Let’s get this out of the way.
No Canadian bank is failing. Not even close. Nor will this happen in your lifetime. A systematically-important maple bank (we have six) will probably never fail. Ever. If it were to, we have bail-in provisions to cope. So chill.
In the US there are 4,844 federally-regulated and insured banks. A few of them crash routinely. Then the Federal Deposit Insurance Corp. arrives in town, takes over the assets, bails out depositors and oversees a merger with a stronger bank. Yawn. It’s America. They roll that way.
The collapse yesterday of SVB – the Silicon Valley Bank – was the biggest since the credit crisis of 2008. Started over a poker game two decades ago, the bank specialized in funding start-ups in a part of Cali where almost 15% of all workers are employed by either Apple or Alphabet. SVB quadrupled in the past five years and was valued at $40 billion. It’s stock did a moon shot before (as you have likely heard) it cashed to earth.
So these are harder days in the valley. Big tech is laying off. Start-up zombie tech companies have been scrabbling for subsistence funding. Crypto is a complete mess after FTX. Meanwhile the geniuses who ran SVB put a ton of money into government bonds where rates were zero. After eight Fed increases yields popped and bond values dumped, the bank lost almost $2 billion and tried floating new securities to get back even and meet its funding needs.
Events conspired against it, word got out, big depositors withdrew massive amounts on Thursday, the stock dropped 60% in a few hours then more overnight, and by Friday morning it was toast. It was the second regional lender (along with Silvergate Capital) to go paws-up this past week. That spun off enough contagion to take some other small bank stocks seriously down. Some big FIs were sideswiped for a while, before recovering. Confused investors scrambled into the safety of bonds, pushing prices up and yields down.
Meanwhile on Friday the latest jobs report showed 50% more hiring than The Street had expected. The economy is still blowing hot. Good news is bad news, because this probably means the Fed will hike 50 basis points on March 22nd. Americans have not yet seen the peak in rates, nor will this occur until many, many more layoffs take place and inflation has a 5-handle.
Stock markets plopped a fair amount Thursday as all this drama unfolded, then seesawed on Friday. Big swings. Worried money fled. Confident money bought the big US banks when valuations dipped on the back of SVB failure.
Silicon Valley Bank seems to be an outlier. It was the only publicly-traded bank with a narrow focus on funding nascent companies in the emerging, cash-burning tech space. In other words, it didn’t have a broad, diversified base of assets or clients. Its collapse will not bring down the system. Moreover, the routine nature of bank failures in the States has made that country really good at moving in to remove the bodies and clean up the gore.
Here’s how one Wall Street analyst put it:
SVB’s issues show that companies, including banks, need to be much more discerning about whom they do business with. The market has been punishing companies that have no business models since the bear market began in January 2022 and SVB’s woes are the latest frontier in the market’s reckoning. The market is tired of companies that do business with unprofitable companies or that are unprofitable themselves.
Between 2001 and 2022, there were 561 bank failures in America, the majority (297) during the 2009-10 credit crisis. During this time the American stock market increased 446%.
How many Canadian banks have failed? Have you ever heard of that? Is it even a thing?
There have been some. None of consequence. And not recently. During the GFC, when almost 300 American institutions rolled over, we lost none. That’s a good thing, of course, since deposit insurance here is a mere $100,000 per person per institution (but there are ways to triple or quadruple that). In contrast, Americans are covered up to $250,000.
Well, Mr. Market will recover from SVB, but interest rate worries aren’t going away soon. Higher-for-longer rates put pressure on bank earnings, they crater mortgage originations, destroy demand for new credit and goose the cost of funding, hurting margins.
Of course, all this will change. In about a year. Ignore the noise.
About the picture: “This is Oakley,” writes Troy. “We purchased our first home during a brief housing lull in Summer of last year and were able to lock in a sub 3% fixed rate. As regular readers of your blog, your wisdom has helped us to keep dog food on the table and guided us from making rash financial decisions. We spend our days out on trails, content with our decisions and not worrying about the fluctuations of the market.”
135 comments ↓
The water gets deeper with reports on fraudsters active in stealing and trying to steal properties.
A title search would show who legally owns the property, meaning that it would show a homeowner if their property appeared under a different name.
We all need homeowners title insurance, which is our “first line of defense.” It protects homeowners (and buyers) against any fraudulent activity on the property. I am not saying that the real estate and lawyer should be completely off the hook here, surely somewhere in between, better due diligence can be enforced. Title insurance or not, when someone comes back to their home, it is still in the same location and considered stolen, then it’s no longer yours, something is wrong with our laws here. It was always my understanding that real estate was covered by errors and omissions insurance, perhaps if we have a realtor commentator on the blog, this part could be explained to us.
The same fraudulent driver’s license was used to rent two Toronto homes that organized crime tried to sell without the homeowner’s knowledge, according to a private investigator working on the cases.
A private investigation firm working for a title insurance company says a handful of organized crime groups are behind a string of real-estate frauds in the GTA — where at least 30 homes have either been sold or mortgaged without the real owners’ knowledge, this was reported by Bloomberg, Story was also carried on CBC. If one is lucky enough to have title insurance, they would come out OK through their insurer, but that is also costing the insurer millions in claims. Once a game like this starts, it never ends, but I do not see or hear much on what is being done to correct this type of fraud, in protecting the general public homeowners.
Title and mortgage fraud can take on many different forms. The perpetrators are sophisticated and leverage modern technology to their advantage. In the Ontario cases, organized crime groups allegedly used stolen identification, hired “stand-ins” to pose as tenants to gain access to the homes and impersonated homeowners to mortgage or sell them,
The fellow in Etobicoke ON, was not so lucky, his home got sold through the fraudsters.
One home that got fraudulently listed a year ago all while impersonating the owner, even had two listing agents stage the home for sale, there are many questions to see if agents are doing enough to identify potential tenants, home sellers and homebuyers, in this case the family was able to stop the sale.
Another recent case in Scarborough ON, where three people were arrested after a smart lawyer noticed something not quite right with this closing.
Ontario is not alone for this type of fraud, In B.C., at least three attempted cases have been confirmed since 2019, two of which resulted in successful sales by the fraudsters.
In Montreal Quebec, two men were arrested in December for a 1.5-million-dollar mortgage scam. They were advertising, we buy homes for Cash. “The fraudsters walk away with the mortgage money in their pockets, while the victims wait for a second payment that never comes.” Police allege they ran the “J’achete des maisons CA$H” company that involved homeowners seeking to sell their homes quickly for cash.
The victims are also told that the rest of the sale price will be paid after the house has been renovated and resold, at the latest in one year.” “In the end, police say the house is foreclosed by the company that granted the mortgage,”.
The Land Title and Survey Authority of British Columbia (LTSA) confirmed one home was allegedly fraudulently sold in 2019, followed by another in 2020. In 2021, a third attempt was thwarted before the transaction was finalized.
On record so far stealing and trying to steal homes, we have Quebec, Ontario, and British Columbia, and they also tried in Prince Edward Island, without success.
It is beyond me how this can slip through, not only with the Real Estate, but also through a lawyer, some cases two lawyers are involved. Other provinces need to be on the alert, Real Estate fraud is coming, it not only appears to be easy money, it is big money. To get a passport or Nexis card, you almost must give up one of the kids for proof of who you are, to go for a COVID shot, they ask for two pieces of ID, yet the realtor from my understanding, is only obligated to ask for one piece of ID, nothing makes sense.
Other provinces need to be on the alert, real estate fraud comes in many forms, it does not only appear to be easy money, it is big money.
For stolen properties, If some fancy lawyer can walk in front of a judge and get you off from such a criminal act, reduced to a year or two and perhaps even a probation for a first-time offender, maybe it is time we need an established Federal law in Canada that gives an automatic life sentence in jail for such treachery and swindling of properties.
The people that are involved in such fraudulent transactions are brilliant, yet they chose to work on the other side of the fence. I would bet, given from what they are able to do, it would not take them long legally to build a supersize legal business with the right mindset.
Quote: for bloggers and commentators, our wisdom cannot be stolen – it can only be shared
Disclaimer: The following is for information only, not intended for offence.
_________________________
The hits just keep coming…
Here is the latest:
Arch-rivals Iran and Saudi Arabia agree to revive ties, reopen embassies in China-brokered deal
https://www.cnbc.com/2023/03/10/arch-rivals-iran-and-saudi-arabia-agree-to-revive-ties-reopen-embassies.html
Contemplate it (but with an open and enquiring mind, please), my fellow amateur geopolitical analysts.
