestamp: March 13, 2023, 12:13:17 am
content: Reports on Twitter that a "bailout" has happened. All deposits of any value have been guaranteed.

author: bdunham7
author_rank: Super Contributor
timestamp: March 13, 2023, 12:18:06 am
content: Quote from: EEVblog on March 12, 2023, 11:56:43 pmThe assets (UST, MBS and their loan portfolio plus the real estate and furniture) don't get marked to market, they get marketed now, either as a whole, in large pieces or small pieces. The UST and MBS parts apparently have a current duration of 6.2 years (according to random chatter and unreliable sources) and their own loan portfolio is unknown to us at this point. Their overreliance on securities actually makes it a bit easier because the price of those is easily determined and this will allow the FDIC to give back good chunk (maybe half) of the uninsured money right away. However, the insured deposits are paid first and the FDIC isn't Santa Claus--that money comes out of those same assets.Then their loan portfolio is going to have to be liquidated and that will be at substantial discounts.

author: bdunham7
author_rank: Super Contributor
timestamp: March 13, 2023, 12:29:20 am
content: Quote from: EEVblog on March 13, 2023, 12:13:17 amYes, and another bank has been siezed (on a Sunday!) and is the third largest failure in US history. Signature Bank NY. I can't see exactly what went wrong with it at the moment. Three banks in one week and they all start with "Si". Hmmmm.

author: Black Phoenix
author_rank: Super Contributor
timestamp: March 13, 2023, 12:39:06 am
content: https://apnews.com/article/silicon-valley-bank-bailout-yellen-deposits-failure-94f2185742981daf337c4691bbb9ec1eQuoteQuote

author: EEVblog
author_rank: Unknown
timestamp: March 13, 2023, 12:52:33 am
content: A bailout thar's not a bailouthttps://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htmThey knew the systemtic risk.Problem is, anyone with any sense at all will immediatley withdraw every cent from SVB. In which case where would the $20BN shortfall come from?

author: bdunham7
author_rank: Super Contributor
timestamp: March 13, 2023, 01:13:17 am
content: Quote from: EEVblog on March 13, 2023, 12:52:33 amI don't know that they will since it takes a fair amount of work to switch banks if you are a medium-ish or larger company. The shortfalls in general are going to be covered for a little while by the new program that will loan money to banks against their securitiesat par value, not market value. IOW, the shortfall will come from a loan for more than the collateral is presently worth.https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 13, 2023, 01:31:50 am
content: More band-aid.

author: coppice
author_rank: Super Contributor
timestamp: March 13, 2023, 01:35:54 am
content: Quote from: SiliconWizard on March 13, 2023, 01:31:50 amCue Bob Geldof......."I don't like Mondays....."

author: EEVblog
author_rank: Unknown
timestamp: March 13, 2023, 01:38:08 am
content: Quote from: bdunham7 on March 13, 2023, 01:13:17 amYes, if they do marked to market they are going to come up hugely short, to the tune of 10's of billions.

author: coppice
author_rank: Super Contributor
timestamp: March 13, 2023, 01:40:17 am
content: Quote from: EEVblog on March 13, 2023, 01:38:08 amOnly 10's? That's loose change to these people.

author: VK3DRB
author_rank: Super Contributor
timestamp: March 13, 2023, 04:30:34 am
content: SVP is just the start. It is different this time... the Russian war, the Chinese COVID virus and this which is the most alarming...https://www.usdebtclock.org/The virus can "controlled" and the Russians will be defeated. But who is going to pay back this spectacular amount of debt? Your retirement funds, savings and assets will, as per the bank and real estate crashes of 1893 and the stock market crash of 1929.Its coming very soon.

author: EEVblog
author_rank: Unknown
timestamp: March 13, 2023, 05:47:02 am
content: Quote from: coppice on March 13, 2023, 01:40:17 amBut it was enough for then to try and raise capital which then started a run on the bank.I have a summary:https://twitter.com/eevblog/status/1635125815175413761I can't believe they didn't have a chief risk officier for 9 months, that's insane.

author: EEVblog
author_rank: Unknown
timestamp: March 13, 2023, 05:48:57 am
content: Quote from: VK3DRB on March 13, 2023, 04:30:34 amBuckle up Dorothy.

author: BravoV
author_rank: Super Contributor
timestamp: March 13, 2023, 06:17:50 am
content: When you gambled, and lost, but government keeps saving your a$$, what stopping you, me and all of us to keep gambling ?Watch the deep state's spin doctors work hard trying to morph the word "bail out", into something that sounds like not a bail out, but it is still a bail out.

author: tom66
author_rank: Super Contributor
timestamp: March 13, 2023, 07:43:32 am
content: Quote from: coppice on March 12, 2023, 10:52:03 pmThis has nothing to do with banks refusing to pay out. The FSCS is a government arm and covers people about 3-6 months after a bank collapse.If a UK bank fails catastrophically, the UK government willmagic the money up. The alternative of allowing depositors to lose out is far too costly because as you note, it would be the end of banking in the UK. There is a reason major governments guarantee depositor funds, they want a functional banking system.I don't recall the government "struggling" with RBS. IIRC the total net cost to the taxpayer in the end for all of the 2008 bailouts was £27bn at last count (https://fullfact.org/economy/1-trillion-not-spent-bailing-out-banks/). Not small change but hardly beyond the realm of government spending.

author: iMo
author_rank: Super Contributor
timestamp: March 13, 2023, 08:37:57 am
content: https://www.nytimes.com/2023/03/12/business/signature-bank-collapse.html

author: Wallace Gasiewicz
author_rank: Super Contributor
timestamp: March 13, 2023, 11:05:06 am
content: The UN BAILOUThttp://endoftheamericandream.com/the-federal-reserve-just-made-an-emergency-decision-which-will-fundamentally-change-banking-in-america-forever/Please note I am not agreeing with any of the authors opinionsI also do not know how much money the bank had in long term securities, which supposedly have taken the big hit. It is supprising that they would put the blame on the rising interest rates, since the government securities are readily sell able at a discount after the rates go up. Long term securities obviously take the biggest hit with rising interest rates.The news seems to state that the bank had a lot of money in long term government securities.

author: iMo
author_rank: Super Contributor
timestamp: March 13, 2023, 11:39:35 am
content: Printing money is easy. All banks saved and a BigMac will cost $300 soon..

author: BravoV
author_rank: Super Contributor
timestamp: March 13, 2023, 11:44:13 am
content: Quote from: imo on March 13, 2023, 11:39:35 am... and that already in heavily discounted price at big promo season.

author: wilfred
author_rank: Super Contributor
timestamp: March 13, 2023, 12:20:11 pm
content: Quote from: Wallace Gasiewicz on March 13, 2023, 11:05:06 amThat link had a statement that the banks are being bailed out. But it seems to me they are, to use the "bail out" metaphor, letting the Titanic sink and rescuing the passengers. That's not a bail-out in the sense of propping up the bank. Equity holders and unsecured creditors have lost the lot.They are injecting liquidity and preventing the need to sell at a loss bonds that are yet to mature. SVB was uniquely at risk as I understand it in that they held a lot of them. I suppose other banks that hold other forms of assets will have a different risk exposure but every bank can fail if enough deposits are withdrawn.People and smaller depositors that had less than $250k were safe but if they work for a larger company that would go belly-up without their cash reserves being protected would likely lose their jobs and suffer anyway.In Australia where we have a very small number of banks it is a bit strange to find America has thousands and they fail in their hundreds. The small one presumably.

author: Stray Electron
author_rank: Super Contributor
timestamp: March 13, 2023, 02:33:45 pm
content: Quote from: wilfred on March 13, 2023, 12:20:11 pmRegardless of why you think SVB is different, this sets a VERY BAD precedent IMO. In effect, this means that from here on out the Feds are going to bail out any and all failing banks. This is an open door invitation for BAD management in the banks, knowing that there will be no consequences for them. In fact, many of the Savings and Loan institutions took FULL advantage of the same arrangement back in the late 1980s. Many wealthy people including Jeb Bush bought up failing S&Ls for pennys on the dollar and then were then bought out by the Feds for 100% of the claimed value."They are injecting liquidity and preventing the need to sell at a loss bonds that are yet to mature."That is probably THE biggest question in SVB's case, on paper they have a lot of assets but no one outside of SVB really believes it. That's why the Feds and the lawyers have been scrambling over the past weekend, to find out what assets they really do have and what they're worth. IF SVB has enough assets then one of the bigger banks will buy them out but if they don't then either the Feds throw money into the quagmire and buy them out and everyone gets 100% of their money back or they simply pay off the insured deposits and let the others take their losses.So far, no big bank or investment group has bought them so that should tell you something."it is a bit strange to find America has thousands and they fail in their hundreds. The small one presumably."Nope, SVB is the 16th largest bank in the US.Banking is a very lucrativebusinessracket in the US, that's why we have an excess of banks!

author: wilfred
author_rank: Super Contributor
timestamp: March 13, 2023, 02:54:04 pm
content: Quote from: Stray Electron on March 13, 2023, 02:33:45 pmGuaranteeing the funds of depositors is not bailing out the bank. The bank is bust. Janet Yellen said they are not bailing out the banks anymore. Which I agree with, but we'll see what happen if Wells Fargo is at risk.I heard on the news some bank in London (whose name escapes me) bought the UK arm of SVB for one British pound. I don't know if some large American bank bought or will buy the US operation but SVB no longer exists. Nor does the other bank. Neither will resume business. That sounds like not bailed out to me.

author: coppice
author_rank: Super Contributor
timestamp: March 13, 2023, 03:28:29 pm
content: Quote from: wilfred on March 13, 2023, 02:54:04 pmIt looks like HSBC are grabbing the UK arm of SVB. They have quoted healthy figures for that business, but buying it for one pound doesn't make it sound too healthy.

author: TimFox
author_rank: Super Contributor
timestamp: March 13, 2023, 04:06:39 pm
content: The proximate cause of SVB's failure was an old-fashioned bank run, after depositors became worried about the bank and many withdrew funds immediately.Today's New York Times business section had an article suggesting that the run was exacerbated by the depositors' being members of the tech community who spent much of their time online, thus spreading the fear quickly.Their fear was possibly an overreaction to normal business activities by the bank that were communicated badly to the public.

author: dave j
author_rank: Regular Contributor
timestamp: March 13, 2023, 04:16:48 pm
content: Quote from: coppice on March 13, 2023, 03:28:29 pmSVB UK weren't in a position to haggle on price - the Bank of England had already decided to rule them insolvent. With the customers about to have financial problems and the markets in panic mode having someone like HSBC buy it for a nominal amount meets both protect the customers and calm the markets objectives all without the UK government having to spend a penny. Wins all round (apart from for SVB owners) as far as the UK government are concerned.

author: coppice
author_rank: Super Contributor
timestamp: March 13, 2023, 05:13:33 pm
content: Quote from: dave j on March 13, 2023, 04:16:48 pmLarger, more stable, banks usually hoover up the pieces at bargain prices when there is a collapse. However, if the bank that failed still has genuine net value you might expect everyone to be a the trough fighting for a piece of the action.

author: AndyBeez
author_rank: Frequent Contributor
timestamp: March 13, 2023, 05:39:02 pm
content: British perspective. London Stock Exchange public listed (PLC) share holdings with exposure to SVB's 'liquidity issues'. Some notable brands mentioned including Oxford BioMedica, Music Magpie, Trust Pilot and Moon PigShares Magazine: London listings with exposure to Silicon Valley Bankhttps://www.sharesmagazine.co.uk/news/market/1678709915961551900/summary-london-listings-with-exposure-to-silicon-valley-bank-Sure Money === Sure Risk

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 13, 2023, 07:17:40 pm
content: Quote from: imo on March 13, 2023, 11:39:35 amNo problem, that will be Russia's fault. People will be starving but happy to have someone to hate.

