My snappy colleague Ryan tore a band-aid off over the weekend, lamenting the death of the work ethic. Yes, it’s an open social wound. There’s a generational schism, of course. We knew that. The pandemic and three years of WFH skewed a lot. The wealth divide is worse now. And doubled interest rates have made real estate even more unattainable.
The comments section sank more than usual into a swamp of nihilistic moaning. So many people with unfulfilled expectations. So much anger. Such blame smeared on boomers, banks and bosses. It reminded of a poll we shared with you wherein close to half of younger respondents said socialism is the preferred economic model. Their solution to capitalism today: burn it down.
Will that happen?
The arsonists showed glimmers of hope late last week as a significant US bank failed. Some analysts said the collapse of the Silicon Valley Bank would force the Fed to reverse its interest rate hikes and cut the cost of money by a full 1% over the next few months.
Meanwhile the share value of Canada’s big banks dropped by almost $20 billion on the SVB news. Some regional US banks were whacked with a 40% equity drop. Charles Schwab lost 10% (the majority shareholder is TD Bank). The big Wall Street FIs were also hit, as stock markets retreated.
The question is about central banks. Has a 450-basis-point rate bloat started to break stuff? After all, SVB’s problems began after it put depositors’ money into government bonds which sank in value as Fed hikes took place. When it tried to issue new securities, revealing its almost-$2 billion investment loss, Internet chatter among its high-tech clients caused a panic. In one day $42 billion was sucked out by worried clients. The bank failed.
Ironically, SVB’s innovative, mostly-younger, tech-savvy and leading-edge depositors created their own nightmare. In a few hours they destroyed an organization that had nurtured, gambled on and supported many of them. In a world devoid of social media or digital communications, that never would have happened. The bank dudes would have covered their bond losses, secured some new capital, diluted their equity and carried on with business.
Instead, as some analysts said over the weekend, we came to the edge of financial contagion.
Two things.
First, don’t expect dominoes to fall. SVB mattered a lot to a volatile sector and a slew of corporate depositors, but it’s not bringing down any of the big guys. Nor will this cause the CB to panic, kick into reverse and drop rates. The Fed will hike again a week from Wednesday.
Second, the real story of SVB – like Ryan’s lament on the work ethic, our growing political polarization, the crisis of house lust and the dissing of capitalism – is the staggering power of influence. Never before have people been able to so quickly and effectively influence others or be influenced themselves into beliefs or actions. Quiet quitting. Crowdfunding truckers. Real estate booms and bust. Generation Squeeze. A bank run.
Giving people voice and social power is not a bad thing. But we’re also in an age of peer-to-peer, unfiltered ‘news’. Disinformation. Conspiracy theories, Qanon and political extremism – left and right. The MSM’s fact-checking is largely gone. People come to quicker decisions based on Tweets and social media like SnapChat or Telegram.
The glory is more power and influence given to every citizen. The danger is bad decisions made on corrupted data. Suddenly in social media, corporations are greedy and oppressive. People are stereotyped by their gen. Employers are the enemy. Galen Weston and Jeff Bezos are crooks. Or democratic capitalism is failing. On one side are the woke. On the other, patriots.
Sheesh, and now we have AI chatboys. The bold glamour filter. Real and fake are one and the same. The influencers are everywhere.
Thankfully old people have a defence. It’s called experience.
151 comments ↓
As Phil Collins sang “I can feel it coming in the air tonight, oh lord
And I’ve been waiting for this moment, for all my life, oh lord”
Last week I commented in a discussion, this all feels like 2008 GFC — the contraction of credit, dis-ease in obtaining credit (high rates) and everything. There was agreement.
Then, on March 11th – that’s 3/11 – this.
Sooo close to Back To Normal Guys. Do we know the Digital Currencies are created and awaiting the next ‘crisis’ to roll??:
https://www.bloomberg.com/news/articles/2023-03-12/us-discusses-fund-to-backstop-deposits-if-more-banks-fail
FDIC and Federal Reserve discuss fund to backstop deposits if more banks fail following Silicon Valley Bank’s collapse
March 11, 2023 at 7:30 p.m. EST Updated on March 11, 2023 at 9:52 p.m. EST
–The Ides of March For those keeping track 3/11 is a big day globally
Let’s see.