And it’s not finished yet.
Next on deck, peace between Ukraine and Russia:
China calls for peace talks, ceasefire between Russia and Ukraine
(China’s 12-point proposal to end the conflict)
https://www.cbc.ca/news/world/china-ukraine-russia-peace-proposal-ceasefire-1.6758815
O Say can you see
The new world order rising
Pax Americana is so yesterday
Here comes
Pax Sinica, shining brightly over the world
https://en.wikipedia.org/wiki/Pax_Sinica
Tech…by its very nature….is designed to make humans redundant and obsolete.
Then what….
(ain’t it obvious ?)
Where’s Nonna Nicola? Maybe they were on to something, just buya da land — like in Ontariowe’s Greenbelt.
— Today must be like the old days for the financial advisors/advisers. A phone on each ear.
Ring ring. Get me to Cash! Stay invested. Click.
Ring ring. I SAID GET ME TO CASH. You’re delusional. Click.
Ring ring. Harley or V-twin? V-twin. Click.
Ring ring. Trading desk, here is your Treasury Blondes quote in size. Scotch it. Click.
Ring ring. Ehhh Gartho this is Nonna Nicola, Why you no buya da land? Flush.
—- Ho Ho Hold The Payments. Everything old is new again.
“”The Globe and Mail reports in its Friday edition that Canadians’ ability to pay their mortgages on their absurdly expensive real estate is the existential question of the Canadian economy. … TD Bank and Bank of Montreal offer mortgages that allow borrowers to maintain that fixed monthly payment, fail to cover the full amount of the interest and add the unpaid portion of the interest to the loan balance. It is called “negative amortization,” but disclosure is scant. One sign, revealed in regulatory filings, is the proportion of residential mortgages with amortization periods longer than 30 years, which reveals the amount of mortgages that have been extended. At BMO, it is 32.4 per cent, while TD’s was 29.3 per cent. At Royal Bank of Canada, which does not allow negative amortizations but does allow the extension of the payback period, it was 25 per cent. The Globe asked BMO and TD why the two banks have not disclosed transparently the number of clients with “negative amortization.” In an absurdist theatre of many words, some more helpful than others, they declined, with BMO saying it follows “industry guidelines.” © 2023 Canjex Publishing Ltd. All rights reserved.””
Canary in the coal mine?
Garth….deposit insurance here is a mere $100,000 per person per institution (but there are ways to triple or quadruple that).
***********
Garth, very very very interesting!
If you talking about single bank, not opening different accounts in other insured by CIDC banks in that case how?
Could you explain for bloggers how?
May be in future need special post?
#181 Faron on 03.10.23 at 2:54 pm
#178 Really? Not! on 03.10.23 at 1:49 pm
While spoofing precious metals traders get slapped on their manicured, girly hands for years of spoofing
—
Why do you change your identity while continuing to comment about the same topics?
+++++++++++++
Why did you change your name from Linda Blair to Faron?
Hi Garth!
Why will all of this change in a year? Armageddon? Historical cycles? Trump will be El Presidente again? Yawn….
You watch! Biden’s Multi Trillion Dollar Budget will burn the Dow down to 12, 000 pts. Who will risk money in a market where his intentions are to soak the hell out of businesses and people?
SVB whilst not a major player (was) in the ballpark of say Scotia here. Indeed they were pretty unique to specialise in the sillycon cash burning corps, rather than more traditional loans, mortgages, chequing, CC, for individuals and general corpos.
At the very least the depositors will have ‘cash in hand’ by Monday.
Will be good if it kills a bunch of zombie companies
You know this is going to be a gongshow. Get your money out of Canada.
Buy 20- 50 USA homes for a million. Retire in the sun living well on all the USA Rent Dollar checks
There were bank failures in the 1980’s. https://www.cdic.ca/about-us/our-history/history-of-failures/
None important to the financial system. As stated. – Garth
the late great Guy Lafleur’s house is back on the market and 32% off!
A qui la chance?
https://www.tsn.ca/radio/montreal-690/guy-lafleur-s-home-back-on-the-market-at-much-lower-price-1.1928597
In USA they let dead wood burn.
We don’t, because we think we’re smarter.
https://www.youtube.com/watch?v=Adgx9wt63NY
All hail the canadian bank mafia…..
Apparently, this will all blow over. But the biggest blower in the comment section is the jealous Elon hater or wishes he was, known as f. Let me add accuser and paranoid name caller for good measure. Loud and proud isn’t the way to go through life, son. Pride comes before the fall, don’t you know? I’m thinking NOT!
#155 Nonplused on 03.10.23 at 10:16 am
More evidence that the “news” media is just a giant Rorschach test:
https://twitter.com/CollinRugg/status/1634192576634064896
It is important to understand that “news” organizations do not actually report the news, and any facts that are accidentally reported are incidental. They report what their market segment wants to hear. If they report anything that contradicts what their viewers want to hear, they lose viewers and thus revenue. Too much truth would be existential. They’d go out of business.
And you do your part by listening to only the news you want to hear. We all do it.
So remember how it works: People draw their conclusions first, based on what they “know” in their hearts, and look for collaborating evidence later, if they bother to look at all.
You perfectly described Fox News. Thank you. – Garth
>>>
With all due respect, that’s true of all news networks one way or another, eventually. They all do it. Granted, Fox is in deep now because we have the inside proof. But which network doesn’t lead news with blood? Which network doesn’t capture audience with fear? Which doesn’t cater to what their audience wants to hear?
What was that Al Pacino’s “The Insider” about?
Whoever has the bullhorn gets to say what they want. That’s why rich dudes buy news networks and why we get all our news from corporations. It’s a profitable gig. It’s what you started in as well.
Well…actually, you’ve now set up a GNN, say what you feel is right and we tune in!
Do you give us what we want? :-)
Garth: I remember reading a passage in your book, After the Crash, about one Canadian bank that the government had to help/bail out because it was at risk of folding.
Sorry, I don’t have that book anymore to reference a page. Which bank was it? You didn’t disclose a name.
Your memory is incorrect. No bank was saved from collapse by the federal government. – Garth
Doesn’t the collapse of the SVB bank foreshadow large layoffs in the Tech sector in California as start-ups and emerging companies will now have a much reduced access to funds to innovate and grow? These are high paying jobs that drives consumption and feeds back into the California economy. The tech sector is 28% of the economy in San Francisco. Indeed many of the companies are long established and don’t need the SVB bank, but this collapse seems a little ominous for innovation.
Speaking of banks, what’s going on with Credit Suisse? They ARE a systemically important bank, are they not?
Not in Canada. – Garth
Hi, the weekly call is still from February 28. I hope you upload the one from this week.
Thank you!
Will do. – Garth
Your memory is incorrect. No bank was saved from collapse by the federal government. – Garth
=================================
This is what confuses many….
WHO or WHAT save banks from collapse if it is not the FEDS ?
Thanks in advance !
Banks collapse on their own. But not in Canada. Pointless discussion and worry. – Garth
Hard not to make large money when the Silicon Valley Bank first got going. They made big money on FANG, and I am guessing, Bit Coin.
Now that there are no more “easy unicorns” to make Fairy Tale bank on… they implode.
I consider this a big test of the economy. If we can prevent contagion we are still strong.
#7 Yukon Elvis on 03.10.23 at 3:20 pm
Have you ever been, done anything or even uttered something at all useful? Just once?
Didn’t think so.
RE: #6 VladTor on 03.10.23 at 3:15 pm
Garth….deposit insurance here is a mere $100,000 per person per institution (but there are ways to triple or quadruple that).
***********
Garth, very very very interesting!
If you talking about single bank, not opening different accounts in other insured by CIDC banks in that case how?
Could you explain for bloggers how?
=======================================
Not sure who you bank with, but in my TD direct investing account I can buy 4 different “high interest savings accounts” (They trade like a no-fee mutual fund) which are issued by 4 different corporations:
The Toronto-Dominion Bank
TD Mortgage Corporation (TDMC)
TD Pacific Mortgage Corporation (TDPMC)
The Canada Trust Company (CTC)
Therefore, each would be insured for $100K for a total of $400K even if I held them in the same trading account.
https://www.td.com/ca/en/asset-management/additional-solutions/
Good/bad?
The banking system in Canada is an oligopoly.Furthermore its incestuous relationship with CMHC should be illegal.
It doesn’t fit well within a supposedly free market.
Let’s get this out of the way.