author: Gyro
author_rank: Super Contributor
timestamp: March 13, 2023, 08:12:25 pm
content: Quote from: dave j on March 13, 2023, 04:16:48 pmYes, HSBC bought the UK arm for £1, injected a bunch of money (the HSBC boss said how much on the 6pm news interview but I can't see it in the story) and they opened for business as usual at 9AM.https://www.bbc.co.uk/news/business-64937251

author: ejeffrey
author_rank: Super Contributor
timestamp: March 13, 2023, 10:31:33 pm
content: Quote from: nctnico on March 12, 2023, 10:12:30 pmSVB was one of the top 20 commercial banks in the US. It's not nearly as big as the top 5, but it's way bigger than most local and regional banks. They just largely didn't have a consumer presence so they aren't a household name like bank of america.QuoteIt definitely looks like that played a part, although it also appears to have an element of good old fashioned yield chasing. The news that triggered the bank run was that they were forced to sell a fairly large chunk of long-term bonds at a loss. Rising interest rates (and the corresponding loss in value of long term bonds with lower yield) were widely expected by everyone and projected by the federal reserve well in advance, so it's hard to say how much of that was reckless investing vs. mass hysteria. I don't think the full extent of their holdings is well understood or reported, so it isn't clear if they would have been mostly OK without the shock, or if they were just a collapse waiting to happen.

author: MT
author_rank: Super Contributor
timestamp: March 13, 2023, 10:41:17 pm
content: The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&l Industry; By William K. Blackhttps://law.umkc.edu/profiles/faculty-directory/william-k-black.htmlhttps://www.amazon.com/Best-Way-Rob-Bank-Own/dp/0292754183In this expert insider’s account of the savings and loan debacle of the 1980s, William Black lays bare the strategies that corrupt CEOs and CFOs—in collusion with those who have regulatory oversight of their industries—use to defraud companies for their personal gain. Recounting the investigations he conducted as Director of Litigation for the Federal Home Loan Bank Board, Black fully reveals how Charles Keating and hundreds of other S&L owners took advantage of a weak regulatory environment to perpetrate accounting fraud on a massive scale. In the new afterword, he also authoritatively links the S&L crash to the business failures of 2008 and beyond, showing how CEOs then and now are using the same tactics to defeat regulatory restraints and commit the same types of destructive fraud.Black uses the latest advances in criminology and economics to develop a theory of why “control fraud”—looting a company for personal profit—tends to occur in waves that make financial markets deeply inefficient. He also explains how to prevent such waves. Throughout the book, Black drives home the larger point that control fraud is a major, ongoing threat in business that requires active, independent regulators to contain it. His book is a wake-up call for everyone who believes that market forces alone will keep companies and their owners honest.

author: Stray Electron
author_rank: Super Contributor
timestamp: March 13, 2023, 10:56:40 pm
content: Quote from: coppice on Yesterday at 10:09:32 pmI found it interesting that so many companies in one area had a large part of their cash holdings in the same place. Don't these people know what SPOF means?I talked to my family member that's involved with this today and asked the same question. Their reply was that SVB was VERY good to deal with and had a very good website and gave better benefits than the other banks so most of their customers dealt with them exclusively. I talked to another family member that lived in the area until recently and he said the same.

author: EEVblog
author_rank: Unknown
timestamp: March 13, 2023, 10:59:18 pm
content: Quote from: wilfred on March 13, 2023, 02:54:04 pmThe funny thing is Biden literally quote tweeted a NY Times article saying that it was a "bail out", LOL.

author: james_s
author_rank: Super Contributor
timestamp: March 13, 2023, 11:08:44 pm
content: Quote from: EEVblog on March 13, 2023, 10:59:18 pmWell in a sense it's "bailing out" if only that it's covering their screwup so that the clients don't get hosed.I would be ok with this IF bank executives received serious punishment such as fines and jail time if they engaged in risky behavior. Unfortunately what usually happens is they are given millions of dollars to go away.

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 14, 2023, 12:29:03 am
content: Quote from: james_s on March 13, 2023, 11:08:44 pmYep. In that regard, it kinda looks like a mafia. Well, it mostly is.

author: coppice
author_rank: Super Contributor
timestamp: March 14, 2023, 12:33:00 am
content: Quote from: EEVblog on March 13, 2023, 10:59:18 pmI suspect he's trying to blur things. A lot of regional bank stocks seem to have plummeted today. Biden doesn't want that. On the other hand a bail out would be a political hot potato after the public backlash over bailouts in 2008. So, I suspect he's trying to keep both side calm, but will end up spooking them both.

author: RJSV
author_rank: Super Contributor
timestamp: March 14, 2023, 12:34:35 am
content: "SPOF" (thanks, coppice);That meant opposite of 'Diversify your holding's, but I'm afraid that once we've focussed on diversity, they be thinking about race and ethnicity.That level of incompetence INVITES such disasters.

author: Rick Law
author_rank: Super Contributor
timestamp: March 14, 2023, 12:42:39 am
content: Quote from: Stray Electron on March 13, 2023, 10:56:40 pmThey (SVB) may very well be nice people, just not very business savvy. Theyoperated for months (April 2022 to Jan 2023) without their Chief Risk Management Officer.Nice, may be. Smart? No.Well, at least they have their Chief Diversity office all that time so their C-suite is not a ghost town. Businesses need to go back to being a business, sooner better.

author: Red Squirrel
author_rank: Super Contributor
timestamp: March 14, 2023, 04:38:47 am
content: This whole fiasco shows how important it is to not put your eggs in one basket when it comes to money. Good to have a backup plan such as cash on hand and a secondary bank account. Ideally you want to have enough cash to cover about a month worth of expenses, or at least the more critical ones like mortgage/rent and property taxes as not paying those means you basically lose your house and you may not even be allowed to go in to get your stuff as they'll condemn it.

author: james_s
author_rank: Super Contributor
timestamp: March 14, 2023, 07:14:04 am
content: Quote from: Rick Law on March 14, 2023, 12:42:39 amThe people that clients interact with may be both nice and smart, the people making the decisions in the back may be neither. If they're as large a bank as it sounds like, they probably have (had) thousands of employees.

author: VK3DRB
author_rank: Super Contributor
timestamp: March 14, 2023, 07:33:07 am
content: Every engineer will have learnt control theory. This is a classic example of an unstable system having an abrupt stimulus, creating an undesirable outcome, and chaos. The Chinese real estate implosion and the virus, Vlad the Terrible, and the resulting huge interest rate rises are stimulus to the unstable global financial system.As I write this, three banks have failed. If the banking system is inherently unstable, they will fall like a house of cards in the next few weeks. This is a symptom and not a cause.Time to buy gold.

author: tooki
author_rank: Super Contributor
timestamp: March 14, 2023, 08:03:55 am
content: I think the key thing to remember in this instance is that SVP had not actuallylostanything. It was strictly a liquidity issue — plenty of assets (more than enough to cover their liabilities and deposits), but far too littlecash. If they’d been forced to sell the bonds prematurely (which they had bought instead of holding onto cash) they would have createdactuallosses. HSBC has now bought SVB, so HSBC’s liquidity can cover whatever deposits SVB’s customers want to withdraw, and once the bonds mature, HSBC will more than recover that.As I understand it, the only real losers are SVB shareholders. I have no idea what HSBC ended up paying for the shares, but I’m guessing it won’t have been at a premium.Also, at least for USA: yet another reason to use your local credit union! Better conditions, in my experience better service, and they’re not for profit (account holders are actually shareholders). At the Maryland credit union where I do my U.S. banking, there used to be a nice teller who remembered me. One time I had my dog in the car so I ran inside to grab a a form, and she happened to be at the front and saw me. I apologized that I had to be quick due to the dog, and she instead came outside, said hi to the dog, and then gave me curbside service (not a service they actually offer). That and other examples show me it’s a far more trustworthy place to put my money than commercial banks.Another bonus: credit union deposits are government-insured, but not by the FDIC, but rather another fund. That means that if a commercial bank failure should wipe out the FDIC, credit union deposits are not affected.

author: tom66
author_rank: Super Contributor
timestamp: March 14, 2023, 12:23:22 pm
content: Quote from: tooki on March 14, 2023, 08:03:55 amAFAIK, HSBC has only purchased the UK division so far. They bought the bank for £1, I would expect this includes the shares, so they effectively bought the whole business for f-all. I think it was a case of HM Government panicking and wanting to avoid a bank run, and HSBC put together a deal which was along the lines of, "we'll cover the liquidity but we're not paying for anything", and they accepted because it was the first/best offer. I'm not sure exactly how much influence the UK government has here over forcing a sale, because the UK arm may have been solvent if the US arm had been bailed out sufficiently.

author: dave j
author_rank: Regular Contributor
timestamp: March 14, 2023, 08:15:16 pm
content: Quote from: tom66 on March 14, 2023, 12:23:22 pmReport on the efforts to save SVB UK. There were several companies considered for the takeover and it seems a big part of HSBC being chosen was because it had enough cash reserves to meet ongoing liquidity requirements without having to raise more capital.

author: coppice
author_rank: Super Contributor
timestamp: March 14, 2023, 08:27:40 pm
content: Quote from: dave j on March 14, 2023, 08:15:16 pmThat's worrying. In 2008 people like Barclays were in their bidding to scoop up some US failures cheaply. If they were not head to head with HSBC trying to get SVB UK what does that say about their current state? Simply burned last time, and not interested? Less well positioned?

author: Rick Law
author_rank: Super Contributor
timestamp: March 14, 2023, 08:50:20 pm
content: Quote from: james_s on March 14, 2023, 07:14:04 am(bold added)Yeah they are pretty big, 16th largest. I assume 16th only within the USA, but that would still make them a sizable hulk. The impact is not just because of the raw size but their core business. From reports I've seen on the web, a sizable amount of their business is on tech-startups and media. So those two industry (tech and media) is going to be hit worst than other industries.

author: bdunham7
author_rank: Super Contributor
timestamp: March 14, 2023, 09:03:44 pm
content: Quote from: tooki on March 14, 2023, 08:03:55 amI can tell you from experience that almost every insolvent person or company starts out thinking they have a liquidity issue. If you have assets that are difficult to value and sell, that narrative can allow you to get in pretty deep before you are faced with the fact that the issue is actually insolvency. However, when assets can be valued precisely, then it is much easier to tell the difference. And if your assets have an active,liquidmarket like treasury securities do, then the problem is their actual current value, not your inability to sell for the correct value. The fact that the current value has dropped far below some future value, no matter how certain that future value is, does not really make it a liquidity issue.The reason many are still clinging to the idea that all someone needs in a situation like SVB is some 'liquidity' in the form of cash to be returned later when their securities mature is that is just hasn't sunk in thatmoney isn't free any more. ZIRP is dead! A cash bridge to cover the 6.2 years of duration of SVBs portfolio would cost ~30% even at the Fed funds rate. The new BTFP facility is essentially a special program to extend ZIRP/LIRP just to banks with treasury or agency securities to avoid having the ZIRP withdrawal from killing them. Sort of like giving methadone to a heroin addict for a while. I haven't heard what the cost of this facility will be to the banks.

author: dave j
author_rank: Regular Contributor
timestamp: March 14, 2023, 09:16:39 pm
content: Quote from: coppice on March 14, 2023, 08:27:40 pmHSBC have always been relatively conservative compared to other banks. During the 2008 banking crash, the UK government called in the heads of the UK banks to explain how they were going to meet the UK's new bank liquidity requirements. Most of the banks needed government loans/bailouts. Barclays said they preferred to raise the money on the markets rather than be subject to government involvement in the business (a condition of a loan/bailout). HSBC didn't bother sending the head of the company as asked but instead sent someone with a note that said 'we have transferred some cash from our global bank and are now in full compliance with your new liquidity requirements'.Scooping up US banks post 2008, Barclays would have had time to raise the capital. With SVB UK, the government needed someone to buy it immediately, not in a few days time. HSBC had the cash available. Barclays, presumably, didn't.