March 11th, 2020 – WHO declares global pandemic.
March 11th, 2011 – Fukushima nuclear disaster.
March 11th 2004 – Spain Terrorist Train Bombs.
—— N.S. not so healthy these days. Et tu, pubic health officials?
https://www.cbc.ca/news/canada/nova-scotia/excess-mortality-rate-causes-covid-19-1.6759698
Last Updated: March 07, 2023
Nova Scotia tight-lipped about spike in deaths
‘Unexpectedly high numbers of people are dying in an untimely fashion,’ expert says
Everything in the news is starting to look like an adaptation of Little Red Riding Hood
https://en.wikipedia.org/wiki/Little_Red_Riding_Hood
or the Three Little Pigs. https://en.wikipedia.org/wiki/The_Three_Little_Pigs
In short, lots of fairy tales in Canada’s economy.
emergency fed meeting tomorrow
On another blog topic… dogs vs cats… a heart warming story to soothe the current turmoil and angst.
https://vancouverisland.ctvnews.ca/video?clipId=2644687&jwsource=cl
Re: 2 dayze photo
OMG…
A genetically engineered legless dog…
How do you take it for walks ?
Don’t worry.
Musk is gonna buy up the “Silly” Bank.
And save the planet.
There’s some talk that Trump caused all this.
Because of partial deregulation of da Banks.
Would not be a surprise, would it not?
Thank you Garth for the free advice. Thank you for the blog. See you give us pipsqueaks a voice and feedback to the jittery goliaths.
It just goes to show you can’t hedge everything.
“Giving people voice and social power is not a bad thing.”
When I read this, I knew the next word after it would be “But”. I was right. From Game of Thrones: “Nothing Someone Says Before The Word But Really Counts”. What Elon Musk has done with twitter is a true example of giving a voice to the people. And so was crowdfunding for truckers. People being able to give money to what they want is true democracy. It may not fit into someone’s agenda and it may anger some people, but what is the alternative? Hasn’t the media been just as bad at trying to manipulate people for their own agenda over the years? The twittergate stuff should alarm anyone who reads it. Just my two cents.
#180 Chaddywack on 03.12.23 at 1:37 am
I used to work hard, but after the creep of politics into the workplace I’ve decided not to anymore.
I’m tired of attending sessions telling me that I’m to be blamed for the travesties in the world because I’m a white male.
/////////////
At first I read transvestites, and then I saw travesties.
Either way Faron will want to woke you.
Thank you Boomers for all the sanity you bring to this world! We are forever grateful!
Me being a 64 year “Old Guy”, love the last sentence. The ‘Old Guy / Person Life Experiences’ is so disregarded by the youngsters over the last decade and a bit. Having said that, there are sure are also a lot of old guys messing things up around the globe these days, especially south of our border, embarrassing to say the least!
When you have people in power suppressing video evidence from a defendent’s council while he languishes in jail, what do you expect Garth?
The footage clearly showed him calmly walking around accompanied by the capital police.
A journalist with the initials TC was pilloried by PEOPLE IN POWER for doing the right thing and RELEASING THE FOOTAGE.
Transparency and openness have to start at the TOP.
@#1 Turner
“Nova Scotia tight-lipped about spike in deaths
‘Unexpectedly high numbers of people are dying in an untimely fashion,’ expert says”
++++
No big secret.
Nova Scotians like their cigarettes, booze and lack of exercise.
Toss in Covid to the stew and ….voila…..Excess deaths.
Britain is going through the exact same thing….
https://www.bbc.com/news/health-64209221
An aging population that smokes, drinks and doesnt exercise….+ Covid.
I’m sure the pension plan actuaries are rubbing their hands with glee.
Yes!
Lots of big, tough, Libertarian VC crypto cowboys who’ve been vocally bashing the Fed are having a come to Jesus moment and begging for a bailout.
Marc Cohodes is an interesting Twitter follow (@alderlaneeggs). He called SBF /FTX before anyone else.
Plenty more crypto dominoes to fall, if he’s correct again. Monday will be a market bloodbath regardless.