No Canadian bank has failed. Not even close.
*********
Northland Bank
Industry Bank
Founded 1974
Defunct 1985
Fate Bank failure
Headquarters Calgary, Alberta, Canada
Area served Western Canada
The Northland Bank was an Alberta-based Canadian bank that failed in 1985. It was incorporated in 1974. It failed and was closed by the Canadian government shortly after the failure, also in 1985, of the Canadian Commercial Bank. The failures of both banks were the subject of a Commission of Inquiry headed by Supreme Court of Canada
https://en.wikipedia.org/wiki/Northland_Bank
The reference was current. Who cares about about four decades ago? – Garth
SVB was a minnow, 8B in assets under management. Scotia has close to 1T.
Separate – anyone recommend a large US FI ETF? Something that tracks the top 25 big banks?
Nanaimo B.C. is one of a few cities in North America that is adopting the “donut economy “…which appears to be an offshoot of 15 Minute Cities…(implying it is set up to be a socio -economic Lab Rat experiment ).
Canada Post has just announced a decision that ALL its fleet in Nanaimo will be electric (EV).
Keep an eye on this…
As I understand it, this Silicon Valley Bank experienced a surge of deposits during the COVID-19 lock-downs, as people played and worked from home, benefiting tech companies. The bank invested these funds in bonds, which have now crashed due to rising interest rates.
Meanwhile, today the tech sector is facing challenging times. Rising interest rates make long bets on potentially world-changing technology in the future less attractive than companies that generate substantial cash today. Additionally, people are spending more time outside and less time online, leading to lower profits for tech companies. As a result, tech companies that are still burning through cash have made withdrawals from this bank.
Eventually, the news got out, and there was a run on the bank, causing it to fail.
Yogism #61: “Catastrophizing? In Canada, bank on it”.
Lots of venture capital wound up into SVB. Lots of securities about to need to be sold. Lots of losses to account holders with more than $250k. Lots of payrolls not going to be executed.
Contagion? Is there any mechanism for snowballing here? Or is this positively stable and the harm will diffuse out into the financial world?
I’ve been reading articles lately.
Suggesting that Silicon Valley has lost its edge.
Rather than coming up with new innovations, the companies are buying out innovative start ups.
And allegedly, even resorting to plagiary.
Not saying that this is happening.
But, could there be a new Dot.com bust coming?
Cdn banks are resilient.
In fact, IMF tried to figure why after the GFC.
Liquidity.
Table 3. Balance Sheet Liquidity, Page 9
Bigger the number in the Green column more liquid they are, Cdn banks at the bottom (high liquidity):
https://www.imf.org/external/pubs/ft/wp/2009/wp09152.pdf
——————-
#18 Rook
Go to above 2nd from bottom, very liquid and that was during the GFC. If you were being critical, stop reading clickbait articles on the web about Credit Suisse.
——————-
GFC money deadlock between the World’s commercial banks. CBs stepped in and in essence acted as the intermediaries. Memory Lane at what the BoC had to do (recent events at top, older events at bottom):
https://www.bankofcanada.ca/markets/market-operations-liquidity-provision/a-chronology-of-crisis-response-measures/#timeline
—–
Why I keep my cash in Canada and only transfer cash to Fineco here in Italia for expenses such as trips, etc. Fineco is the strongest stress tested bank in all of Italia and #1 here by Forbes.
I like to trash the Cdn Banks as of late, not enough earnings, but I would not bank/invest anywhere else, no siree.
https://www.statista.com/statistics/460700/net-income-before-tax-leading-canadian-banks/#:~:text=In%202022%2C%20Toronto%2DDominion%20Bank,Montreal%20(BMO)%20ranked%20third.
$100,000 per person per institution (but there are ways to triple or quadruple that).
FAQ on this is where?
#1 chalkie on 03.10.23 at 3:06 pm
Other provinces need to be on the alert, real estate fraud comes in many forms, it does not only appear to be easy money, it is big money
=============================
Re: Vacancy tax etc.
Talking to a colleague..apparently someone in our area is posting a condo “For Rent” claiming it is leased, tenants are moving and will be available by end of May.
The evidence suggests there are NO current tenants, and this is a scam to avoid any/all taxes for vacancy etc.
#21 yvr_lurker on 03.10.23 at 3:47 pm
Doesn’t the collapse of the SVB bank foreshadow large layoffs in the Tech sector in California as start-ups and emerging companies will now have a much reduced access to funds to innovate and grow? These are high paying jobs that drives consumption and feeds back into the California economy. The tech sector is 28% of the economy in San Francisco. Indeed many of the companies are long established and don’t need the SVB bank, but this collapse seems a little ominous for innovation.
———–
Agree.
But it’s a chicken and egg situation.
What comes first, the collapse of the bank.
Or the decline in innovation?
In any case, I think these are important questions that investors in Silicon Valley companies should ask themselves.
Still like to know…if you invested $10k in Jan 2001 in a portfolio of Canadian bank stocks, what would be the current gains vs. TSX index? Even without reinvested dividends, I’d bet on the bank stocks. With reinvested dividends, it would be real interesting.
Cdn Jobs report was very good. Seasonally adjusted for Feb 2023:
+22,000; +0.1%
Unemployment unchanged at 5%.
BNN said Economists expected 10,000 new jobs.
Canada actually, NOT seasonally adjusted, did much better in ACTUAL job creation:
+77,400; +0.4%
Maybe the Q4 2022 GDP slowdown is in the rear view mirror?
—————-
Wait and see but if the above continues, BoC may have to raise the rate again in April or June?
https://www150.statcan.gc.ca/n1/daily-quotidien/230310/dq230310a-eng.htm?HPA=1
https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=1410035502
Any thoughts whether or no the US Fed will initiate some large cuts (100-150 bp) to stop other banks from going under?
That would help push up our dollar and house prices again and might save this declining market.
Of course not. – Garth
#2 Proud Truck Driver on 03.10.23 at 3:10 pm
Disclaimer: The following is for information only, not intended for offence.
_________________________
Been following the Geo-Politico situations. It seems that China is taking the high road (appearances only) in both cases. China and Russia are courting Africa and the US is trying hard to drive a wedge between India and Russia by playing on India’s tensions with China. Jordan inviting Syria’s leader for a visit.
Turkey is a wild card.
Ukraine…any Chinese brokered peace arrangement most likely in the Summer allowing Russian a last push to gain as much ground in eastern and Southern Ukraine as possible.
Then we have Netanyahu trying to over ride the courts…his corruption case in currently before the courts.
To say the least.
A geo political diplomatic war et al in plain site.
funny how garth states “nothing to worry about in Canada” …. but ignores the fact these banks failing has wider global repercussions…just a start, more pain coming….watch out Signature Bank, you’re next… $SBNY
And the strange thing is, SVB probably wasn’t beyond saving. They could have held the bonds to maturity and just had lousy profits. But the bank run forced them to liquidate at a loss to raise cash.
Ah, the wonders of mark to market accounting.
Of course if Biden and Warren get their wish and can start taxing “unrealized capital gains”, which would come here too immediately, we’ll have all kinds of havoc. An “unrealized capital gain” is just a number on a spreadsheet. It isn’t cash until you sell, as SVB just found out.
Remember folks, houses aren’t money. Neither are factories, gold, oil, or “future earnings”, or even bonds. It’s only money once it’s in the bank. For that you have to sell, and for that you need a buyer. Good luck out there.
The Biden budget just announced has no reference to taxing unrealized capital gains. It’s not happening. Obviously. – Garth
I doubt its over.
Americans have a flawless skill of digging up the bones up out the ground once skeletal remains are found.
Give it 2 weeks.
Get your cash ready. Buy when blood is flowing down the street, even if its your own.
$100,000 per person per institution (but there are ways to triple or quadruple that).
——————-
Garth is correct.
TD created 3 of them for me way, way back when … when I had a bounce in my step.
People, go to talk to your bank and find out on your own – like I did.
I don’t worry about the banks failing I worry about my money which I needed for a new roof next month.
Just mad at myself as I could sold a month ago. Lost over 2,60 on ETF shares. Scrolling back six months I am even.
Bad news I bought at the absolute high a year ago.
Hope you’re right Garth about bank shares, waiting another year will be tough.
On a positive outlook, dividends are nice and it’s like a one year GIC in terms of not touching the money for a year.
How many Canadian banks have failed? Have you ever heard of that? Is it even a thing?