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 14, 2023, 09:45:49 pm
content: Who on Earth really thought our global banking system was sustainable anyway?

author: coppice
author_rank: Super Contributor
timestamp: March 14, 2023, 10:07:11 pm
content: Quote from: bdunham7 on March 14, 2023, 09:03:44 pmLow interest rates have persisted for so long a generation has grown up that doesn't realise what the world is like when money is expensive. I wonder how they will adapt. Its really annoying to hear young people complain how easy it was for their parent's generation to buy houses with the lower prices of the past, ignoring how interest rates made a mortgage on even those low prices crippling.

author: themadhippy
author_rank: Super Contributor
timestamp: March 14, 2023, 10:16:33 pm
content: Quoteif barclays couldn't raise a quid id be pretty worried

author: tom66
author_rank: Super Contributor
timestamp: March 14, 2023, 10:20:58 pm
content: I think it's funding the $6.7 bn or so in customer deposits that's a little more important.I've often wondered about these £1 nominal sale things. Does someone actually wire a pound to the SVB UK arm? How do you divide that £ between all of the shareholders? Or is it just a legal fiction for convenience?

author: coppice
author_rank: Super Contributor
timestamp: March 14, 2023, 10:25:13 pm
content: Quote from: tom66 on March 14, 2023, 10:20:58 pmI think someone would be very sure to get that pound paid and receipted. If the business is turned around without the sale being properly receipted there would be battles in court.

author: tooki
author_rank: Super Contributor
timestamp: March 14, 2023, 10:29:38 pm
content: Quote from: bdunham7 on March 14, 2023, 09:03:44 pmWhat exactly is your point? Mine wasn’t to explain SVB’s thinking, but rather to elucidate that the bailout isn’t high-risk for the buyer of SVB, since the bonds will more than cover the deposits once they mature. (And indeed, that it’s not really a bailout in the traditional sense of dumping money into a company to replace actual losses.)

author: james_s
author_rank: Super Contributor
timestamp: March 14, 2023, 10:46:32 pm
content: The thing that annoys me about this whole thing is that it reflects a fundamental part of irrational human behavior that has always irritated me. If everyone pulls all their money out, a bank will fail, any bank. If people continue on as usual it's unlikely to fail, and it is insured by the government up to a value that no individual with any sense should have sitting in their account. People get worried about a bank collapsing, fear spreads and then these same people cause the bank to collapse in the rush to get their money out.

author: themadhippy
author_rank: Super Contributor
timestamp: March 14, 2023, 10:55:22 pm
content: what gets me is the bank expect the government to bail them out when things go bad,but try every trick in the book to keep every penny in there pockets when times are good

author: Sal Ammoniac
author_rank: Super Contributor
timestamp: March 14, 2023, 10:59:12 pm
content: "All we have to fear is fear itself" -- FDR

author: Sal Ammoniac
author_rank: Super Contributor
timestamp: March 14, 2023, 11:00:21 pm
content: Quote from: themadhippy on March 14, 2023, 10:55:22 pmPrivatizing the profits while nationalizing the risk is a common theme for business in the States.

author: bdunham7
author_rank: Super Contributor
timestamp: March 14, 2023, 11:07:32 pm
content: Quote from: tooki on March 14, 2023, 10:29:38 pmYou're proving my point by insisting that getting paid in full 6 years from now is effectively not taking a loss. That was maybe sort of true during ZIRP, but it isn't true at all now. Getting paid in full 6 years from now represents at least a 30% loss. That's why nobody rushed in to buy SVB even though by your rationale it looks like has positive value. It doesn't, it is completely and unequivocally under water.

author: tooki
author_rank: Super Contributor
timestamp: March 15, 2023, 08:12:33 am
content: You know that bonds pay interest, right? (But only if allowed to mature.)

author: iMo
author_rank: Super Contributor
timestamp: March 15, 2023, 09:29:01 am
content: Quote from: james_s on March 14, 2023, 10:46:32 pmThat would also allow that Ponzi_schemes/Airplain_games/Pyramid_schemes work fine forever..

author: m k
author_rank: Super Contributor
timestamp: March 15, 2023, 10:02:37 am
content: So you give us some millions as savings or something like that.We pay high interest but you can't pull out annually more than say 10%.We then put your millions to work by riskin'em highly.If we fail feds will bail you out, win-win.On the other hand, if feds are not bailing everybody out,all big cash piles must be in non investing money parks.It's a waste says a banker.

author: vk6zgo
author_rank: Super Contributor
timestamp: March 15, 2023, 12:26:30 pm
content: Quote from: bdunham7 on March 13, 2023, 12:07:26 amA really very silly "News" outlet in Oz says it wasn't any of those things-----it's because they were "woke"!

author: bdunham7
author_rank: Super Contributor
timestamp: March 15, 2023, 01:53:10 pm
content: Quote from: tooki on March 15, 2023, 08:12:33 amYes actually, I was aware that they paid interest. Were you aware that some bonds pay larger coupons (interest) than others?But 'allowing them to mature' makes no sense--you have no control over that and they pay their coupon as per their original terms no matter what you do.

author: tooki
author_rank: Super Contributor
timestamp: March 15, 2023, 06:21:17 pm
content: Quote from: bdunham7 on March 15, 2023, 01:53:10 pmOf course it makes sense: if you wait for it to mature, you make a predefined profit on it. If you redeem it prematurely, you lose big time.

author: bdunham7
author_rank: Super Contributor
timestamp: March 15, 2023, 06:26:33 pm
content: Quote from: tooki on March 15, 2023, 06:21:17 pmWhat I meant was that including that quote makes no sense when discussing treasury bonds. You can't 'redeem' them at all, you can only sell them to someone else. These don't work like savings bonds or retail CDs. They are going to pay their coupons according to their terms and no matter what action you might take, they return the principal at the end of their term and no sooner.

author: james_s
author_rank: Super Contributor
timestamp: March 15, 2023, 06:30:31 pm
content: Quote from: coppice on March 14, 2023, 10:07:11 pmYeah my parents house was a lot cheaper than mine, but their mortgage was around 18% interest while my is 2.75%, adjusted for inflation the total cost of mine is probably lower.

author: Gyro
author_rank: Super Contributor
timestamp: March 15, 2023, 06:39:38 pm
content: Credit Suisse, seems to be a bit iffy at the moment. Probably not an ideal week to choose to 'disclose "material weakness" in its accounting controls'.https://www.bbc.co.uk/news/business-64964881

author: coppice
author_rank: Super Contributor
timestamp: March 15, 2023, 07:29:14 pm
content: Quote from: Gyro on March 15, 2023, 06:39:38 pmCredit Suisse and Deutsche Bank have been teetering on the brink for years. It seems unlikely that either could survive significant turbulence in the market.

author: Gyro
author_rank: Super Contributor
timestamp: March 15, 2023, 08:15:10 pm
content: I didn't know about Deutsche Bank. I thought the EU, like the UK, had put strict liquidity rules and 'financial challenge tests' in place [Edit: following 2008]. Credit Suisse on the other hand have had a somewhat chequered history, scandal wise, lost money for the past two years and aren't predicting profitability until 2024 (that's probably a maybe now). Saudi Bank have said that they won't inject any more money.

author: Stray Electron
author_rank: Super Contributor
timestamp: March 15, 2023, 08:31:48 pm
content: Quote from: james_s on March 14, 2023, 10:46:32 pmI don't see what's irrational about that fear. Everyone is afraid that with everyone else taking money from the bank that if they delay getting their money that it will all be gone and they'll lose their savings. Yes, I know FDIC insures most individual accounts to $250,000 but many people (1) don't trust the government, (2) are afraid it will take months or years to be repaid (3) don't trust the government, (4) afraid that the US Gov or the FDIC will go broke and not everyone will be paid or (6) don't trust the government. In the US, we've all grown up with stories of the bank crash of 1929 and 1930 and how many people lost EVERYTHING so it drives our thinking. OTOH if the banks actually kept a significant portion of their deposits in the bank and on hand instead of playing financial Russian Roulette with it then people would be a little more inclined to trust the US banking system. But realistically, not a single day goes by that you don't hear of another bank, credit union, investment fund, Saving and Loan or other US financial institution that was been caught with their hand in somebody else's cookie jar.Until the banks and other institutions and their directors, managers, etc etc etc are all heldtruely accountable, no one is going to trust the current system.

author: TimFox
author_rank: Super Contributor
timestamp: March 15, 2023, 08:36:58 pm
content: 1. The statement "not a single day goes by" is far too absolute. Most single days go by without a US bank failure.2. For the usual accounts, < $250k by today's regulation, nothing has ever been lost to the depositor and the delays are minimal.3. The amount of reserves kept by banks (< 100%) is a matter of regulation, and the politics involves listening either to banks (to reduce the requirement) or bank critics (to increase the requirement). The results oscillate with a period determined by how long it takes to forget the previous problem.4. When the authorities do intervene on a failed bank, the shareholders and executives take the loss.

author: m k
author_rank: Super Contributor
timestamp: March 15, 2023, 08:49:14 pm
content: Quote from: Gyro on March 15, 2023, 08:15:10 pmI remember that Deutsche Bank and Societe Generale were pretty deep in Greece and Italy.Maybe there are still something left from there.

author: Gyro
author_rank: Super Contributor
timestamp: March 15, 2023, 09:28:52 pm
content: Ah yes, now that I read the DB wikipedia page, quite a lot of news stories come back to mind. Their exposure in Greece seems minimal now, but still Spain and Italy.

author: coppice
author_rank: Super Contributor
timestamp: March 15, 2023, 09:44:42 pm
content: Quote from: Gyro on March 15, 2023, 08:15:10 pmFrom a quick look it seems Deutsche Bank's position may have improved. The rating agencies considered them dodgy for a long time, but seem to have upgraded them a few months ago. Then again, the rating agencies are worth about as much as a campaign promise.

author: james_s
author_rank: Super Contributor
timestamp: March 15, 2023, 10:12:45 pm
content: Quote from: Stray Electron on March 15, 2023, 08:31:48 pmBut if they didn't all take the money out, everything would be fine and the bank wouldn't fail. It is their fear-driven actions that directly cause it to fail.

author: Gyro
author_rank: Super Contributor
timestamp: March 15, 2023, 10:41:58 pm
content: Yes it is. Unfortunately you're arguing against human nature though and there's no wayanyone'sgoing to change that.

author: VK3DRB
author_rank: Super Contributor
timestamp: March 16, 2023, 01:38:32 am
content: Global debt is > USD $300 TRILLION, according to the IMF in 2021. This can never be repaid. When the house of cards starts to fall, it will be catastrophic. This will once again be a precursor to global war.Now, there is a big positive side to this... 555 timers will drop in price

author: EEVblog
author_rank: Unknown
timestamp: March 16, 2023, 02:15:08 am
content: Credit Suisse will be lucky if it has 24 hours left.The CDF market yesterday priced in a 30% chance of them defaulting, today it's up to 50%. The Saudi's said no more money for you.

author: themadhippy
author_rank: Super Contributor
timestamp: March 16, 2023, 02:22:36 am
content: QuotePaid for on the country's credit card

author: james_s
author_rank: Super Contributor
timestamp: March 16, 2023, 02:52:11 am
content: Quote from: VK3DRB on March 16, 2023, 01:38:32 amThey pretty much just have to start over. I don't know what will happen but it's not going to be fun. Hopefully it occurs after I'm gone, no civilization lasts forever.This is actually part of the reason I don't have much interest in going to Mars and such, I think the human race, or at least modern society will collapse long before we manage to develop the technology to travel to some other habitable planet. Humans have existed for only an extremely brief portion of the history of the earth and we will likely be gone long before the earth is.

author: bdunham7
author_rank: Super Contributor
timestamp: March 16, 2023, 03:48:01 am
content: Quote from: EEVblog on March 16, 2023, 02:15:08 amYikes, I hope not--I have some CS bonds. The CDS market itself will be in turmoil as banks and instutional investors whoneedto be hedged have to pay the price. Much more is priced in than the likelihood of defaul and CDS sellers are probably raking in absolutely huge premiums. The bonds themselves were only trading at a 10-15% discount today, if that, in a turbulent but illiquid market that had a lot of one-sided trade books (either only an offer to sell or buy, not both). But as far as CS going down, the Swiss National Bank has stepped in and said CS has a very strong capital position and even if they have a run, SNB will 'provide liquidity', meaning they'll fire up the forklifts in the bullion warehouse if need be. CS failing would wipe out the Swiss as a banking center even if the depositors were made whole, so I'm guessing any and all efforts will be made to prop it up. Beirut used to be a big financial center. Zurich does not want to become Beirut. If CS fails I think we'll be on the way to a crisis worse than 2008.The Saudis did say they were done, but also cited regulatory reasons as they currently hold 9.9% after putting in a few billion more. Of course they may be glad to have that excuse.