Talks about ‘fake news’ and lets turnernation ‘coded’ antivax post on health in Nova Scotia. Lol
Like I said yesterday, “over employment” runs silently parallel to “quiet quitting”. OE is where the young hustlers are now–working 2+ FT gigs from home. Hard work is still out there chasing the money and getting stuff done. In it’s newest form it’s just harder to see because well.. if you broadcast you’re working multiple jobs, you tend to get fired! The irony!!
Love the Schipperke aka black hole into which all treats disappear. :)
bold glamour filter
————–
“It is better to look good than to feel good”
– Fernando Lamas
When the Kardashians were still playing with their toes or a glimmer in their Daddy’s eye.
Yogism #62: “Committed, hard work is boss!”.
Oh to have been a fly on the wall at SVB in the two days it took to implode. Probably went something like this, “I hope this doesn’t affect our bonus”. It didn’t. They’re entitled to their entitlements.
https://www.msn.com/en-ca/money/markets/silicon-valley-bank-employees-received-bonuses-hours-before-government-takeover/ar-AA18vFVG?ocid=emmx-mmx-feeds&PC=EMMX01
An older friend of ours (now deceased) had this to say – ‘youth & skill are no match for age & treachery’. So yes, experience does (or should) make a difference. There are always those who can’t or won’t learn from history & thus repeat the errors of the past – even the recent past. Just look at our current housing angst. Post the GFC of 2008, we Canadians got to observe what happens when housing goes bad. Yet despite that very current & well documented debacle, what did we do? Leverage & take on epic debt just as if we didn’t have clear evidence of what the outcome would be. Because it wouldn’t happen here? Things were different this time? Uhm……
No dog caption? Is that adorable creature someone’s baby doll or is it a stock photo?
“Instead, as some analysts said over the weekend, we came to the edge of financial contagion.” – GT —
All peeps in the investment and banking business better pull on their steel underpants Monday morning, cause the telly phones will be ringing off the hook. The Ancient Warriors in Canada will have been burning the midnight oil, pulling up the drawbridges, and crafting an internal employee memo to steady the troops. If memory serves me correctly, one of them just closed a sale on a regional bank in the western USA.
Just watched an interview with David Sacks and he was completely melting down. Really something to watch.
“How did you go bankrupt?” Two ways. Gradually, then suddenly.”― Ernest Hemingway, The Sun Also Rises.
Mercy.
I’m old with experience… I felt compelled to donate to the trucker protest twice.
Glad it was successful…sometimes things just need to get done without all the BS such as taking a hypocritical knee.
“Burn it down”
Silly me. I thought we were going to have an interesting discussion about the abolishing of that utterly useless pig trough of party hacks, bagmen, and toadies, that sinkhole wastage of $126.7 million taxpayers dollars, that archaic vestige of our colonial past called the Senate.
The Fed will hike again a week from Wednesday.
Good! I hope they hike another 50-100 basis points after that.
About young people don’t not having work ethic.
An intermediate IT guy would get now around 100k/year. That’s 5.8k per month. That is barely enough to live in Toronto where only the rent would eat more than 50%. Now imagine the non-IT professionals that make less.
For work ethic to exist, there should be a point in working. Working for surviving doesn’t span work ethic.
#234 Joseph R on 03.12.23 at 4:52 pm
#226 Alois on 03.12.23 at 3:32 pm
This is NOT the free market..it literally and figuratively fits the definition of COMMUNISM whereby the 1% create and rip – off the OTHER 99%.
——————————————-
Read on communism. You will see your mistake.
Free market is exactly that: CEO makes as much money as they can.
“Greed is good. Greed makes things work efficiently.”
=====================
COMMENT:
I try to avoid hair – splitting definitions and associated political nomenclature.
COMMUNISM has always been a “Bait and Switch” by the 1% elite to fool and manipulate the Middle Class to effectively surrender power and cut their own throats.
Perhaps research “Bolshevik Revolution” and NYC bankers, who felt threatened by Russia’s emerging Middle Class.
WWI ???
…. was invoked because of Germany’s emerging Middle Class.