There have been some. None of consequence. And not recently. During the GFC, when almost 300 American institutions rolled over, we lost none. That’s a good thing, of course, since deposit insurance here is a mere $100,000 per person per institution (but there are ways to triple or quadruple that). In contrast, Americans are covered up to $250,000.
…………………………………………
Hmmmmm. How about Laurentian Bank in the ’80’s and how about Royal Trust???
“None of consequence. None recently.” – Garth
I think the world economy is trending toward deglobalization. Safety in supply chains is outweighing efficiency in supply chains. This may be a result of the growing awareness that China and Russia can no longer be trusted. Deglobalization of the supply chains is inflationary. Eventually, disruptive technologies will be deflationary, but the world has to go through the consequences of supply chain dislocations first. I believe inflation will be around for while because I believe it is caused by global supply chain realignments, not by consumer excess demand. So I am not sure if raising the interest rates will solve this.
https://www.google.com/amp/s/www.cbc.ca/amp/1.1145997
We’ll take your measly $114 billion but darn it, don’t call it a bail out grrrrrrrrrr!
Now where do we sign?
In the GFC banks sold $70 billion in mortgages (their assets) to CHMC (which made money on them). It was a reasonable and transparent move. Our financial system remained strong and trustworthy. Harper did the right thing. – Garth
@#2 PTD
“Pax Americana is so yesterday
Here comes
Pax Sinica, shining brightly over the world
https://en.wikipedia.org/wiki/Pax_Sinica”
+++
Keep dreaming.
2 million people tried to sneak into the US last year.
Some of them from China.
How many try and immigrate to China?
Less than zero I suspect.
The “Belt and Road” initiative to build infratsructure all over the world to benefit china seems to have hit a bit of a “roadblock”
Corruption, bad loans , seizure of foreign assets has dulled the burnish on a “benevolent” Chinese govt loaning billions to third world countries run by dictators.
China is replacing the US in helping the cockroaches of the world stay in power.
“Pax Sinica”?
Pfft.
Let them burn themselves in the cutthroat world of foreign diplomacy, billion dollar failed loans and demonstrations outside their embassies.
Their “Wolf Warrior ” strategy hasnt worked out so well.
But it sells lots of tickets in the movie theaters in Peking… :)
Its one thing to WANT to be a World Leader….its a totally different game when you ARE a world leader.
#30 Mattl on 03.10.23 at 4:25 pm
SVB was a minnow, 8B in assets under management. Scotia has close to 1T.
Separate – anyone recommend a large US FI ETF? Something that tracks the top 25 big banks?
—
$200 billion, not $8 billion.
Nope, he’s right. – Garth
Banks collapse on their own. But not in Canada. Pointless discussion and worry. – Garth
When banks are basically gubernmint it’s fascism for imported slaves… bubba
Our financial system remained strong and trustworthy. Harper did the right thing. – Garth
I have to agree!!!
Becasue they are “a 5 man army” , what is called the BANKING MAFIA.
They never let anyone to venture into their teritory. They are very good at, raping and pilaging their clients and teating new one to each and every customer, with a traditonal Canadian ,”Thank you…i am sorry”.
They don’t care as long as $$$ keep rolling in. So I like them. I don’t want them to fail either.
The other cartels are
Rogers, telus,Bell cartel (telecom mafia)
Legal mafia. (Thank you Conrad Black)
Insurance mafia
Medical mafia.
Who needs Al Capone, when robbery is legalised and TAXED!!
So we are really doing good.
‘Raped and pillaged’. You need help. – Garth
#27 kommykim
********
Not sure. If all these accounts are opened in the same bank, they are considered entirely as one category (marked YOU) and the coverage is equal for the entire category $100000.
For example TFSA regard as other category and covered in addition $100000. Your list accounts not included in list as independent categories.
Here is the explanation —>
https://www.cdic.ca/your-coverage/protecting-your-deposit/
#31 ‘Alois’ – I’ve been doing a bit of research on electric vehicles, since it is possible that by the time we need to replace our current vehicle our only available option will be an EV of some sort. While it is true that EV’s do not generate GHG via the exhaust, there is an environmental GHG impact from the manufacture of EV batteries. Also, something I’ve been wondering about is the eventual effect on the power grid when or if most of us own/operate EVs. Apparently one can go several days between charging up one’s battery, but given the distances most folks drive in a single day, seems logical to presume that most would need to recharge their battery every night. Given that there are some 26 million vehicles in Canada alone, 24 million of which would be rated as a car, just imagine the power grid draw if only half of said vehicles are plugged in each night. Just how much power is available & how is that power generated? I don’t know how common ‘brown outs’ are in Canada, but in the USA one hears about them on a fairly regular basis, especially when weather events precipitate a higher than average draw.
I think it quite possible that ICE vehicles will continue to be used for certain functions. EV’s simply haven’t the range to be used for long haul trucking. And does anyone want to try to depend on an ambulance or fire truck being able to make it to/from an emergency given how quickly a battery might deplete during daily use? Ditto police. I’ve no idea how much power it would draw from a battery to operate those emergency lights/sirens, but presumably it does take a certain amount.
#27 kommykim
************
In addition:
Probably since April in this list will be added FHSA as new category.
#7 Yukon Elvis on 03.10.23 at 3:20 pm
#181 Faron on 03.10.23 at 2:54 pm
#178 Really? Not! on 03.10.23 at 1:49 pm
While spoofing precious metals traders get slapped on their manicured, girly hands for years of spoofing
—
Why do you change your identity while continuing to comment about the same topics?
+++++++++++++
Why did you change your name from Linda Blair to Faron?
++++++++++++++
#26 Faron on 03.10.23 at 4:16 pm
#7 Yukon Elvis on 03.10.23 at 3:20 pm
Have you ever been, done anything or even uttered something at all useful? Just once?
Didn’t think so.
++++++++++++++
You will be the first one voted off the island Linda. So fast it will make your head spin.
One month ago, Jim Cramer urged investors to buy Silicon Valley Bank stock $SIVB.
Today, the bank was closed by California regulators, making it the 2nd largest banking failure in US history.
https://twitter.com/WatcherGuru/status/1634246217226919937?cxt=HHwWgoCx1dSRga4tAAAA
Remember what we told you about owning single stocks? – Garth
Hi Blog Dogs,
Tell Jagmeet Singh that it’s time to shut down the farce that is the Trudeau government. Pull the plug and put some grown-ups in charge. Or at least someone who doesn’t take foreign $$$$ for elections.
Here’s Mr. Singh’s email:
[email protected]
What good is a bail-in to clients/depositors/investors in a bank which is already failing?
What’s in the blog water cooler? These comments are bizarre. – Garth
What about publicly traded companies that had uninsured deposit accounts with SVB? Hopefully a buyer steps in and deposit accounts in excess of $250k are not vaporized. I could see that being a problem for a number of companies and ETFs (like XBI)
We’ll see what Monday brings :)
A number of us in the steerage section predicted non-zero rates would break some things. Frankly I’m surprised it took so long.
I suspect the central bankers will take the wrong lesson from this. That is, rather than the low rates causing excessive borrowing in the first place leading to high risk down the road, they’ll use 4% rates (still quite low historically speaking) as an argument that rates are too high.
I bet Americans can’t wait to bail out billionaires again. With QE and negative real rates, it’s basically been a rolling bailout since 2009. What a system…
Rates are not coming down for quite some time. – Garth
Where is the news here?
You inject a trillion to create 500 billion of value so that people don’t kill themselves during the pandemic.
Now you are down 500 billion.
So why would markets go up?
They can go up in the short term for stupid reasons but ultimately they have to come down.
It’s just grade 8 math.
You don’t need to be a genius to figure out what just happened. So why would you overpay for anything during a pandemic (house, car etc.)?
Are people really that dumb?
But of course you don’t stop there. You vote for wokeism.
Politicians who grease their pensions on your house appreciation until your gains are gone through outrageous property taxes and land transfer taxes.
That is ultimately the definition of stupid. Even this blog couldn’t prevent the average Canadian from showing off a 90 IQ.
Starting to see recent realtor listings coming back down to earth in BC. They are still high, but many houses coming in below 1 million and dropping.
I smell a correction happening in real time. I don’t think it is going to be something that leads to a big crash all at once – hopefully not.
I think it just grinds lower for the next few years when somebody finally wakes up and realizes the 50% markdown eventuality.
The reason it won’t just break is because every possible tool is being pulled right now to stop it from happening, which would spill over and the bankers supporting real estate will be successful in this, but they won’t be able to stop the slow melt that could be more painful for how long it is dragged out.