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 16, 2023, 04:15:53 am
content: Quote from: james_s on March 16, 2023, 02:52:11 amDon't you already see what is happening?

author: Rick Law
author_rank: Super Contributor
timestamp: March 16, 2023, 04:36:44 am
content: Quote from: Stray Electron on March 15, 2023, 08:31:48 pmIt is beyond merely holding institutions and their directors accountable. Before that, there are other criteria we must achieve first -- they must get their priority right and get people who knows what they are doing. Both for the feds and for businesses.Are we/they watching the ball carefully? I submit no. As recent as March 7, the feds didn't see it coming. On March 7, the Treasury department head (Secretary of the Treasury Janet Yellen) was delivering a speech to the Financial Risk Advisory Committee about "the risks that climate change poses to U.S. financial stability". Granted, she probably can multi-task and look at more than one thing at a time. How come this Treasury Bond liquidity issue came as a surprise whey they also control the interest rate? Interest rate is probably the most if not the only thing that controls Treasury Bond value, other than USA declaring bankruptcy. Who on her staff should be telling her: "Don't do it! This is like worrying about the weather insulation may not be adequate come next winter while the building is currently on fire and is about to flashover. Deal with the fire first!" Anyone?As for business, just the fact that they have been running 8 months without a CRO (Chief Risk Management Officer)said it all.In seeing what I just listed above, my opinion is both the feds and SVB (and the likes) are either incompetent or they simply don't knew what they are doing.Footnote: Press release where I drawn the quote:https://home.treasury.gov/news/press-releases/jy1325 SVB running without a CROhttps://fortune.com/2023/03/10/silicon-valley-bank-chief-risk-officer/

author: BravoV
author_rank: Super Contributor
timestamp: March 16, 2023, 05:41:05 am
content: The whole Western economies are collapsing, all printing money like crazy USD or EUR, the only way out is to launch nuke attack "simultaneously" on Russia and China.On Western front, EU/NATO cannon fodders will go 1st to sacrifice them self for the sake of freedom and democracyon destroying the evil Russia, while on the East front, the "mighty" Australians (now with nuke subs) with Japan, S.Korea and "cute" cannon fodder like Philippine will self sacrifice them self 1st for the sake of freedom and democracy .. of US, of course.US will be protected at both fronts, will stay safe and untouched watching from far far away giggling that the big problem of economy will be reseted and fixed, yay ... no more national debt.

author: ejeffrey
author_rank: Super Contributor
timestamp: March 16, 2023, 06:05:56 am
content: Quote from: Stray Electron on March 15, 2023, 08:31:48 pmYes, exactly all of that is the part that is irrational.When banks have failed since the FDIC was created, insured people have access to their money within a handful of days, not weeks or months. It's easy to look that stuff up. Even beyond the 250k legal limit, when the FDIC manages the liquidiation of a failed bank like SVB they put themselves on behalf of depositors as the highest priority creditor, above even secured creditors. That is basically how almost everyone is going to get their money back from SVB -- because they are in line ahead of bondholders.Also, while financial failure of the US government would be a serious problem, if you are an American living in the US it's not materially worse if you withdrew your money from the bank before it failed or not. That's the principle of sovereign debt.So yes, it's irrational panic. That isn't to say that SVP didn't have bad practices, and maybe they deserved to fail. But a bank run is basically by definition irrational panic, and that's why the FDIC was created. Banks are incredibly useful, but even the best run bank could be destroyed in a panicked bank run and frequently was before the FDIC.QuoteIf you are suggesting that banks not lend or invest depositors money, including longer term investments that would be tremendously unhelpful, defeat the purpose of banks and more or less permanently end economic growth. If you are saying that we shouldn't let banks write the rules on risk management for banks, then I totally agree.

author: EEVblog
author_rank: Unknown
timestamp: March 16, 2023, 07:06:14 am
content: So the US federal government shuts down a Signature Bank and stipulates that the bank that buys it not be involved in crypto in any way? (presumably also going forward?)How is this not a direct federal government attack on the crypto industry?CBDC conflict of interest much.The rug pull is in plain sight.https://www.coindesk.com/policy/2023/03/16/signature-banks-prospective-buyers-must-agree-to-give-up-all-crypto-business-report/

author: james_s
author_rank: Super Contributor
timestamp: March 16, 2023, 07:08:26 am
content: Quote from: ejeffrey on March 16, 2023, 06:05:56 amWhat if they were to limit the rate at which money could be withdrawn? I suppose that would cause all manner of other problems. The problem happens when too many people withdraw too much too rapidly.

author: iMo
author_rank: Super Contributor
timestamp: March 16, 2023, 07:38:45 am
content: Quote from: james_s on March 16, 2023, 07:08:26 amThat is a common practice, at least in Europe. They also limit/stop withdrawals from ATMs first. The problem is whether the bank's bosses are ready to make this kind of decision early enough, as the setting the limits actually publicly indicates the bank is a crap.

author: wilfred
author_rank: Super Contributor
timestamp: March 16, 2023, 07:51:16 am
content: Quote from: EEVblog on March 16, 2023, 07:06:14 amWasn't the whole point of crypto so those involved in crime and money laundering could do it safely hidden from bank system regulation?When ordinary bank depositors are at additional risk from crypto rot in the banking system they might be glad of the no crypto edict.

author: EEVblog
author_rank: Unknown
timestamp: March 16, 2023, 09:58:45 am
content: Quote from: wilfred on March 16, 2023, 07:51:16 amNo. It was so individuals could be free from central banking fiat systems. Blackchain based crypto by its very nature is 100% traceable, that's the point of it.Criminals have to jump through a lot of hoops to avoid detection using it.QuoteThat's not the real reason though.

author: tom66
author_rank: Super Contributor
timestamp: March 16, 2023, 10:26:19 am
content: Quote from: EEVblog on March 16, 2023, 07:06:14 amMeh. We've had so many try to make crypto a success and all I see is one scam after another. Any financial industry would be shaken by a major bank collapsing but effectively from crypto in the space of just a decade we've seen Terra/Luna crash, FTX completely implode, Celsius bankruptcy, Mt.Gox theft, numerous rug pull coins, and many more. There's a reason banks are regulated, and if crypto is to succeed it will need to be tightly regulated, which kinda defeats the whole point so I'm not sure whether crypto in the current form ever makes any sense except for criminal activity.

author: EEVblog
author_rank: Unknown
timestamp: March 16, 2023, 10:36:38 am
content: Quote from: tom66 on March 16, 2023, 10:26:19 amCrypt is a direct threat to governments and their coming CBDC's, they'll take every opportunity they can to shut it down.

author: tom66
author_rank: Super Contributor
timestamp: March 16, 2023, 10:49:47 am
content: Quote from: EEVblog on March 16, 2023, 10:36:38 amA decentralised system will still need some kind of financial regulation. What the current experiment with crypto has shown is it is not sustainable to expect the market to regulate itself.

author: EEVblog
author_rank: Unknown
timestamp: March 16, 2023, 12:39:48 pm
content: Quote from: tom66 on March 16, 2023, 10:49:47 amIn this case it's not regulation, it's an attempt at active supression.

author: coppice
author_rank: Super Contributor
timestamp: March 16, 2023, 01:32:38 pm
content: Quote from: tom66 on March 16, 2023, 10:49:47 amNobody has ever come up with a decentralised financial system. They like to talk about crypto as decentralised, but every scheme proposed so far has a choke point where people can take control.

author: coppice
author_rank: Super Contributor
timestamp: March 16, 2023, 01:34:44 pm
content: Quote from: EEVblog on March 16, 2023, 12:39:48 pmWhile governments don't like crypto, can you really expect a government to bail out a bank that got in trouble through crypto, and hand it back to the volatile crypto world to rinse and repeat?

author: tom66
author_rank: Super Contributor
timestamp: March 16, 2023, 01:53:13 pm
content: Quote from: coppice on March 16, 2023, 01:32:38 pmWell, there are crypto systems that are entirely decentralised. You can buy and sell Bitcoin without a central authority. That's the whole point of Bitcoin after all.The problem is how to make that function in the real world - you have payment dispute, fraud, theft, and the like. For those the only way to resolve the issue is to add an authority, or to accept that it is a cost of buying and selling. This might work for crypto-enthusiasts, but I imagine Joe Public will struggle with the idea.The secondary issue is many cryptotokens that function in a truly decentralised manner, like Bitcoin, have absurd power requirements to maintain the mining rate. It has to be very difficult to make new tokens, or the currency loses value quickly as hardware escalates in compute power. Alternatives based on proof-of-storage (e.g. Chiacoin) have a similar issue, with a significant amount of hard drive supply at one point being taken up by storage miners. Ethereum is now proof-of-stake which is a good thing from energy consumption but means the largest owners of tokens on the network can control the network creating the risk of a fork and destabilising the currency.

author: bdunham7
author_rank: Super Contributor
timestamp: March 16, 2023, 01:57:37 pm
content: Quote from: james_s on March 16, 2023, 07:08:26 amIf they try to change the terms retrospective of the deposit you can expect a full blown panic and a spot on the evening news. To reduce the 'runnability' of a deposit portfolio, the bank has to offer time deposits that are either less likely to be withdrawn (retail CDs) or are impossible to withdraw early (brokered deposits). Of course they have to pay more for that money. If you can get billions of deposits in non-interest bearing transactional accounts you can make more profit. Risk? Oh, we fired that guy and haven't replaced him.

author: coppice
author_rank: Super Contributor
timestamp: March 16, 2023, 02:05:04 pm
content: Quote from: tom66 on March 16, 2023, 01:53:13 pmAs it says on the Wikipedia page, "A network of communicating nodes running bitcoin software maintains the blockchain.". Attack those, and you have control. Maintaining the blockchain, so its thorough but doesn't explode in size through a myriad of tiny transactions, is the Achilles heal of blockchain systems. They are not as distributed as they are portrayed.

author: bdunham7
author_rank: Super Contributor
timestamp: March 16, 2023, 02:05:51 pm
content: Quote from: tom66 on March 16, 2023, 01:53:13 pmThey really aren't decentralized. The terms and code of Bitcoin have been changed several times by a committee. It is an oligolopoly at best, a wretched hive of scum and villainy at worst. North Korea, child pornographers, hit men and drug dealers along with SBF and the Winkelvoss twins. Bitcoin has merely gone from obscure low-level dirtbag usage to global crisis level criminal usage.

author: Bud
author_rank: Super Contributor
timestamp: March 16, 2023, 02:13:59 pm
content: How's that different from your street corner bank? Every bank has an Anti-Money Laundering (AML) department and Fraud department for a reason, to let you know.

author: Bud
author_rank: Super Contributor
timestamp: March 16, 2023, 02:15:38 pm
content: Quote from: coppice on March 16, 2023, 02:05:04 pmWhat control ?

author: coppice
author_rank: Super Contributor
timestamp: March 16, 2023, 02:20:18 pm
content: Quote from: Bud on March 16, 2023, 02:15:38 pmHe who manages the ledger controls the ledger. He who controls the ledger controls what's on the ledger.