Paleo reconstructive surgery without the without the knives.
https://www.tiktok.com/@gemluvabeauty/video/7205595698945871147?q=Bold%20Glamor&t=1678523788304
[Holy Holopchi Batman]
Blasé young woman awakens.
https://www.tiktok.com/@sunflowermoon00/video/7204271492111273262?q=Bold%20Glamor&t=1678523788304
Pretty Boi tries it, just to prove how pretty he already is.
https://www.tiktok.com/@itsthemasoncarter/video/7204295804289420590?q=bold%20glamour%20men&t=1678655967188
And the irretrievable but honest.
https://www.tiktok.com/@chris.cherry.koolaid/video/7204486972780432646?q=bold%20glamour%20men&t=1678655967188
[ZZ Top fine as they are]
———————
Narcissists can be very entertaining. They can.
And now they have a new toy to play with.
Ironically, SVB’s innovative, mostly-younger, tech-savvy and leading-edge depositors created their own nightmare.
——————-
I’m not sure if “innovative” and “leading-edge” are the right words.
Foolish, greedy and reckless are better adjectives, IMO.
It’s time to ask the question, again:
Are High Tech’s and NASDAQ’s high valuations sustainable?
People so focused on affordability re housing they have lost sight of affording a life.
While they are correlated, one does not beget the other.
Seriously messed up social scene.
Now I got a case of the Sunday scaries reading about how easily people are duped. Are bank stocks on a big enough sale yet?
Confucius Say…Economy will go up and down when cpu try is run by Yo-Yos.
You contribute to this boomer hate. While the free financial advice and opinions are amazing don’t be so daft to think that things are the same and hard work pays off. Average families could have average life and that is not the case anymore. You know this. Stop pandering.
When Chuck Norris turned on the bold glamour filter, nothing changed.
Q and A with DS. You asked, we answered:
Q: Their solution to capitalism today: burn it down.
Will that happen?
A: No
Q: The question is about central banks. Has a 450-basis-point rate bloat started to break stuff?
A: Yes. Crappy stuff that shouldn’t exist anyway. This is just housekeeping.
Always here to help.
I thought Murphy was out of ammo already, I’m still bleeding from the salvo on friday.
This reminds me of the sixties. We wanted to burn it all down – yup rebels without a cause or a clue. But we were sure that our generation knew “the” truth.
I think the meme then was “drop out and tune in” or something equally as profound. And we despised “the man” who was everyone over 30.
Then we figured it out that if we really wanted something we did have to work and sacrifice. So we all got dressed up and got a job. I can remember eating a lot of Kraft dinner when we bought our first house.
Thankfully old people have a defence. It’s called experience.
__________________________________
People of all ages have Grand Master Garth Turner to set the record straight!
People are stereotyped by their gen…
…Quiet quitting…
…The MSM’s fact-checking is largely gone…
…Thankfully old people have a defence. It’s called experience…
_______
Based on your rants against the young looks like that experience has failed you. Quiet quitting is the perfect example of made up MSM story repeated over and over.
Actually it came from social media, later reported by the MSM. Try to keep up. This is embarrassing. – Garth
I’m thinking sale! Time to make my shopping list.
We still doing the SVB thing?
O.k, well I saw this the other day.
Could be talking about the Surrey Viper Brothel…
M48BC
///////////////////////////////////////////////////////
“Silicon Valley Bank Expands to Vancouver and Hires Local Leader.
VANCOUVER, BC, Oct. 27, 2020 /CNW/ — Silicon Valley Bank (SVB), the bank of the world’s most innovative companies and their investors, today announced its expansion to Vancouver and the appointment of Caterina Papadakos as Director of Technology Banking for Western Canada. Papadakos will be based in Vancouver and responsible for the development of new business relationships as well as management of the current client portfolio.
“With $555 million in venture capital invested in BC-based companies in the first half of 2020, BC is attracting growing investor and founder interest,” said Paul Parisi, Head of Canada at Silicon Valley Bank. “Silicon Valley Bank is dedicated to supporting the growth of the Canadian innovation ecosystem and we are excited to bring Caterina on board to focus specifically on working with companies in Western Canada. Caterina brings a broad range of experience working with high-growth companies and their investors to SVB. She will be a valuable partner to our clients and will help us build on our momentum in this growing market.”
About Silicon Valley Bank.