Does anyone expect house prices to pop in the next few years?
#3 Alois on 03.10.23 at 3:10 pm
“Tech…by its very nature….is designed to make humans redundant and obsolete.
Then what….”
Well, that depends on what we do with the tech.
If we use them to pursue social good, we will likely see reductions in poverty, working hours, stress, and diseases of despair.
If we allow private entities to continue keeping the benefits of tech for themselves, then we will see the further gig-ification of life, where eventually we just rent our very existence from our technocapitalist overlords.
No Canadian bank has failed. Not even close. Nor will this happen in your lifetime. A systematically-important maple bank (we have six) will probably never fail. Ever. – Garth
Not this decade anyway. The 30’s, well…
The Fed will raise a half ‘er and keep ratcheting up risk but so long as nothing majorly systemic breaks, organized demand destruction will continue. The Fed shoulda when the had the last opportunity, but you know.
Hey, some good news! La Nina is over, yay!!! No more rivers drying up, no more global scale droughts, no more depressed farmers (me too) and one less worry right? We can read about it in CBC science, our hard earned tax dollars at work:
https://www.cbc.ca/news/science/la-nina-over-1.6773214
Or here for dailies, I use this site with frequence myself:
https://climatereanalyzer.org/wx/todays-weather/?var_id=sstanom&ortho=1&wt=1
It sees as though there may be changes afoot in the war in Ukraine to boot. Russian state TV hosts are opening talking about losing the war:
https://www.youtube.com/watch?v=evHnNjHcUnQ
They should be. As to U.S. interests, the U.S. did $ 1.1 trillion in trade with Europe in 2021. 64% of global investment into U.S. markets came from Europe. There are trillions and decades invested. For those dumb enough to ask “what’s in it for us”, or believe fringe arguments that the U.S. would bomb nat gas lines for a few billion in LNG sales crippling NATO’s largest manufacturing base in Europe during a time of war, why on earth would the U.S. risk this for war profiteering for peanuts?
Or call $32 billion in military aid to Ukraine a major expense with the sheer degree of trade and investment at stake over the long term? It’s mostly surplus the U.S. has delivered at a markup, a tactical poor man play that checks off lots of necessary boxes. Especially so, when one considers the Budapest memorandum and the U.S.’s ties to security as the world’s #1 economic superpower:
https://en.wikipedia.org/wiki/Budapest_Memorandum
It’s not like Ukraine has been lavished with military aid, Ukraine has been poor manned with equipment out of the 90’s largely for, I think, tactical reasons. That is about to change.
Russian artillery has a max of 80 to 120km’s. U.S. HIMARS can fire smart rounds with a range up to 300km. The last Biden aid package had rounds up to 150km. Ukraine has Excalibur’s firing small diameter bombs that can land within a yard of GPS co-ordinates with a range of 75 to 80kms for a fourth of the price (10k a round). Ukraine has by no means received the best that it has and it’s strategic but if Ukraine received HIMAR rounds with a distance of up to 300km’s, all of occupied Ukraine is in play.
U.S. Bradley’s remember those, 250 or so sent to Ukraine, they don’t look like much but these are tank killers. They aren’t designed to trade 125mm rounds with Russian tanks, they have TOW 2b missiles with a 4.2km range coupled with optics and sensors to long ranges that make them lethal day or night. At any time, infantry can leave Bradley’s with stingers and javelins. Combined with the global leader in intelligence, ground tech is in favor of Ukraine forces from here on.
We’ve been hearing narratives from Polish TV over the last 48 hours on Russian demographics, its worth a watch and in keeping with your assessment Vlad, in terms of what happens to Russia after the fact but we know certain things will come regardless of whether Russia leaves or not. Russia is a pariah. Their economy has been set back most likely for the rest of this decade. It is unlikely that commodities will resume with business as usual. From here on in, it will be more difficult for Russia to regain it’s footing for a variety of reasons, from demographics to reputation. Russians may have to come to grips with the idea that it may never be the nation it once was, at least, with the old imperial & history spawned ideals of fluid borders. True power lies in hearts and minds not through control & force born out of hate & discrimination, but from freedoms born out of equality and justice for all.
What lies ahead for Russia is likely to force Russia to rethink it’s old ways and it’ll go basically one of 2 ways. Russia will either continue to double down on using force against it’s neighbors through military buildup and bombs resisting change, or Russia will take a much harder look at why the U.S. ever became the world’s #1 superpower to begin with, warts and all.
But I wander. All things considered, we will likely see an end to the war in Ukraine this year. Maybe next, I think that’s doubtful, we don’t know til’ we know and it largely depends on Putin’s regime, but the signs point to this year.
Northland Bank 1985
Canadian Commercial Bank 1985
These Canadian bank failures both happened in my lifetime.
Ancient history. And neither were systemically important. – Garth
End of week round up. What good is money when…
— File this under Control over Feeding TheGlobal Corps. to take away our meat.
“Bettermoo(d) Food Corp. is applauding furniture giant Ikea on its recently announced sustainability plan — a plan that includes a transition that would see its bistro menu and Swedish Food Market packaged meals at 50 per cent and 80 per cent plant-based, respectively, by 2025 as well as adding dairy-free alternatives to its menu.
” Ingka Group, the parent company of Ikea based in Leiden, the Netherlands, is looking to accelerate its carbon footprint reduction mission with the introduction of Saluhall, a food hall inspired by Nordic culture that will serve 80-per-cent-plant-based food and hopefully 100 per cent in the future. (stockwatch.com)
—- Control over Travel. Yep cheap free travel ended in 2020. You are free to leave your Smart City at any time Comrade, just get past the Cameras.
https://www.telegraph.co.uk/news/2023/03/08/new-ulez-cameras-vandalised-amid-backlash-against-zone-expansion/
When it goes ahead the expansion will see the Ulez charge cover all of London’s 32 boroughs. It will mean after August, all cars that do not meet European emissions standards will have to pay a £12.50 charge every day.
Most petrol vehicles less than 16 years old and diesel vehicles under six years old meet these standards.
At the weekend The Telegraph revealed that Mr Khan was plotting to use the Ulez cameras in the future to police a new road pricing scheme for the capital, which could take the form of a “pay-as-you-drive” scheme.
———
Bonus footage. War on Small Business / Life in Kanada.
https://www.youtube.com/watch?v=iBSppvX6MwM
Town Councillor Apologizes for Mandates
A town councillor in West Nipissing, Ontario, Canada (Sturgeon Falls area) issues an apology for mandates.
In this small Canadian town, a member of a town council expressed concern for the impact of the mandates on the workforce and community which appeared to be sincere and from the heart.
#38 Alois on 03.10.23 at 4:37 pm
Re: Vacancy tax etc.
Talking to a colleague.. apparently someone in our area is posting a condo “For Rent” claiming it is leased, tenants are moving and will be available by end of May.
The evidence suggests there are NO current tenants, and this is a scam to avoid any/all taxes for vacancy etc.
———
Good for them. The vacancy tax is a massive government overreach.
#52 crowdedelevatorfartz
….Its one thing to WANT to be a World Leader….its a totally different game when you ARE a world leader.
***********
Yes, don’t be ridiculous! China is already a recognized world leader.
The “Belt and Road” initiative successfully implemented. There is a large queue of countries that want to join BRICS.
BRICS is rapidly working on creating its own regional currency and in 2-3 years it will be created. BRICS countries will switch ALL to settlements in this currency. This is the collapse of the dollar! The dollar will turn into a regional currency, which will be needed only for mutual settlements with the G7 countries. Compare what you can buy in China with what you can buy in the US right now and you will immediately get an answer who is the world leader not by zeros and ones in a computer.
Garth is correct. Put all your trust in your Canadian banks.
Come on over this week and we will help you purchase a wonderful mutual fund for your retirement.
I said invest in the bank, not at the bank. – Garth
Hmmmm, I wonder who ends up bailing out banks that fail.
-1 Good Fairy
-2 Santa
-3 J P Morgan
-4 J P Patch’s
-5 Magic money printing machine
-5 Shareholders
-6 Sheeple.
None will fail. Not in this lifetime. – Garth
Shorted the hell out of Silvergate while being long Canadian banks. Another one to watch from crypto fallout is Signature Bank.
So the Fed will go for.50 on Mar. 22nd. so what will Tiff
do continue to vegetate ?
I thought Royal Trust failed as well, if you look it up, all it says is Royal bank bought them. Maybe it was in distress, who knows.