author: tom66
author_rank: Super Contributor
timestamp: March 16, 2023, 02:27:10 pm
content: Quote from: coppice on March 16, 2023, 02:20:18 pmBut you could only do that with 50% of the nodes in your evil network. That's the whole point of the blockchain authentication which is performed by miners on the network. It's impractical to take control of so many nodes.Ignoring the outrageous power consumption of operational Bitcoin, it is a genuinely novel and smart solution to decentralised currency. But it doesn't scale. It handles a couple of transactions a second, compared to Visa/Mastercard processing something like 20k per second, but Visa/Mastercard do that with about 10 datacenters (power consumption ~100MW total) whereas at last count Bitcoin was running at around the power consumption of Czechia!Quote from: bdunham7 on March 16, 2023, 01:57:37 pmThe other problem at least in case of companies using banks like SVB is it's quite reasonable to draw a significant amount of cash in a business account down, e.g. to run payroll. If you say max 10% of balance can be withdrawn per day, then payroll becomes non-viable for some companies.

author: coppice
author_rank: Super Contributor
timestamp: March 16, 2023, 02:36:47 pm
content: Quote from: tom66 on March 16, 2023, 02:27:10 pmA committee made changes to how bitcoin works. We are living through a period where many august ancient institutions have been turned upside down by activists getting into the controlling positions. What makes bitcoin immune. Its actually the MOST centrallsed form of finance. One committee rules them all.

author: james_s
author_rank: Super Contributor
timestamp: March 16, 2023, 04:43:29 pm
content: Quote from: EEVblog on March 16, 2023, 10:36:38 amMy problem with crypto is the massive amount of energy wasted mining it. I am fundamentally bothered by the idea of expending HUGE amounts of electricity to run hardware that does useless busy work, and that alone is enough that I personally would like to see the whole thing shut down. It is far too volatile to be useful as currency, most of the economic activity and profits are from just speculating on the currency itself.

author: coppice
author_rank: Super Contributor
timestamp: March 16, 2023, 04:50:18 pm
content: Quote from: james_s on March 16, 2023, 04:43:29 pmThey are trying to move these crypto systems from proof of work to proof of stake, although it might be steak as the whole idea seems BS.

author: vad
author_rank: Frequent Contributor
timestamp: March 16, 2023, 04:55:30 pm
content: Quote from: EEVblog on March 16, 2023, 09:58:45 amBitcoin is a blockchain crypto. Bitcoin transactions are 100% traceable to bitcoin wallet, but are completely untraceable to the wallet owner.For example, it is known that the largest bitcoin wallet with 1.1 million BTC belongs to Bitcoin creator, but the identity of the creator is still disputed.Criminals use crypto extensively to safely defraud victims, while hiding their identity.

author: Bud
author_rank: Super Contributor
timestamp: March 16, 2023, 05:18:58 pm
content: Quote from: coppice on March 16, 2023, 02:20:18 pmYo can't change (tamper with) what is on the ledger because you do not have everyone's private keys and the private keys for every single record on the ledger. The hash of Each given record is fed into the next record and becomes part of the next record which is hashed with the next transaction owner's private key. This is where the "chain" term of the blockchain comes from.And you can't "control" the ledger because there is no central copy of it, every participant gets a latest copy.

author: coppice
author_rank: Super Contributor
timestamp: March 16, 2023, 06:26:31 pm
content: Quote from: Bud on March 16, 2023, 05:18:58 pmI suppose you would have expected the Maginot line to hold, too. You have addressed the obvious bits, where the system is clearly solid unless you can break some very basic things like the public key system used. That currently seems intractable. That probably means you could never tamper with what is well established in the blockchain. What gets into the blockchain is another matter. All the existing crypto systems have problems combining sufficiently fine granularity with a sufficiently compact blockchain. That's where most of the current development work is expended, and its also where most of the weakness to control freaks like politicians and bankers lie.

author: bdunham7
author_rank: Super Contributor
timestamp: March 16, 2023, 06:34:41 pm
content: Quote from: Bud on March 16, 2023, 05:18:58 pmEditing the already existing blockchain is not the mode of attack you worry about. The miners determine what get's added to the ledger in each block. The nodes decide whether or not to accept a new block as posted by a miner. Control or tamper with either and you control future blocks. You don't need to control all of them, just enough to cause a meaningful fork.

author: floobydust
author_rank: Super Contributor
timestamp: March 16, 2023, 07:15:01 pm
content: Engineers have to be honest with themselves and their work, to be any good with the Art.Politicians, banks, investors etc. on the other hand have to be as corrupt as possible - up to a point.So I doubt EE's will ever understand what is actually going on.The ultimate bank is corrupt and adept at money laundering, high risk shady derivatives, shell games giving inflated asset/return numbers and anonymity enabling tax evasion etc.Look at historical charges and fines for Deutsche Bank, Credit Suisse and if we think SVB was just a little management mistake- of course there's criminal activity under the veneer.Why else install a board of clowns and have no risk official - it's the best way to undermine an institution allowing the mob to party. Look at business news:Forbes annual ranking "America's Best Banks" SVB on there for the past 5 years in a row.CNBC's Jim Cramer last month Feb. 8 "Buy SVB!",Buy Signature Bank!, First Republic Bank "FRC is new focus... very good bank".Kevin O'LearyblastsSVB's "negligent board of directors' with idiot management". Fox News Sean Hannity flat-out asks the SVB depositor ‘Why did you keep your money there if it was run by idiots?’ CRICKETS, DODGE ANSWER lmao. Cockroaches scurrying.Looking atUS indictmentsinvolving crypto currencies and exchanges, it's massive fraud, money laundering, Ponzi scheme layers. Crypto is not an answer to corruption.

author: coppice
author_rank: Super Contributor
timestamp: March 16, 2023, 08:43:38 pm
content: Quote from: floobydust on March 16, 2023, 07:15:01 pmCome on. Its Jim Cramer. Everyone knows when he says "Buy SVB" he's just mispronouncing "bye bye SVB".

author: HuronKing
author_rank: Frequent Contributor
timestamp: March 16, 2023, 08:48:12 pm
content: Quote from: coppice on March 16, 2023, 08:43:38 pmI wouldn't put any real money towards it... but I've enjoyed a few beers on trades from inversing whatever Cramer says.

author: TimFox
author_rank: Super Contributor
timestamp: March 16, 2023, 08:56:36 pm
content: Quote from: HuronKing on March 16, 2023, 08:48:12 pmAt my broker's office, but not in writing, they all believe that trading on the inverse of Cramer's recommendations is a good strategy.

author: HuronKing
author_rank: Frequent Contributor
timestamp: March 16, 2023, 09:41:08 pm
content: Quote from: TimFox on March 16, 2023, 08:56:36 pmThey don't need to keep it so secret anymore I guess - there is an actual Inverse Cramer ETF trading as SJIM that started a few days ago:https://www.marketwatch.com/investing/fund/sjim

author: bdunham7
author_rank: Super Contributor
timestamp: March 16, 2023, 09:43:50 pm
content: Quote from: TimFox on March 16, 2023, 08:56:36 pmThere's actually an ETF for that now.SJIM(Short JIM) "Inverse Cramer Tracker", and it is real. I bought a share just so I can track it. So far it has made a small bit of money. Fidelity lists it as a 'designated investment' meaning you have to read a disclaimer before buying it and acknowledge that the broker is not recommending it.https://www.google.com/finance/quote/SJIM:BATS?sa=X&ved=2ahUKEwj-s5SktOH9AhXhLkQIHZTrAKgQ3ecFegQIChAg&window=1M

author: floobydust
author_rank: Super Contributor
timestamp: March 16, 2023, 10:19:32 pm
content: I'll never forget this screencap of the Jim Cramer show from early in the pandemic. It just shows what Wallstreet and him are about. Greedy scum manipulating the masses.The business press minimizing the SVB failure, is a bit surprising. I thought they would help push for bank regulation to get fixed- although both the Clinton and Trump admin's loosened them up for obvious corrupt reasons.

author: Marco
author_rank: Super Contributor
timestamp: March 17, 2023, 02:59:43 am
content: Quote from: VK3DRB on March 16, 2023, 01:38:32 amGlobal paper debt is 300 Trillion, but the economy functions functions quite well regardless.Internal sovereign debt is not all that important, look at Japan. BoJ just puts whatever the market doesn't want on its balance sheet and bob's your uncle. Demographics are a far greater threat to Japan than debt/GDP ratio. Now of course when that sovereign debt is on bank balance sheets and the interest rates rise, that is a problem ... so what is the solution?I have a solution, end private consumer banking. Transfer demand deposits to the central bank as well as marked to market assets necessary to cover them (banks without sufficient assets get liquidated). The central bank then provides CBDC, aka. central bank run full reserve consumer banking. The central bank can then slowly auction off the assets to investors once everyone stops panicking.Fractional reserve banking is more trouble than it's worth. If people want to invest let them invest, don't use demand deposits for it.

author: jonovid
author_rank: Super Contributor
timestamp: March 17, 2023, 03:40:04 am
content: had a look under the bed. just not the space for hoarding more gold and silver.as for Cramer's recommendations are like re-shuffling deck chairs on the titanic.

author: vk6zgo
author_rank: Super Contributor
timestamp: March 17, 2023, 03:50:27 am
content: Quote from: jonovid on March 17, 2023, 03:40:04 amYou can't put it under the bed---that's where the Commies are!

author: vk6zgo
author_rank: Super Contributor
timestamp: March 17, 2023, 03:56:35 am
content: By the way, & completely off topic.Do you know the difference between a Rich Scotsman, a poor Scotsman & a dead Scotsman?A rich Scotsman has a canopy over his bed.A poor Scotsman has a "can o' pee" under his bed.&A dead Scotsman cannae pee at all.

author: tooki
author_rank: Super Contributor
timestamp: March 17, 2023, 07:51:28 am
content: Quote from: james_s on March 16, 2023, 04:43:29 pmI was just discussing this with a friend last night (who didn’t know about this issue), and I came across the figure of it taking 1200kWh to process a bitcoin transaction.And that the entire bitcoin network uses more power than Argentina.Apparently, a lot of mining is now done on custom ASICs whose useful lifespan is just 1.3 years before it’s no longer economical to run. So mining a bitcoin also creates lots of e-waste.I think it’s crazy, when you think that this nonsense has wiped out all of the progress made by e.g. mandating very low standby current on chargers at idle. Our poor little planet can’t handle bitcoin’s future.

author: vad
author_rank: Frequent Contributor
timestamp: March 17, 2023, 05:56:26 pm
content: Quote from: tooki on March 17, 2023, 07:51:28 amI wonder how this compares to resource wastage and environmental impact of gold mining.

author: TimFox
author_rank: Super Contributor
timestamp: March 17, 2023, 06:34:30 pm
content: Back to the SVB failure:I accidentally posted this comment to another thread, but it belongs here.Several right-wing American politicians stated that SVB failed due to "wokeness".The New York Times fact-check department, pooping the party, checked the normal "D&I" and "ESG" scorekeepers for the financial industry and found SVB parked right near the middle/median of its peer group.Facts are for losers.Blaming risk management is always easy in hindsight.In foresight, risk management, like safety, is often considered a cost center, rather than prudent management.However, there are some risk management algorithms and tools that may not use appropriate statistical distributions: the risk probability of future not-yet-announced interest-rate changes may not be normally distributed.

author: HuronKing
author_rank: Frequent Contributor
timestamp: March 17, 2023, 06:47:20 pm
content: Adding to what you said Tim - it's also sometimes the case that lack of risk management isn't a bug caused by some other external factor, but a feature for the rich to get richer as quickly as possible before the whole thing comes crashing down while they bail out with golden parachutes and often move on like locusts to the next company to rinse and repeat.Enron was giving bonuses to executives moments before the whole thing went to hell:http://www.cnn.com/2002/LAW/02/09/enron.bonuses/index.html#:~:text=The%20list%20of%20so%2Dcalled,to%20give%20them%20severance%20packages.Enron is one of the rare cases where the perpetrators were punished, somewhat.Remember Wells Fargo? Coincidentally it's just coming back in the news again.https://apnews.com/article/wells-fargo-sales-scandal-carrie-tolstedt-guilty-013f744a811b741560b466a7b8e203dc

author: Marco
author_rank: Super Contributor
timestamp: March 17, 2023, 06:53:55 pm
content: Quote from: vad on March 17, 2023, 05:56:26 pmIt would be pretty disastrous to back a major currency with gold again too, yes.Proof of Work Crypto and gold are negative sum games, proof of stake at least is only a zero sum game.

author: james_s
author_rank: Super Contributor
timestamp: March 17, 2023, 07:05:40 pm
content: At least gold is useful. It's a tangible substance, it is in limited supply, it has always had value and it will always have value because people want it. Not only because of scarcity but because it is such useful stuff. It's a good conductor of electricity, a superb reflector of IR radiation, and it is extremely resistant to oxidation and corrosion.