For more than 35 years, Silicon Valley Bank (SVB) has helped innovative companies and their investors move bold ideas forward, fast. SVB provides targeted financial services and expertise through its offices in innovation centres around the world. With commercial, international and private banking services, SVB helps address the unique needs of innovators. Learn more at svb.com/canada.”
https://www.newswire.ca/news-releases/silicon-valley-bank-expands-to-vancouver-and-hires-local-leader-851394716.html
Nic #34:
You contribute to this boomer hate. While the free financial advice and opinions are amazing don’t be so daft to think that things are the same and hard work pays off. Average families could have average life and that is not the case anymore. You know this. Stop pandering.
Correct! With all due respect, I do appreciate your pov, Garth. But you come from a charmed generation that had/took it all whilst tearing up this world for future gens to fix. Boomer gen did all with 1 basic income. Now, we need 2 rock-star incomes. Different days these are!
Stop rewriting history. Most boomer couples had two incomes, went through 19% mortgage rates and (ahem) raised you. – Garth
#34 Nic on 03.12.23 at 5:33 pm
Xxxxx
So what type of work are you suggesting?
@#34 Nicked
” don’t be so daft to think that things are the same and hard work pays off….”
++++
Whats so different?
Hard workers get noticed and get ahead.
Or
Laziness and sloth gets ahead?
Ridiculous.
I’ll stick with what works for me.
You do what you want to do…
See how that “works” out.
Recession coming.
Better keep an eye on the boss because he’s keeping an eye on you..
Cuts, closures, purges and layoffs coming.
Get your financial sh!t in order or the trustees in bankruptcy will….
:)
I have to agree with some of the arguments the kids are making as I see it everyday. Here is a story today of Nikki Haley’s proposed changes to pensions. No boomers are affected of course, just the kids take the hit.
https://www.cnn.com/2023/03/09/politics/nikki-haley-retirement-age-social-security-medicare/index.html
“While calling for changes to salvage the programs that she argued were headed for bankruptcy, Haley said older Americans should not see any cuts to their benefits”
Does anyone not see the problem with this? I’m reminded of the guy driving into a provincial park with a 500k motorhome and getting and senior discount while the kids with the Civic and a tent pay full price. I’d be pissed too if I was 20. The problem with the kids is they need to come up with real solutions other than socialism, cause that doesn’t work.
btw….Jagmeet made an idiot of himself this week. Not one fact expressed other than food stores make a profit. He must have been a terrible lawyer, definitely not worth the $600 per hour (40 times the minimum wage) he was charging.
Public pension reform must be enacted decades ahead of implementation, for obvious demographic reasons. Canada has done the same with regard to substantial increases in CPP benefits for people now in their 20s. – Garth
boomer hate. millenial hate.
this blog is getting real good at fomenting hate in all its forms. Never thought I’d see the day.
ah well.
What hate in this post? – Garth
Yes and no; some men have a hundred experiences, but most curmudgeons have the same experience a hundred times.
I don’t think that the major economic calamities were caused by the young. Most were caused by the members of the old boys’ club.
Rich kids, born with a silver spoon in their mouths, who have never worked at a real job.
Not that greed and stupidity is a quality exclusive to the curmudgeons, but the reality is most central bankers and politicians, that have been instrumental and are responsible for the mess we are in, are mostly old.
Started with the Greenspan Put, the rest is history easily accessible.
Please provide examples of, “Rich kids, born with a silver spoon in their mouths, who have never worked at a real job”. Just so we know. – Garth
CIRCLE THE WAGONS
TECH IS IN THE CROSS HAIRS
KABOOM! RUN FOR COVER!
As I write this, Dow futures are up 286 points. – Garth
You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.
Abraham Lincoln
Washington, DC — The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg:
Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority.
All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.
Called it. $SBNY just got seized
The glory is more power and influence given to every citizen. The danger is bad decisions made on corrupted data. – GT
—————————————–
Indeed. Most people can’t accept that they’re completely ignorant on almost every topic conceivable. Generally, if you’re not getting paid for your expertise on something (or were paid previously), you know almost nothing about it. Yet, social media has given everybody an equal voice, as if they’re all equal experts. And because none of us are experts and almost anything, our filtering of the data is also bound to be wrong.
The smartest people are the most humble, knowing they don’t know much about anything. Anybody with a such a strong opinion that they’d, for example, fund the trucker occupation, is likely not the sharpest tool in the shed.
That’s crazy talk, just like the crazy prediction of $3 liter gas.