Did you know You can still buy Royal Trust GICs trough Royal bank!
A little know loophole I found out years ago after my mother passed away. She loved GICs
Remember CIDC only covers 100,000 in deposits and such.
However Royal bank had my mother buy GICs in both Royal Bank and Royal trust 100,000 each. Problem solved. She was covered.
I know there are other ways, but we are talking little old lady and GICs.
Have a great day.
Royal Trust did not fail. Jaysus, people, look stuff up before you comment. – Garth
#30 Mattl Separate – anyone recommend a large US FI ETF? Something that tracks the top 25 big banks?
**********************
Looks like ZBK fits the bill..
https://www.bmogam.com/ca-en/advisors/investment-solutions/etf/bmo-equal-weight-us-banks-index-etf-zbk/#holdings
Unrelated to bank failures I know, but has anyone been following H5N1? It’s a bit of a slow burn as it’s been around since the 90’s, but it’s jumping into mammals causing case for alarm. Are we prepared?
https://www.sciencenews.org/article/bird-flu-mammals-influenza-pandemic
There’s another trend I’m seeing that is cause for alarm for the here and now. I looked at a recent study that pegged prediabetes in U.S. adults at 48.3% and confirmed diabetes at 11% with unconfirmed diabetes at 3.7% for a 14.7% total. All told, the statistical survey suggested that 63% of U.S. adults have pre diabetes and diabetes. 63%!
This is 14% higher than the CDC’s own numbers out last year (48.7%, this number forced me into a deep dive). The adult median age of the study was 47 and the level of Confidence was 95%.
https://pubmed.ncbi.nlm.nih.gov/36586345/
Readers do know that pre diabetes in most studies (I say most, I haven’t seen a study under 2 years but I haven’t seen them all) shortens your life by 2+ years and diabetes by 8+? If we didn’t, now we do.
Pre diabetes is above normal sugar relating to a pancreas that can’t keep up. This means that IR (insulin resistance) would be back of the napkin guessed to be in the 60%’s to 70’s as it’s prevalent in 100% of pre diabetes and in the mid 80’s of diabetics, but is also present on average for 5 to 6 years depending on the metrics, before pre diabetes.
These numbers are in line with obesity & overweight numbers in the mid 70’s in U.S. adults for a reason.
According to the CDC, more than 90% of pre diabetics don’t know they have it. There was a recent study tracking ages 2 to 17 recently. 28% of ages 11 to 17 had pre diabetes. This is what I’ve been working on this winter in case anyone wants to know, not so much the numbers of the scope and magnitude of the problem, that’s just the preamble, but how to fix it from the micro (individual) perspective to the macro (government policy).
It’s a deep dive and complex and highly rewarding because I see the whys and hows to live a long life (even from the perspective of starting in the hole) and literally see how most can be playing tennis at 90, but as to government policy… I’ll give readers a taste.
Why does the U.S. government subsidize corn and production, specifically the cheap production of HF corn syrup and ordinary white sugar? Why does the U.S. government pay food stamps that allow for up to 10% consumption of pop and high fructose drinks? To answer this question is to answer what can be done about campaign election financing laws and lobby laws.
What we have in the U.S. is legalized corruption that has seeped into power since the 60’s, likely before. This will not end any time soon. Nor will laws changed to end this kind of systemic corruption last long even if you had a government honest enough to pass honest laws. The only way laws can be passed that will stand the test of time is if they end up in the constitution. This means that while it’s foolish folly to give up the good fight, don’t expect wins any time soon, if ever.
As consumers, we are literally on our own, but here’s the rub. The system isn’t controlled entirely from the top down, its also controlled from the bottom up. Consumer behavior correlates well with consumer awareness. Not suggesting a book will solve these issues here, it’s a suggestion of something much larger.
Gotta love bloomberg’s headline.
“Spectacularly Fails After Unthinkable Heresy Becomes Reality”
Maybe more people should start thinking…
#6 VladTor on 03.10.23 at 3:15 pm
Garth….deposit insurance here is a mere $100,000 per person per institution (but there are ways to triple or quadruple that).
…
…
===============
personal accounts chq/sav in total 100K CDIC
joint accounts is another 100K CDIC
registered accounts each 100K CDIC
gic’s 100K CDIC etc
https://www.cdic.ca/wp-content/plugins/nvi-cdic/assets/images/Add_up_your_coverage_ENG.png
https://www.cdic.ca/your-coverage/protecting-your-deposit/
https://www.cdic.ca/your-coverage/changes-to-cdic-deposit-protection/
plus
Each bank has 3 entities like : banking, mortgage, trust and may offer certain products, so each is 100K CDIC as well. it may reach to total 300K
plus
https://www.cipf.ca/cipf-coverage/about-cipf-coverage#coveragelimits
For Investor accounts :
For an individual holding an account or accounts with a member firm, the limits on CIPF protection are generally as follows:
$1 million for all general accounts combined (such as cash accounts, margin accounts and TFSAs), plus
$1 million for all registered retirement accounts combined (such as RRSPs, RRIFs and LIFs), plus
$1 million for all registered education savings plans (RESPs) combined where the client is the subscriber of the plan.
Hope this helps.
Family member taken away in an ambulance today, and as it was pulling away the water heater broke and flooded the basement.
I don’t even care that portfolio is down 20% in 48 hours anymore.
It could always be worse.
#74 DOWn on 03.10.23 at 6:26 pm
None will fail. Not in this lifetime. – Garth
—
It is disappointing that the financial literacy of people like DOWn is so low that they don’t get that a strong and well backed banking sector benefits people orders of magnitude more than harms them.
JC [email protected]
The fact that a ~$200 billion asset bank could collapse in 2 days due to a failed ~$2 billion equity raise (that had an anchor investor) when it was trading with a ~$15 billion market cap is a damning indictment of both the US regulatory apparatus and US capital markets
Porter [email protected]
The $SIVB failure is just another epic failure of the FED. They had 15 post Lehman to fix the banking system. I also find it ironic they they failed due to US government debt not dogshit VC loans.
RE:#56 VladTor on 03.10.23 at 5:33 pm
#27 kommykim
********
Not sure. If all these accounts are opened in the same bank, they are considered entirely as one category (marked YOU) and the coverage is equal for the entire category $100000.
For example TFSA regard as other category and covered in addition $100000. Your list accounts not included in list as independent categories.
Here is the explanation —>
https://www.cdic.ca/your-coverage/protecting-your-deposit/
=======================================
From the link you posted above:
“CDIC covers eligible deposits up to $100,000 per insured category per member institution.”
Each one of those Direct Investing “savings accounts” are with different a “member institution” and the brokerage is just holding them on my behalf.
Just like I’d be fully covered if I had opened a $100K GIC in a RBC RRSP and another $100K GIC in a BMO RRSP by doing down to the actual bank branches…
Interesting to see what time bombs are out there.
#51 Meh on 03.10.23 at 5:00 pm
https://www.google.com/amp/s/www.cbc.ca/amp/1.1145997
We’ll take your measly $114 billion but darn it, don’t call it a bail out grrrrrrrrrr!
Now where do we sign?
In the GFC banks sold $70 billion in mortgages (their assets) to CHMC (which made money on them). It was a reasonable and transparent move. Our financial system remained strong and trustworthy. Harper did the right thing. – Garth
————————————
Gotcha!
3 questions…
1. Harper did the right thing for whom exactly?
2. If the big 5 were/are so robust, why was it all necessary?
3. How about the other $44 billion from the US government? That’s another $61 billion in today’s funny money.
Asking for a friend
If the banks fail we all fail. Do not wish for it. – Garth
I think the implications of SVB are bigger than your post conveys. Whether one wants to admit it or not, innovations across the globe is driven by startups and small companies that start in the Bay Area – the biotech industry for example was ubiquitously screwed by this collapse and now may not have access to their funds, the funds necessary to make payroll and keep the lights on. While there may be a rescue, what about next week or next month. Canada is a great country, but not one where innovations happen in any meaningful way – the drugs and technology that you all use daily likely got their roots in the Bay – and almost certainly had money travel through SVB. Poof gone overnight.
Agreed our Canadian system is much more regulated and solid.
One question I do have and have to make an effort to figure out is what our banks use for loan backing. I know under our rules they have to have a certain ratio of convertible assets to loans. Just curious, certainly not concerned.
It can’t be housing, as that is mostly covered by CMHC, and they only have 80% exposure for a brief period of time as principal is paid down for non CMHC loans.