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 17, 2023, 07:08:32 pm
content: Some countries have been buying large amounts of gold this past decade (hint: not western countries), while we have done everything to get rid of it.I'm sure they did it just because they don't know what they are doing.And my little finger is telling me that whoever is going to be better off in the coming decade is... not us.Of course if things go really sour in that context, you can guess what's going to happen. It already has, in fact.

author: vad
author_rank: Frequent Contributor
timestamp: March 17, 2023, 07:28:30 pm
content: Quote from: james_s on March 17, 2023, 07:05:40 pmIndustrial gold demand is a tiny fraction of overall gold demand. Therefore scale of gold mining does not justify waste of resources and environmental damage.Bitcoin is also in limited supply and in high demand.

author: TimFox
author_rank: Super Contributor
timestamp: March 17, 2023, 07:29:54 pm
content: Quote from: HuronKing on March 17, 2023, 06:47:20 pmI never understood what Enron was supposed to be doing.In the court proceedings, apparently they weren't doing anything except accepting funds.This is far from novel: look at the history of Dr. Frederick A Cook, the arctic explorer.He may have been the best expedition physician of his day, serving on an early voyage of Peary and on the ill-fated voyage of the Belgian antarctic expedition, where he probably saved the crew, including Roald Amundsen.(Of course, Amundsen is remembered as the first man to achieve the South Pole, beating Scott in a two-expedition race by a month.Amundsen took unfair advantage, being competent and already knowing how to ski before arriving on Antarctica.Amundsen remained a friend, even after Cook's imprisonment mentioned below.However, most of Cook's later exploits, including an announced visit to the North Pole, are no longer believed, along with the alleged visit by Peary.The only well-documented sled trips to the North Pole are much later, in 1986 [one-way] and 1995 [two-way]. These were after the first genuine surface trip, on snowmobiles, in 1968.)Cook was convicted in 1923 with a long prison term for deceptive practices in the Texas oil patch, with the Texas Eagle corporation of Fort Worth, including paying dividends from stock sales instead of profits.Some believe the prosecution was politically biased against him, since there were lots of operations doing much the same thing at the time.Reference: R M Bryce,Cook & Peary: the polar controversy, resolved, Stackpole, 1997

author: Marco
author_rank: Super Contributor
timestamp: March 17, 2023, 07:38:09 pm
content: Quote from: SiliconWizard on March 17, 2023, 07:08:32 pmWell in retrospect it was a pretty bloody disastrous investment.They could have many times more gold now, hindsight is of course 20 20.

author: coppice
author_rank: Super Contributor
timestamp: March 17, 2023, 08:03:38 pm
content: Quote from: TimFox on March 17, 2023, 07:29:54 pmEnron's basic principal of operation was dynamic pricing of energy down to the consumer level. I was approached about a project for this. They needed ultra low power consumption meters for customer's premises that could operate for long periods from a modest sized battery, providing reliable exchanges of pricing and consumption information with rapid updates. When I enquired whether this was a second generation the answer was basically that it would be the first. When I asked how Enron was currently operating there were crickets. I didn't take it beyond that.

author: james_s
author_rank: Super Contributor
timestamp: March 17, 2023, 08:06:40 pm
content: Quote from: tooki on March 17, 2023, 07:51:28 amYes we could totally forget about crypto and then we could forget about all the environmental stuff and just go back to the way everything was in say the 90s and it would all be a wash. Kind of a depressing thought isn't it? All of our efficiency gains are just wiped out by some other use of energy, our overall consumption just keeps rising. A lot of the people I know that talk a lot about "green" stuff are also the ones that are into crypto ironically.

author: EEVblog
author_rank: Unknown
timestamp: March 18, 2023, 01:37:35 am
content: Quote from: james_s on March 17, 2023, 08:06:40 pmThere are a lot of crypto systems that don't use much power at all.I posted the numbers once for LBRY/Odysee. The miners that keep the system running use very little power in the scheme of things.

author: EEVblog
author_rank: Unknown
timestamp: March 18, 2023, 01:39:45 am
content: Quote from: Marco on March 17, 2023, 06:53:55 pmWhy?You just have to peg a ratio.Does mean you can't just print more out of thin air though, and well, they can't give up that magic ability.

author: nctnico
author_rank: Super Contributor
timestamp: March 18, 2023, 01:53:10 am
content: Quote from: EEVblog on March 18, 2023, 01:39:45 amThe latter is because you need to adjust the amount of money to the size of economy and add some inflation on top. Otherwise everything grinds to a halt. You can't back money with some physical item that is in limited supply (whether it is gold, crypto, sea shells, etc). In the end money represents an amount of work. The more people work, the more money you need and hence the need to being able to print more money.Imagine a village which has 1kg of gold. Now the population doubles and twice as many people need to buy bread. With only 1 kg of gold it means that the amount of gold that used to pay for 1 bread now has to be worth 2 breads. And the people that have extra gold will sit on it instead of investing their gold into more economic growth so even less is available for use in the economy. Hyper deflation! 'Pegging a ratio' goes flying out of the window!Bottom line: you really need to let go of the idea that money is actually worth something tangible. It isn't. It is a bartering tool to exchange labour. In the end any value of money is created by somebody doing work.

author: EEVblog
author_rank: Unknown
timestamp: March 18, 2023, 02:35:37 am
content: Quote from: nctnico on March 18, 2023, 01:53:10 amGold backed currencies worked quite fine for a long time. You can build some inflation into your ratio peg.The idea is to stop, or at least put the brakes on the modern theory of just printing your way out of problems instead of actually solving them. e.g. Let's actually cut back on military spening this year to pay for all this covid stuff. Radical thought, I know.

author: RJSV
author_rank: Super Contributor
timestamp: March 18, 2023, 02:45:43 am
content: Yeah, I don't follow the logic, exactly, but seems to make sense, (the above discussion on GOLD based economies).However, I DID pick up on the fact that, Janet Yellen etc.al. were warned. "DON'T do these massive spending, as inflation will, predictably, skyrocket."But then, Yellen saying "Gee, we had no idea or warning, that this (runaway inflation) could ever happen."It all sounds just so fresh-faced and innocent, as she (they) shrug off any responsibility. It's just "Whoops, must have been something Trump did...They were warned, plenty.

author: nctnico
author_rank: Super Contributor
timestamp: March 18, 2023, 02:47:10 am
content: Quote from: EEVblog on March 18, 2023, 02:35:37 amThat is a bad idea and exactly why gold (or whatever) backed systems don't work. If you print extra money, you can get people to work on military stuff and improve (increase) the economy which in turns backs the value of the extra money. Government debt is only a problem when people stop to work so there is some carefull planning required (and why we have a limit on the debt versus GDP ratio in the EU). In a way you can even doubt government debt is an actual debt; more likely bookkeeping to show how much money was printed.

author: EEVblog
author_rank: Unknown
timestamp: March 18, 2023, 03:02:56 am
content: Quote from: nctnico on March 18, 2023, 02:47:10 amBe careful playing the Modern Monetary Theory game:

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 18, 2023, 03:05:59 am
content: Oh yeah, that is working very well indeed!

author: Rick Law
author_rank: Super Contributor
timestamp: March 18, 2023, 03:23:06 am
content: Quote from: TimFox on March 17, 2023, 06:34:30 pm(bold added)First, to Mr. TimFox. In quoting you this way, it may appear I am arguing with you. That is not my purpose. I am however (respectfully) borrowing your words to point out how SVB failed their given mission. No argument intended.re:Several right-wing American politicians stated that SVB failed due to "wokeness".That is probably because SVB was very outspoken about it. Hiring based on equality, loaning based on equality, so forth. Having a DEI department itself is not the issue. The outspokenness on the issue suggests that they deem it more important than other less high-lighted issues.re:Blaming risk management is always easy in hindsight.Most if not all accounting department functions are on the costs side of the ledger. If everybody pay their bills and did the numbers right, the math should automatically work out. Most company have accounting department because they know "relying on it to just automatically add up right" is too risky.For a bank that is heavy on the investment side, not having a CRO (Chief Risk Management Officer) is inexcusable. It suggest theybelieve that investment of any kind will always work out, profit will just keep coming. The need to distinct good investments vs bad investments should be in their DNA, their reflexes, their prefrontal cortexes, and their muscle memory 24/7.Putting both quoted points together, it paints a very dark picture. It gives the appearance that idealistic empty brains are running that organization.SVB's mission statementin their own word is ""Our mission is to increase the probability of our clients' success." How on earth do they expect to accomplish their mission with these kinds of decision making? Only an empty-brain would decide like that for their given mission.

author: james_s
author_rank: Super Contributor
timestamp: March 18, 2023, 06:36:49 am
content: Quote from: Rick Law on March 18, 2023, 03:23:06 amI haven't looked but I suspect they were hiring, loaning, etc based on *equity*, it sounds a bit like equality but is anything but.

author: nctnico
author_rank: Super Contributor
timestamp: March 18, 2023, 11:09:38 am
content: Quote from: EEVblog on March 18, 2023, 03:02:56 amAnd? You can always prove that some governments are not able to rule / regulate their country properly. That doesn't make monetary money flawed. Are cars fundamentally flawed because some people crash them into a tree? IOW: you a using a straw man argument here.

author: vk6zgo
author_rank: Super Contributor
timestamp: March 18, 2023, 11:54:46 am
content: Quote from: EEVblog on March 18, 2023, 01:39:45 amWhen the Spanish, in the 15th Century, started looting those societies in the New World which had a lot of already processed gold & silver, as well as establishing new mines, "treasure ships" full to the gunwales with precious metals streamed back to Spain, initially to great joy & celebration, but the huge increase in the quantities of gold & silver held in that country soon caused a fall in their value.This lead to inflation, which in time, spread across Europe.https://en.wikipedia.org/wiki/Price_revolution.

author: vad
author_rank: Frequent Contributor
timestamp: March 18, 2023, 02:57:27 pm
content: Quote from: EEVblog on March 18, 2023, 03:02:56 amDave, what makes you believe that Robert Mugabe's regime followed any modern economic theory at all?USSR, on the other hand followed Marxist theory and played the Gold Standard game.Each ruble had equivalent of 0.987412 grams of pure gold between 1961 and 1991.Here is a picture of typical Soviet grocery from late 1980s:Correct me if I am wrong. US dollar was pegged to gold when Great Depression began, was not it?

author: iMo
author_rank: Super Contributor
timestamp: March 18, 2023, 03:08:49 pm
content: Germany 1923..

author: nctnico
author_rank: Super Contributor
timestamp: March 18, 2023, 03:32:24 pm
content: Keep in mind that gold being valuable is just an imprint in western culture. Like a religion obsessing over a tangible object instead of an imaginary deity.

author: tom66
author_rank: Super Contributor
timestamp: March 18, 2023, 04:02:39 pm
content: Quote from: EEVblog on March 18, 2023, 03:02:56 amHung on my living room wall, my father grew up in Rhodesia (to Dutch/South African parents) and left just after it became Zimbabwe. He left it in his will to me.(He may have had a few, err, "opinions" about Mr Mugabe.)