Recession is nowhere in sight. Will a nasty recession eventually come? Yes, but it’s a long way.
First the casinos will go into the gutter, OOPS! I meant to say the stock exchanges.
The real economy is chugging along, powered by an inefficient engine, but it won’t be a wreck for a while yet.
…and then Signature Bank collapsed today and under control of the US government.
Nothing to see here, move along.
https://www.wsj.com/articles/federal-reserve-rolls-out-emergency-measures-to-prevent-banking-crisis-ba4d7f98?mod=article_whats_news_pos1
Another crypto bank. – Garth
Most of the misinformation and lazy work ethic now comes from the MSM.
That’s the whole reason they “report” on social media hearsay that some irreverent influencer came up with just to get more views.
I checked out Tiktok out of curiosity and it’s great. I learned more scrolling Tiktok in a night than I did from reading/hearing MSM do some half-assed reporting on events that nobody needs to know about.
Not that imporant….Then why did the Fed just step in?
https://www.cnbc.com/2023/03/12/regulators-unveil-plan-to-stem-damage-from-svb-collapse.html
Oh and Signature Bank…..shutdown!!!
https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html
Don’t downplay this. Its about to get nasty.
And its just the beginning.
Not it’s not. Drama queen. – Garth
Well stated! Thanks Ryan and Garth (and team)!
Just an aside but can regular people get 4% on a savings account now?
I mean, who parks money at .5% with these banks? I’m sure that would have helped SVB keep deposits.
Sigh, off to buy more bank shares…and collect dividends instead.
#12 TSA on 03.12.23 at 4:59 pm
“Me being a 64 year “Old Guy”, love the last sentence. The ‘Old Guy / Person Life Experiences’ is so disregarded by the youngsters over the last decade and a bit. Having said that, there are sure are also a lot of old guys messing things up around the globe these days, especially south of our border, embarrassing to say the least!”
————
I understand you’re upset about the “youngsters” disregarding the older generation that has experience. But, hasn’t it always been that way? Don’t tell me that 64 year olds weren’t saying the same thing about boomers in the 1960’s when your generation burned bra’s and burned flags, and had sex and did drugs. That was the boomer generation in their late teens and early 20’s. So, why do you expect youngsters today to be any different? You’re looking at things as a 64 year old, but if you could talk to the 24 year old version of yourself he would probably have a different opinion of things.
#53 Jason on 03.12.23 at 6:51 pm
The glory is more power and influence given to every citizen. The danger is bad decisions made on corrupted data. – GT
—————————————–
Indeed. Most people can’t accept that they’re completely ignorant on almost every topic conceivable. Generally, if you’re not getting paid for your expertise on something (or were paid previously), you know almost nothing about it. Yet, social media has given everybody an equal voice, as if they’re all equal experts. And because none of us are experts and almost anything, our filtering of the data is also bound to be wrong.
The smartest people are the most humble, knowing they don’t know much about anything. Anybody with a such a strong opinion that they’d, for example, fund the trucker occupation, is likely not the sharpest tool in the shed.
———————
Exactly.
In my hometown in Austria, the 700 year old Cityhall cum Courthouse das the following inscription above its entrance:
“One Man’s speech is half a speech.
One should listen to both Man”.
It rhymes in Old German”
This kind of intrigued me as a kid.
And to this day, I try to put my emotions and prejudices aside, and try to see the other side of the coin.
Not always easy.
When I’m in a meeting, and everyone agrees.
The Devil’s Advocate in me has to pipe in.
Group Think is deadly.
In woke vs patriots, I sure would like to know where the true patriots are. Because I see a lot of nationalists who are claiming to be patriots.
Dear Advisor/Adviser.
We feel it prudent to sit on the sidelines given the recent events in US Banking news, war in Ukraine and Interest Rates. Please move us to cash at once. We will advise once we are ready to re-enter the markets.
P.S. We will continue with your emailed newsletter subscription as we value your insights.
Sincerely,
Morley Superior (he/him/his)
RE: #46 Bezengy on 03.12.23 at 6:20 pm
Does anyone not see the problem with this? I’m reminded of the guy driving into a provincial park with a 500k motorhome and getting and senior discount while the kids with the Civic and a tent pay full price. I’d be pissed too if I was 20.