Ultimately the house is an asset to the homeowner I believe, not the bank.
They sure are a nervous bunch down in the US but there might be reason for that. I believe the issue isn’t SVB, but who else is in the same boat?
Remember it’s been less than 15 years since Bear Stearns and Lehman.
Maybe we should be paying attention to the reaction more than the event.
@Linda re: EVs
Regarding sustainability, power generation and consumption, you can be assured that many, many people fully experienced and deeply involved in the sector have calculated all of the usage, generation, development numbers.
It’s been done. All available if you are truly interested.
RE: Cdn Feb Jobs report per StatCan:
“Average hourly wages rose 5.4% (+$1.69 to $33.16) on a year-over-year basis in February, compared with 4.5% (+$1.42) in January (not seasonally adjusted).”
———–
Good sign GDP increased from 4th Qtr 2022 slowdown – more jobs created than expected & wages up?
Bad sign as wage increases have increased and above 2%?
Starting to look like a BoC rate increase coming this year. When, who knows but it seems Cdn economy starting to heat back up. Good for us investors, hate to say it, but the truth.
I like it that when it matters, StatCan uses “(not seasonally adjusted)” numbers like I do.
People aren’t stupid, they know there are seasonal swings in job creation and retail trade. Why for those 2 I do not like seasonally adjusted (smooth the hills and valleys out).
Seems somebody at StatCan is on side with that. Good and finally.
It’s funny… at 50, I am now the company old guy. We just had a Friday brewski afternoon to welcome a few new hires, and the youngsters are all planning skiing, mountain biking, boating, hiking excursions.
Good for them.
I just look forward to a nice hike/run to the Benson summit tomorrow, then a relaxing weekend of home-based bird dog training.
Life is good
I wondered if T2 congratulated Xi on his 3rd term. Putin did, we know dictators like to stick together. Remember T2 praised Castro following his death . Why ?
“What’s in the blog water cooler? These comments are bizarre. – Garth”
+++
The after effects of the Full Moon.
The case for, the case against, real estate raptures.
It’s Spring Break.
The only case I care about now is my suitcase…
M48BC
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
“Only One of Canada’s Big Six Banks Expects Real Estate Prices To Rise.
RBC Is The Only Big Six Forecasting Higher Home Prices Next Year.
RBC is the only Big Six expecting prices to rise in their base case scenario. The bank expects prices to rise 2.6% to $732,300 by next year, followed by 5.1% compound annual growth for the next four years. At the end of the 5-year forecast, a home would be around $893,500—about 25.2% higher than current prices.
Scotiabank Sees Canadian Real Estate Prices Down For A While.
Scotiabank’s base case doesn’t see a real estate recovery over the next five years. They expect prices to fall 12.3% over the next year, with 0.3% CAGR over the following 4 years. If applied to the benchmark, that would leave a typical home around $618,500 by 2028, or 12.3% lower than current prices. The bank’s forecast is notably the biggest drop remaining at the end of the 5-year period.”
Scroll down and press play.
https://betterdwelling.com/only-one-of-canadas-big-six-banks-expects-real-estate-prices-to-rise/
@#72 Vlad Is Mocked Off
“BRICS is rapidly working on creating its own regional currency and in 2-3 years it will be created”
++++
o….m…g….
BRICS currency?
Bwahahaha.
The Brazilian Real?
The Russian Ruble?
India?
China?
Give me a break…….
The socialist BC NDP in the 1970’s tried selling BRICS….it wasnt a success.
https://en.wikipedia.org/wiki/British_Columbia_Resources_Investment_Corporation
Bought more CM and TD today and like yesterday. the dividends are too good to ignore but I’m starting to have a little doubt about CM with its 35% of clients with 35-year mortgages.
#53 Faron on 03.10.23 at 5:25 pm
#30 Mattl on 03.10.23 at 4:25 pm
SVB was a minnow, 8B in assets under management. Scotia has close to 1T.
Separate – anyone recommend a large US FI ETF? Something that tracks the top 25 big banks?
—
$200 billion, not $8 billion.
Nope, he’s right. – Garth
Where are you getting those figures from? Their deposits are in 170B+.
Last I checked deposits of any kind fall under AUM.
https://www.businessinsider.com/silicon-valley-bank-svb-particularly-scary-bank-failure-why-2023-3?_gl=1*fx1r0e*_ga*MjA1NjI4OTIwNC4xNjc4NDk4Mjkx*_ga_E21CV80ZCZ*MTY3ODQ5ODI5MS4xLjEuMTY3ODQ5ODMxNi4wLjAuMA..
#97 Monkey shoulder on 03.10.23 at 8:26 pm
Bought more CM and TD today and like yesterday. the dividends are too good to ignore but I’m starting to have a little doubt about CM with its 35% of clients with 35-year mortgages.
++++++++++++++
I am still holding and buying more of those two as well. Been buying in the dips for 20+ years. I got a bunch of TD for $60 during the last dip, it sits at $83 during this “dip”. I like BNS as well. I’ve done ok. Zero worries here.
Canadian banks are unsinkable!
Thank you everybody who explained for me details CDIC.
“The bank had $209bn in total assets at the time of failure, the FDIC said.”
https://www.theguardian.com/business/2023/mar/10/european-markets-spooked-by-us-bank-shares-sell-off
Some years ago when RIM blew apart, a highly placed member of the KW business community said it was going to be the best thing. All the talent that flowed into RIM that was poorly (or not) managed was freed to move on.
In much the same way, the malinvestment caused by free money of the last 20-30 years will move folks on to more productive efforts.
How is Twitter carrying on with 75% fewer employees? False news?
I think that Trudeau’s antics with seizing accounts of people giving money to the truckers convoy made the Canadian foundation shake just a bit.
Just reading the comments shows me the biggest risk to the health of banks is the fear of the herd.
If enough people ran to cash out…we would have a problem.
DELETED (Slur)
I worry more about bail in than bail out. Ask the Cypriots.
Zero comparison. Read the legislation. – Garth
If the banks fail we all fail. Do not wish for it. – Garth
Incorrect, failure is good, it forces people to work and not just wait for yet another mummy Canada bailout
A la 2008 where we bailed out GM, bits of foreign banks operating in Canuckistan; shush, it’s not well known.
Side note right now people are borrowing against their life insurance to pay their mortgage, using 19.99% credit card to cover 8% mortgages. Lol but we have such an incredible “world class” financial system. There’s so much poo bubbling right now in the mortgage world, give it a few weeks/months. You do not know or are right about everything.
#92 Sail Away on 03.10.23 at 8:02 pm
… the youngsters are all planning skiing, mountain biking, boating, hiking excursions.
Good for them.
I just look forward to a nice hike/run to the Benson summit tomorrow, then a relaxing weekend of home-based bird dog training.
Life is good
*********
I hear you.
After working a week in construction, (electricians) older son showing up at 5am on a Saturday morning to pick up little bro to drive to Renfrew to surf – I’m up making coffee and egg/bacon sandwiches…and my tee time isn’t for hours!
Life is very good.
M59BC
I too hold many shares of Canadian banks.
I started collecting about 20 years ago also.
Generates a healthy dividend .
I drip about half of it.
#72 VladTor on 03.10.23 at 6:18 pm
“BRICS is rapidly working on creating its own regional currency and in 2-3 years it will be created.”
China can turn their Yuan into a global currency, if they want to do so. They don’t need any other BRICS country onboard, just like U.S. did not need a monetary union with any European country to turn their Dollar into a global currency after WW2.
At this time, China does not want their Yuan to dominate the global trade. That would make their currency trade higher, and their exports more expensive and less competitive. In the future, maybe, but not right now.
Without China firmly onboard, a BRICS currency will never take off. They will keep studying the options and promising the launch “in a few years”, nothing else.
So….
Watching the 6pm pabulum on Global.
A story about the relocation of a “sidewalk flea market” comes up.
Seems the drug addicts of Vancouver’s Downtown East Side have to move their “sidewalk sale spot”
The police admit that the items being sold are probably stolen but….the flea market provides…..” low barrier income opportunities”…..
https://globalnews.ca/video/9544480/city-of-vancouver-proposing-to-move-downtown-eastside-flea-market/
Yes ladies and gentlemen…..stolen goods being sold by drug addicts is now a “low barrier income opportunity”…. in the eyes of the politically correct politicians and “leaders” running Vancouver.
Unbelievable.
#96 crowdedelevatorfartz on 03.10.23 at 8:17 pm
The socialist BC NDP in the 1970’s tried selling BRICS….it wasnt a success.