author: tooki
author_rank: Super Contributor
timestamp: March 18, 2023, 04:26:01 pm
content: Quote from: vad on March 18, 2023, 02:57:27 pmWell yes, it was, but it was pegged to gold for decades before and after, too. (1900-1971 pegged to gold, 1792-1900 pegged to a mix of gold and silver.)

author: coppice
author_rank: Super Contributor
timestamp: March 18, 2023, 04:26:55 pm
content: Quote from: nctnico on March 18, 2023, 03:32:24 pmIf you think the west is obsessed with gold you've never been to the east. In the east it has to be 99.99% pure to interest them. Its not just a value thing. Its a purity thing too.I think the only people without an interest in gold are remote tribes who have never encountered it.That said, its a funky form of stored value. Although it has had an unmatched level of stability over the centuries, changing uses or massive discoveries could change that at any time (e.g. the rapid influx of plundered gold from South America to Spain). Remember when the rich served dinners on aluminium plates to show off that they were not the kind of paupers who would use gold?

author: james_s
author_rank: Super Contributor
timestamp: March 18, 2023, 04:52:07 pm
content: Quote from: nctnico on March 18, 2023, 03:32:24 pmHas there ever been a culture that didn't value gold?Even if people didn't find it attractive it's incredibly useful stuff. If it was cheap all kinds of stuff would be gold plated to prevent oxidation.

author: nctnico
author_rank: Super Contributor
timestamp: March 18, 2023, 05:00:58 pm
content: Quote from: james_s on March 18, 2023, 04:52:07 pmHas there ever been a culture that didn't worship some kind of god?AFAIK the Azteks and similar cultures didn't assign monetary value to gold. They used it for creating items for worshipping purposes.For use as money, gold and other rare materials (some cultures used seashells as coins for example) are nothing more than means to prevent counterfeiting. Nowadays that is no longer necessary due to better printing & fabrication techniques and (digital) wire transfer.

author: james_s
author_rank: Super Contributor
timestamp: March 18, 2023, 05:20:34 pm
content: I don't know, I've never worshiped any god and kind of wish it was not a thing but it seems to be hardwired into the human brain. The fact that the Aztecs used gold for religious purposes doesn't suggest it lacked value, on the contrary it suggests it was of extreme value, too valuable for common use by regular people. Many cultures put their greatest resources into religious matters, take the Egyptian pyramids, Mayan temples and the cathedrals in Europe for example.

author: Marco
author_rank: Super Contributor
timestamp: March 18, 2023, 06:46:49 pm
content: Regardless of your opinion on the possibility of hyperinflation due to current debt levels, what backs money is entirely irrelevant for this kind of bank run. A 5% interest rate rise is nothing to a gold backed currency, happened all the time. What backs the bank deposits is relevant ... fractional reserves weren't a fiat based central bank invention.Gold bankers in my country invented fractional reserves and people have been running on banks ever since ... then with the memory of gold fish they chase that couple percent interest rate on deposits the next day.

author: floobydust
author_rank: Super Contributor
timestamp: March 18, 2023, 08:14:18 pm
content: SVB ex-CEO was spotted in Hawaii, Greg Becker and his wife have escaped to their Maui townhouse worth $3.1 millionsourceMust be nice to cash in $3.6M of stock ($84M over the past 2 years) and sit on a beach.

author: EEVblog
author_rank: Unknown
timestamp: March 18, 2023, 09:31:52 pm
content: Quote from: floobydust on March 18, 2023, 08:14:18 pmThat's the CEO game.

author: james_s
author_rank: Super Contributor
timestamp: March 19, 2023, 01:26:58 am
content: Quote from: EEVblog on March 18, 2023, 09:31:52 pmYeah I'm not even surprised even a little. The same happens with politicians, seems like every time a natural disaster occurs here the governor of the state where it happens has jetted of to their vacation home. On one hand it pisses me off, on the other hand, can I really claim I wouldn't do the same given the means? I accept as a fact that when push comes to shove, the vast majority of people are going to look out for themselves first.

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 19, 2023, 03:31:40 am
content: Yeah of course.Now that just looks not very, uh, moral or ethical.We're kinda far away from the ship's captain who will sink with his boat if that saves a single person. Oh well.

author: Black Phoenix
author_rank: Super Contributor
timestamp: March 19, 2023, 09:51:55 am
content: Well one more on the wake of the Silicon Valley one:https://www.ft.com/content/5746165a-3a0c-42c7-9a2e-cb7cf5f33f46QuoteQuote

author: BravoV
author_rank: Super Contributor
timestamp: March 19, 2023, 11:45:21 am
content: Situation in Swiss is pretty simple, as its turning into non-neutral country (taking side, not like it used to/ well known to), and start to seize and steal rich people money illegally that are trusted to be kept in Swiss because of geo-political reason (like sanctions), just to trash their own trusted image as "safe" money heaven.There you go, rich people or rich countries are drawing out their money and sucking Switzerland dried as the trust is gone, yes, its pointless now to keep bailing out, as its like keep throwing money into a deep sink hole.The main selling point where Swiss for "reputable" banking is now gone, they made it themself, stupid eh ?Imagine you're rich oligarch say like rich Arabs or Asians that put your money in Swiss, looking what they did to rich Russian oligarch (even they're Putin's haters) and just seize and steal your wealth, ever thinking to pull your money out ?

author: tom66
author_rank: Super Contributor
timestamp: March 19, 2023, 12:16:54 pm
content: Russia is now a pariah state. Swiss won't hold money for N Korea (well, not "knowingly", wink-wink) or other such pariah states. So they have to do this, because otherwise they risk sanctions and diplomatic action from EU. I don't think they had a choice.

author: BravoV
author_rank: Super Contributor
timestamp: March 19, 2023, 12:34:57 pm
content: Quote from: tom66 on March 19, 2023, 12:16:54 pmYep, that what Swiss believes, that willingly to sacrifice them self for the sake of freedom and democracy.

author: vad
author_rank: Frequent Contributor
timestamp: March 19, 2023, 01:16:23 pm
content: Quote from: BravoV on March 19, 2023, 11:45:21 amIf you are referring to oil-rich Arab monarchies, I have bad news for you.You cannot have oligarchs under monarchy, despite what they tell you on TV in Russia.Any bank that wants to operate in the West will comply with sanction regime imposed against Putin’s wallets and Putin’s cronies, or face secondary sanctions.No reputable bank would support regime, whose leader is accused of war crimes and has international arrest warrant issued for him.

author: jonpaul
author_rank: Super Contributor
timestamp: March 19, 2023, 01:47:42 pm
content: Bonjour à tousAfter the SVB, and silverGate Today's failure and takeover of hugeCredit Suisse, a 150 year old highly regarded Swiss Bank, is now the third bank failure in just 10 days. Even the FED, US treasury, ECB, and Swiss government cannot stem the rising tide of bank runs and metatastizing loss of bank confidenceA natural.and long predicted result ofa, Fiat currencies with zero metallic backingb, Fractional réserve bankingc. sovereign debt explosion due to socialiste control of USA and EU budgetsd, impacted of rapidly rising énergie costs, inflatione "Black Swan" of Covid-19 and then Putin's Ukraine war.The extreme volatility in all markets,and régions and widespread market impact may Signal the start of a major turndown.your thoughts?Jon

author: BravoV
author_rank: Super Contributor
timestamp: March 19, 2023, 01:48:51 pm
content: Quote from: vad on March 19, 2023, 01:16:23 pmLike those claiming there was a WMD in Iraq and bombed the hell out of them ? Wait ... nah, you will never be smart enough to get this.

author: coppice
author_rank: Super Contributor
timestamp: March 19, 2023, 02:14:44 pm
content: Quote from: vad on March 19, 2023, 01:16:23 pmReputable next to bank? That's a strange sentence. Real banks usually love war criminals. They tend to be loaded.

author: tom66
author_rank: Super Contributor
timestamp: March 19, 2023, 02:15:21 pm
content: Quote from: BravoV on March 19, 2023, 01:48:51 pmIt's possible to think Putin is a war criminal and W. Bush is one too, but also accept the likelihood of Bush being prosecuted in our lifetimes as practically nil given the US does not accept any higher authority above itself. They have a law which would legalise their invasion of the Hague if one of their soldiers were to be put on trial.In fact, I once heard it quipped that if the US government had evidence God was real they'd go to war with the almighty to avoid accepting a higher power.

author: coppice
author_rank: Super Contributor
timestamp: March 19, 2023, 02:17:54 pm
content: Quote from: jonpaul on March 19, 2023, 01:47:42 pmCredit Suisse is only 2 or 3 times the size of SVB. Its not that huge in global terms. Did you mean "highly reported"? I haven't seen anyone hold them in high regard for a very long term. The have given reporter lots to talk about, though.They've been a basket case just waiting for the final nudge over the edge.

author: BravoV
author_rank: Super Contributor
timestamp: March 19, 2023, 02:30:08 pm
content: Quote from: tom66 on March 19, 2023, 02:15:21 pmThats what US and NATO called "rule of law", which means, do what I say, but NOT what I do.

author: vad
author_rank: Frequent Contributor
timestamp: March 19, 2023, 02:36:16 pm
content: Quote from: BravoV on March 19, 2023, 01:48:51 pmWas there a bank that claimed Saddam’s WMD possession and had few bombers in possession of their Security department?You need to get your facts straight.

author: vad
author_rank: Frequent Contributor
timestamp: March 19, 2023, 02:41:03 pm
content: Quote from: coppice on March 19, 2023, 02:14:44 pmIf you feel your bank is not reputable, you probably need to find a new one.Real banks also have compliance departments. And executives of real banks prefer to stay out of jail. For that reason they have the compliance departments.

author: bdunham7
author_rank: Super Contributor
timestamp: March 19, 2023, 02:45:47 pm
content: Quote from: jonpaul on March 19, 2023, 01:47:42 pmMy thoughts are that most of those factors should not cause bank failures. My opinion is that the primary and possibly sole cause is the previous ZIRP (and in the EU, NIRP) policies. Credit Suisse, along with many other banks, was forced to buy negative-yield bonds. In addition, those policies caused banks to issue loans at very low and occasionally below zero interest rates to avoid having to deposit their reserves at even more negative rates. Now that interest rates are popping back up, the banks are stuck with those loans as most borrowers are not likely to pay off a negative interest rate loan early.The decision by the US government and the Federal Reserve to keep pumping money into the economy and maintaining near-ZIRP conditions all throughout 2021 instead of gradually ramping up rates a bit was one of the stupidest blunders in history, IMO. And that isn't just hindsight, I and many other people were observing and discussing the obvious market distortions that were developing--stock market grossly overvalued, bids for TIPS bonds going way above the zero real yield price, home values rising on almost a daily basis (at one point our home was appreciating at a rate greater than our income), rents rising so fast that some fully-employed people were becoming homeless and lots more.Also, as of right now (7:44AM PDT, 2:44 GMT 19MAR2023) I haven't seen that Credit Suisse has actually either failed or agreed to be purchased by UBS. Has that happened?Edit: as of now (11:28AM PDT 19MAR2023) it is reported that UBS will be acquiring CS for the token sum of SFR 2 billion. Technically not a 'bank failure', but if it was I believe it would be the largest ever.

author: BravoV
author_rank: Super Contributor
timestamp: March 19, 2023, 03:07:03 pm
content: Quote from: bdunham7 on March 19, 2023, 02:45:47 pmNo one want to buy a sinking ship, infact all potential buyers demand Swiss gov. for a "guarantee" if they save CS.Latest progress ...Switzerland Considers Nationalization Of Credit Suisse As Proposed UBS Takeunder Falters->https://www.zerohedge.com/markets/ubs-offers-buy-credit-suisse-1bn-025-share-takeunder-cs-balks-offerNationalize = print more money to solve problems, that what US and EU are good at for at least the last few years.Interesting time we live in.