=======================================
No senior’s discount during the peak camping season in BC. Only in the late fall and early spring rainy season do they get a discount.
Don’t see how you can link the fall of the SVB to the crazy Qanon supporters.
Social media and people being kept “updated” on current events is a double-edged sword.
For the SVB bank, investors and clients having some inkling that the bank was in trouble was in fact good, as they could extract their $$$ before the collapse. Without this shared knowledge, many times companies would all of a sudden just shut their doors before people can take action. (Nordstrom, Bath-Bed and Beyond, Nortel… all had rumours of problems, but shutting the door suddenly was not in the mindset of people). It is good then that the herd has this knowledge.
The social media organization leading to the Arab spring of a decade ago mobilized so many people to fight to topple their corrupt regimes. Without social media, there was no way to get the information out to the masses. Unfortunately, the initial promise of this has not in the end done much at all.
However, social media clearly has its ills in brainwashing hordes who are not able to discern fact/fiction and who feel hard-done-by in one way or another. They are then victim to all sorts of keyboard warriors spewing rubbish (Qanon and other conspiracy theories).
Sorry, not but sorry. There are employers out there who systematically take advantage of their employees (not the majority by any measure, but they are out there…). Moreover, there are companies who are exploiting the inflationary environment to raise their prices well-beyond their costs as they feel that the public will just accept it.
Most things/people self correct, it just takes some longer than others
Am I missing something here? How are Boomers being blamed for the unaffordable house prices? Is it not the buyer who sets the price? Most Boomers bought their homes 40-50 years ago, when prices were relatively affordable. This recent acceleration was created by the buyers entering the market in the past 10-15 years competing and driving up the prices. That’s not on the Boomers. And, full disclosure, I’m not a Boomer.
“Their solution to capitalism today: burn it down.”
Why not burn down socialist, capitalist and globalist oligarchy down in favor of private enterprise, freedom, strong independent government and morality?
Silicone valley bank problems are a harbinger of more to come.
By centering their mission statement on “ESG” investments the chickens are coming to roost.
Many other banks have similar portfolios and are in the spotlight of trouble.
Garth was right, the parody of the lefties cannibalizing their own bank by making a run on it says everything that is wrong will bite you in the ass.
SVB
Feds have backstopped all uninsured deposits. To me this is pretty clear evidence that had they not done so, the entire banking system was in jeopardy. Anyone with excess uninsured funds in small banks would be ready Monday to transfer funds to only the biggest.
I think it’s the perfect time to write another blog, quick reminder, why it’s wise to own ETF’s, not individual stocks. I assume if someone had invested in SVB stock, all their investment is gone, am I right? Even after the Fed said that they gonna pay all the deposits.
She’s gone. – Garth
After the collapse of the eco-activist SVB bank 1000s of companies face bankruptcy. Unless the
@bankofengland
stops its mad prioritisation of ESG & Net Zero over commercial & national interests this bank failure may turn into the first financial crisis caused by climate hysteria..
Yesssssd
.
Getting older and crustier at some point, is like exiting prepubescence and piling headlong into a chemical fuelled lust for Women, nesting and houses. In fact, it’s even better. You’ll see kids. Look forward to the day when you ain’t shook by anything. Been there done that. 9/11, .Com, GFC, Covid. Just got richer. Trudeau? Just got richer. Catches you by surprise, but you’ll get to like it real fast. Play your cards right. Stay out of the Metros, pump the B+D, don’t sauté yourself in debt, don’t box yourself in, and get yourself a PhD in Herdonomics.
Not that imporant….Then why did the Fed just step in?
https://www.cnbc.com/2023/03/12/regulators-unveil-plan-to-stem-damage-from-svb-collapse.html
Oh and Signature Bank…..shutdown!!!
https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html
Don’t downplay this. Its about to get nasty.
And its just the beginning.
Not it’s not. Drama queen. – Garth
————————————————–
89.7% of Signature Bank’s total deposits of $88.59 Billion were not FDIC insured.
May be more drama than you think.
Who exactly is doing the burning?
The CEO and Sr. Management of SVB was totally focused on homosexuality/transgenderism, global warming, race baiting and supporting left wing political leaders.
Much like the leaders of Canadian Banks and big corps.