—————————————————————
You will recall that when Davie B. beat Mr. B in the election that he had left Davie with $500 million in the bank. Well, it didn’t take long for Davie to get rid of that when he started buying out distressed pulp mills, sawmils, pig farms, chicken farms, and coal port. The next gov sold most of those off so that all that was left of the BRIC was Westshore terminals and a huge debt. That’s when Jimmy P. got control of the shares of BRIC and turned the debt into fund units and sold them off as WTE.un and the terminal was then very profitable and the dividends paid out to all the unit holders. I believe he still owns the majority of the units today. A very profitable venture for him.
Come on Garth you know the big 5 won’t fail cause the Bank of Canada already did. Trudeau senior sold it out to the BIS in ’74, junior follows suit with the CIB when it was his turn. Your ol’ friends Paul Hellyer and William Krehm knew that and just cause the COMER case got thrown out of the Supreme court dont mean Canadians and all levels of gov’t should be paying billions in interest to private chartered banks
#98 mike from mtl on 03.10.23 at 8:38 pm
#53 Faron on 03.10.23 at 5:25 pm
#30 Mattl on 03.10.23 at 4:25 pm
8B in assets under management.
$200 billion, not $8 billion.
Nope, he’s right. – Garth
Where are you getting those figures from? Their deposits are in 170B+.
Last I checked deposits of any kind fall under AUM.
#102 Tan on 03.10.23 at 9:16 pm
“The bank had $209bn in total assets at the time of failure, the FDIC said.”
—
Garth or Mattl, where does your number come from?
#111 fartz
You can’t make this sh*t up eh – GO CANADA lmao
I didn’t know that Canada had bail-in provisions in case a bank fails. The banks failed in Cyprus in 2014 and the EU made them bail-in and all the depositors lost their savings accounts including people that I know. Italy has bail-in too which is why I only keep a few thou in the post office there.
Here in the UK the title registration office offers a free service that you sign up for that insures if anyone even looks at your house title on-line, the owner gets a notification. Easy and cheap free insurance, Canadian provinces should consider it.
For those who think this current hiccup in the road is over and house prices will continue their trip to the moon, I quote Winston Churchill.
“This is not the beginning of the end but it may be the end of the beginning”.
SVB failure is long term positive if reckless VC funding disappears, closing silly companies, freeing up high value added employees to migrate to industrial companies that pay dividends and make things we actually need.
“Royal Trust fid not fail”: Garth
Air Canada did not fail either. I’ve received 1 new AC share for 10000 old AC shares.
RT was acquired by the Royal Bank, and carries on as a unit of it. – Garth
SVB Blindsided.
I suspect there are other banks which have interest rate risk – long term bonds with unrealized losses if sold prior to maturity, vs demand for higher rates by deposit holders. If those deposit holders all marched away for higher yield and the bank needed to sell their bonds at a steep loss, to cover withdrawals, you have another run. Its seems this institution had way too much in long term maturities. They were in a sense, greedy. They could have paid more for deposits and made less money. A lot of these small banks fly under the radar.
Why are the Canadian banks blocking the purchases of cash etfs like CASH.TO, if there is no concern about liquidity, or do they just like to stifle competition?
#107 Salam abdus on 03.10.23 at 10:20 pm
GM sold a bond with a tasty rate, the government made out well. More of a lifeline than a bail. Assuming you’re talking about Canada, since, hey, that’s where you are eh?
The hypocrisy of the small government tech-bro response to SVB has been hilarious.
Just goes to show that there are no libertarians in a bank run.
#116 jane24 on 03.11.23 at 1:07 am
I didn’t know that Canada had bail-in provisions in case a bank fails. The banks failed in Cyprus in 2014 and the EU made them bail-in and all the depositors lost their savings accounts including people that I know.
*****
As far as I know, the Canadian bail in provisions mean that bondholders are forced to exchange their bonds for equity to recapitalize the troubled bank. It doesn’t mean depositors lose their savings. That’s my understanding, anyway.
That said, in a really severe bank run – which I agree with Garth, is highly unlikely in Canada – there would still be risk of losing deposits, especially those above the CDIC limit.
A Canadian bank bail-in would involve zero depositor funds. There are special bail-in securities which would be converted to equity in a crisis, which you can buy (and get a sweet return on). They will never be called. – Garth
Re: #14 Sue on 03.10.23 at 3:34 pm
I had money or limit up mid 50’s in 3 of them. Monarch, Standard Trust and Central Guaranty Trust Company.
All this talk about BANKS made me think of good old Robert Blake, who recently passed away.
As the star of the hit 70s TV series Baretta, Blake’s catch phrase, as Detective Tony Baretta, was:
“You can take dat to da bank!”
RIP Robert Blake
https://www.youtube.com/watch?v=L2vzpsAsYy8&t=5s
#90 ‘Sail Away’ – actually am interested, because while I don’t expect to need to replace our current vehicle for several years am trying to figure out what our best options are come the day, keeping in mind that advances in technology, circumstances will almost certainly occur & thus have an impact on what is decided.
#67 ‘Sun Showers’ – “If we allow private entities to continue keeping the benefits of tech for themselves” – I find this comment rather disturbing. If said ‘private entity’ created the technology they presumably patented it & own the rights to it. So are you suggesting it be nationalized? Which is effectively theft. I’d imagine anyone subjected to said type of theft would not be willing to continue ‘sharing’ any of their creative ideas after that. Or if they are feeling the need for payback, maybe coming up with tech for those who’d take it which would have a nice little payload of misery attached. You reap what you sow. Just saying.
Twitter’s $42,000-per-Month API Prices Out Nearly Everyone
Tiers will start at $500,000 a year for access to 0.3 percent of the company’s tweets. Researchers say that’s too much for too little data.
Chris Stokel-Walker
Business
Mar 10, 2023 12:53 PM
https://www.wired.com/story/twitter-data-api-prices-out-nearly-everyone/#intcid=_wired-verso-hp-trending_fff65311-e4d5-4a54-8425-d02d2641b147_popular4-1
I keep reading posts like Russia has lost or is losing.
We have friends that have left the Ukraine because large parts of it have been reduced to rubble.
Ukraine is toast.
I’m not a fan of war, the people who start them are seldom the ones to pay the ultimate price.
#129 DOWn
Bakhmut at the verge of collapse.
Leaked emails from Hillary Clinton revealed that NATO eliminated Muammar Gaddafi to stop the formation of the United States of Africa.
SO ,now you know what this Ukraine war is all about.
Protect US hegemony and the USD dominance.(Who is in the way….. Russia and China, with the multipolar world)
#83 Faron on 03.10.23 at 7:04 pm
#74 DOWn on 03.10.23 at 6:26 pm
None will fail. Not in this lifetime. – Garth
—
It is disappointing that the financial literacy of people like DOWn is so low that they don’t get that a strong and well backed banking sector benefits people orders of magnitude more than harms them.
————————————————————-
Speaking of financial literacy, or illiteracy, I bet DOWn understands the difference between “Assets Under Management” and “Assets” on the balance sheet.
I for one am certainly glad Faron has chosen Tesla as his obsession.
Can you imagine if he picked any other car company and felt compelled to write a post about every serious accident they were involved in or every time 2 or more people complained about a wobbly something or other?
i think i came across mr turner in the 70,s in guelph ontario.flyers are us, they were everywhere, not knowing it was you at the time.
the toronto sun, mr turners financial disclosures, i was hooked and dumb.
dr shulman.wrote a beginner’s guide to investing with terminology
after i read it,twice and used it as a reference
between classes, i headed to the local brokerage
i made vey good money on my trades
the only area of trading that was off limits by the manager, was shorting
what i learned.
having money is pleasant
and financial knowledge opens opportunities
As long this blog tells us is about small Yankee bank and there is nothing to see here, why not keep dreaming in the maple fairy(free) land!?
What, getting shots, ahem, vaxes, in order to get back to normal was also recommended here? Wait, financial bubble is by no means Canadian bubble? Then what are you waiting, let’s all, but I mean ALL, get the loonies into sweet retirement or at least making some fortunes of it. No one should be left behind.
Re: #27 kommykim on 03.10.23 at 4:23 pm
Always check out who the parent company is when taking out a GIC especially anything over a one year GIC. It’s never a good idea to go over the 100K limit including interest with a parent company and a subsidiary of the parent company combined.
Magic backstop.
Endless bailout cash for the negligence, again.
And nobody pays.
I’m love’n it.