author: coppice
author_rank: Super Contributor
timestamp: March 19, 2023, 03:12:22 pm
content: Quote from: vad on March 19, 2023, 02:41:03 pmYou need to move on from the 80s. We aren't in the era of S&L management suffering, often for things beyond their control. We are in the post 2008 era, where the people who were in full control of crashing things roam free. At least one of them moved on from Lehman Bros, and was just a part of crashing SVB.

author: BravoV
author_rank: Super Contributor
timestamp: March 19, 2023, 03:20:25 pm
content: Quote from: coppice on March 19, 2023, 03:12:22 pmSome people or even certain demographics that so brainwashed, that are never have the word "accountability" in their brain, as the brain just can not cope with that understanding.Let alone words like "reputation" , "responsibility" ,"guilty" and etc.

author: vad
author_rank: Frequent Contributor
timestamp: March 19, 2023, 03:52:29 pm
content: Quote from: coppice on March 19, 2023, 03:12:22 pmNot being able to find a bank you can trust must be really hard on you.What alternative do you have? Buying physical gold and a reliable shotgun?

author: coppice
author_rank: Super Contributor
timestamp: March 19, 2023, 04:49:33 pm
content: Quote from: vad on March 19, 2023, 03:52:29 pmBeing able to rely on a bank depends on a lot more than their honesty. Its honesty which has triggered the downfall of many of them. When the biggest players tilt the table, the smaller guys get screwed, and the unscrupulous gather up the pieces and move on. Many people say the S&L problem was due to lax regulation. Look more closely and you'll see it was due to unbalanced regulation. They used to have tight regulation of what they could lend to, and strong customer compensation regulation. They loosened up only one side (allowed to lend to pretty much anyone for anything), leaving the managers in S&Ls between a rock and a hard place. Customers simply went for the highest interest, with no regard for safety, and the S&Ls were forced into more and more risky loans to be able to offer those interest rates. I feel sorry for any bankers who disagreed with those wacky changes, and who suffered legal consequences.Regulation becomes very polarised, with one side calling for more, and one calling for less. When you look at most regulation related messes, its not usually the amount of regulation that mattered. Its whether the various relevant regulations were well balanced. That's very hard to achieve when each side will grasp at any opportunity to change a single regulatory issue in isolation.

author: Marco
author_rank: Super Contributor
timestamp: March 19, 2023, 05:17:22 pm
content: Fractional reserve banking and contagion is the natural state of the market, only government intervention can prevent it. In extreme cases even government needs to devalue relative to gold in a gold standard.

author: Marco
author_rank: Super Contributor
timestamp: March 19, 2023, 06:18:30 pm
content: Quote from: coppice on March 19, 2023, 04:49:33 pmWith accounting regulations for publicly owned company any analyst can mark to market bank assets with reasonable accuracy, it's pretty hard for them to not be honest without outright fraud. Mark to market in a downturn is a recipe for contagion though.

author: tom66
author_rank: Super Contributor
timestamp: March 19, 2023, 07:29:52 pm
content: Reports now that Credit Suisse has been bought out by UBS for ~1.3 billion EUR, which essentially leaves the average CS shareholder about 80% out of pocket. But it looks like they will live another day.

author: jonpaul
author_rank: Super Contributor
timestamp: March 19, 2023, 07:41:19 pm
content: Swiss news..as of 19:40 CUT/GMT/ZuluUBS has bought out Credit Suisse for 3B CHFR and assumed 5B CHFR losses.Jon

author: m k
author_rank: Super Contributor
timestamp: March 19, 2023, 07:51:22 pm
content: How was it, the blood and buying.

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 19, 2023, 08:31:37 pm
content: Quote from: vad on March 19, 2023, 03:52:29 pmDo you think you can trust yours?

author: tooki
author_rank: Super Contributor
timestamp: March 19, 2023, 09:10:52 pm
content: Quote from: tom66 on March 19, 2023, 07:29:52 pmThe deal went down while I was at a pub quiz with friends. My route home has me change trams at Paradeplatz. That’s me just now, with the Credit Suisse headquarters behind my left shoulder and UBS headquarters over my right.

author: SiliconWizard
author_rank: Super Contributor
timestamp: March 19, 2023, 09:16:24 pm
content: Crédit Suisse has been in trouble for at least 3 years, with a couple shaky affairs, so what's happening is very little surprise.

author: james_s
author_rank: Super Contributor
timestamp: March 19, 2023, 10:44:37 pm
content: Quote from: tom66 on March 19, 2023, 02:15:21 pmAny country can invade or go to war with any other country for any reason really, making war illegal doesn't change that. The various alliances make that complicated and risky but don't really prevent it, as evidence by the fact that we have had two major world wars and countless smaller ones.

author: TimFox
author_rank: Super Contributor
timestamp: March 20, 2023, 03:11:19 am
content: Quote from: Marco on March 19, 2023, 05:17:22 pmThe alternative to fractional reserve banking is keeping ones money under a mattress.The required fraction to hold as reserves is a matter of regulation.

author: bdunham7
author_rank: Super Contributor
timestamp: March 20, 2023, 03:33:38 am
content: Quote from: TimFox on March 20, 2023, 03:11:19 amThere are reasonable alternatives and during the GFC they came a bit closer to a decent solution, but abandoned it. Put simply, you can define 'deposits' as money in the bank that can be demanded at any time and 'investments' as money loaned to the bank for them to earn a return and share some with the customer. Deposits can and should be fully guaranteed without limit and that probably means little or no interest, perhaps even bank fees. The program I'm referring to was the temporary unlimited guarantee on non-interest transactional accounts. Interest-bearing investments, such as CDs and savings accounts over some limit ($250K is good enough) would not be guaranteed. So the customer would have an informed choice about how to store their assets. Banks could offer services such as distribution of deposits among insured institutions (CDARS as it is currently known) or money market and treasury options.

author: bdunham7
author_rank: Super Contributor
timestamp: March 20, 2023, 03:42:15 am
content: Quote from: tooki on March 19, 2023, 09:10:52 pmMaybe they can put one of those glass bridges between the buildings now. Although I suspect that UBS will be consolidating pretty severely and quickly, so there might be some prime real estate available by next year.

author: tooki
author_rank: Super Contributor
timestamp: March 20, 2023, 08:12:28 am
content: Quote from: bdunham7 on March 20, 2023, 03:42:15 amRumor has it that “the banks” have vaults under Paradeplatz with lots of gold and whatnot; maybe they could just join up underground!Jokes aside, if they do merge the real estate, I hope they keep the CS building, built in 1877. It’s so much better looking than the UBS building from 1960.Beyond that, I don’t have any stake in the matter, since I don’t bank with either one of them, nor own shares. I do have a bit of schadenfreude, though: investment banking is kind of a scourge IMHO. Living in Zurich you encounter investment bankers now and then, and they’re just the worst kind of people.

author: jonpaul
author_rank: Super Contributor
timestamp: March 20, 2023, 11:24:47 am
content: With todays continuing contagion to AT1 tier bonds and USA First Republic, my notes are even more relevant.1/ Since The inception of Fractional Reserve banking by English financier John LAW in 1715, at the Bank of France, (plaque still exists at the Bourse, in Parois!) he has initiated 250 years of chaos.The US Founding Fathers knew the dangers and impact of political manipulation of currencies by the British overlords, Kind Henry etc.Thus the unit of account of the United States was defined as a Dollar, a Spanish milled gold coin at the time.2/ The US Constitution Art 1 sec 10 Clause 1"No State shall ........ coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; ......."Art 1 sec 10 clause 1 has not been repealed nor affected by any amendements.3/ Since its illegal inception in 1913 by 5 New York banks the US So called Federal Reserve have debased the US unit of account by 98%.4/ References:The Creature from Jekyll Island: A Second Look at the Federal Reservehttps://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/091298645X/Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitutionby Edwin Vieira Jr.https://www.amazon.com/Pieces-Eight-Disabilities-Constitution-Foundation/dp/0967175917/Have an ABSOLUTELY FANTASTIC day!Jon

author: Marco
author_rank: Super Contributor
timestamp: March 20, 2023, 12:12:08 pm
content: Quote from: jonpaul on March 20, 2023, 11:24:47 amPrivate transactions are more than sufficient to allow fractional banking to persist though. Unless government intervenes, people are suckers for interest on "demand" deposits ... not all the bank runs in the world could kill fractional reserves.Full reserve banking can only happen by the barrels of government guns forcing it on people.

author: bdunham7
author_rank: Super Contributor
timestamp: March 20, 2023, 02:15:31 pm
content: Quote from: Marco on March 20, 2023, 12:12:08 pmThe problem is that the Fed itself is setting the de facto rate for interest on "demand" (overnight) deposits by not allowing any space between the Fed funds rate and the overnight reverse repo rate. There is no free market at the short end.

author: Marco
author_rank: Super Contributor
timestamp: March 20, 2023, 03:09:07 pm
content: Reverse repo and interest on excess reserves are crisis tools. Banks build up liabilities during the good time, when those are completely irrelevant.The world has had free banking. After the fractional reserve meme arose, free banking overwhelmingly used fractional reserves. There is absolutely no reason to expect any differently now. Full reserve is a statist solution and there is nothing wrong with that, except for libertarians who can't compromise and like it :pCentral Bank Digital Currencies are probably the easiest road to full reserve banking.

author: TimFox
author_rank: Super Contributor
timestamp: March 20, 2023, 03:40:30 pm
content: Full-reserve banking is basically paying for a safe-deposit box.

author: bdunham7
author_rank: Super Contributor
timestamp: March 20, 2023, 04:00:17 pm
content: Quote from: Marco on March 20, 2023, 03:09:07 pmThey should be, I agree. However, that isn't the current policy unless you think we've been in a crisis for the past two decades. Mandated negative interest rates on reserves as an economic stimulus was the most insane example.

author: bdunham7
author_rank: Super Contributor
timestamp: March 20, 2023, 04:09:06 pm
content: Quote from: TimFox on March 20, 2023, 03:40:30 pmBut if you limit the full-reserve requirement to actual demand deposits and thus explicitly differentiate between demand and time deposits, the whole thing becomes workable. Right now I'm getting higher interest on my demand savings account (not even mentioning money markets) than I'd get on a 10-year treasury. That's broken. There's also a big spread between treasuries and retail FDIC-insured bank CDs when the CD actually has less overall risk.

author: nctnico
author_rank: Super Contributor
timestamp: March 20, 2023, 04:23:16 pm
content: Quote from: bdunham7 on March 20, 2023, 04:09:06 pmBut it would not be as profitable. In the end it is the customers wanting low banking costs that drive banks towards partial reserve banking.Back in the old days it was even worse. Banks would sit on a money transfer for a couple of days and increase their cash position that way. As an upside you got a bank account for free. Nowadays bank transfers are near instant (even within the EU) but banks charge money for having an account. Heck, some even have a surcharge to cover the costs for mandatory background checks.

author: Rick Law
author_rank: Super Contributor
timestamp: March 20, 2023, 06:26:55 pm
content: Quote from: EEVblog on March 18, 2023, 09:31:52 pmThe unintended consequences of government action. This is a reminder for us all why government "pain relief" may cause even more pain.In the Clinton era, tax (rules on deductability when amount exceeded a certain magic numbers) was change to reduce pay-differential between fat-cat level senior executive salaries vs average worker salaries. While the President can claim that he reduced the huge pay differential between senior exec and average employees, almost immediately senior exec's stock-based "incentive" ballooned to compensate for the salary drop. That came with very negative side effects, short time stock prices become way too significant to the executives personally -- share prices matters when they cash-in their options or grants.So while one may want the government to act to relief pains caused by the SVB collapse, the relief itself may end up being more painful.

author: coppice
author_rank: Super Contributor
timestamp: March 24, 2023, 02:08:55 pm
content: Quote from: coppice on March 15, 2023, 09:44:42 pmFrom the news today it seems my original comment about Deutsche Bank might have been more accurate one. For all the Europeans have done about liquidity requirements for their banks, a bank who's plays in derivatives markets go poorly can be in hock for staggering amounts that they can't fudge indefinitely.