It didn’t end well. At the end of the day, the folks who withdrew $42B in a day didn’t give them any credit for their political activities.
Let them reap what they sow…
When your deposit base is made up almost entirely of people also without fundamental moral principals….
Put down the keyboard and back away slowly. Then nobody gets hurt. – Garth
Beware of the Ides of March. All debt must be settled, or your head will rest on a pike.
Cue the banking crisis on both coasts – crypto and tech are roiled. Commercial real estate is next. The office towers need to be liquidated. WFH rules. Gen-Z says burn it down.
#16 Old Boot on 03.12.23 at 5:06 pm
Lots of big, tough, Libertarian VC crypto cowboys who’ve been vocally bashing the Fed are having a come to Jesus moment and begging for a bailout.
Marc Cohodes is an interesting Twitter follow (@alderlaneeggs). He called SBF /FTX before anyone else.
Plenty more crypto dominoes to fall, if he’s correct again. Monday will be a market bloodbath regardless.
———————————————————–
But Bitcoin doing very well.
People starting to learn about the difference between property and a security.
Also, the idea of keeping hold of your own property is a good way to sleep well at night and not worry about dodgy bankers or financial regulators.
I have a question for everyone: What stops us from having a banking crisis (like 2008) and inflation at the same time?
You can bash all the young fools as much as you want, but don’t you dare disrespect my work or the booming real estate market, Garth!
Or I will come over there and SLAP YOU SILLY!
DELETED
#61 Ponzius Pilatus on 03.12.23 at 7:18 pm
And to this day, I try to put my emotions and prejudices aside, and try to see the other side of the coin.
—————
As demonstrated by your deep fondness and appreciation for plumbers: a solid profession where qualified professionals do regulated, certified work for legit fees.
After all, SVB’s problems began after it put depositors’ money into government bonds which sank in value as Fed hikes took place. When it tried to issue new securities, revealing its almost-$2 billion investment loss, Internet chatter among its high-tech clients caused a panic. In one day $42 billion was sucked out by worried clients.
Clients ? Venture Capital firms
Contagion?
“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority.
More bank runs are still very possible…
Even in Canada, good to keep some money at home. I did.
“Ironically, SVB’s innovative, mostly-younger, tech-savvy and leading-edge depositors created their own nightmare. In a few hours they destroyed an organization that had nurtured, gambled on and supported many of them. In a world devoid of social media or digital communications, that never would have happened. The bank dudes would have covered their bond losses, secured some new capital, diluted their equity and carried on with business.”
—————
Exactly. In my own businesses, there’ve been times we were on the thin edge and if creditors demanded immediate full payment, that would’ve been that.
It happens.
It’s nice to see the bank paid employees’ 2022 bonuses before the implosion. It wasn’t their fault. And depositors will be made whole. It wasn’t their fault, either, and they have bills to pay.
Blah Blah Blah..
People are pulling their cash out of banks because you can get 5% on money markets while the criminal banking cartel pays 0.2%.
To produce the cash, banks will need to sell 0.1% bonds into a market paying 5%.
The banksters caused their own fall by paying 0.2% on savings while charging 25% on credit cards.
It’s not the banks fault if it’s leagel. Again the true criminals are the bank regulators within your own traitorous government.
Any talk of “hard work” and “pulling yourself up by your boot straps” falls on deaf ears where inflation isn’t mentioned. Telling the younger generations to suck it up and take it is just plain tone deaf at this point.
People will work hard where hard work is rewarded, but wages haven’t kept pace with inflation or productivity since the early 70’s (don’t make me tap the chart) and over the past decade, it has just gotten worse. Numerically I make what both my parents combined made in the mid-90’s. Adjusted for BoC CPI inflation, my buying power is around half of what my parents was 30 years ago. A house is still out of reach, a base model Honda Civic is $28,000, a stick of butter is $8, and rent is up because Justin thinks importing 500k humanoids per annum to suppress wages for his friends and to prop up the CPP is just great (don’t care what race they are, numbers are numbers).
Enough people have realized that life is short, and that spinning your wheels to go nowhere just isn’t worth it, and I have a difficult time blaming them. I did all the right things: went to school, got a good job with a good pension, saved/invested aggressively… only to watch more money melt away with inflationary policy, and lose yet further value against the US dollar because too many people went into too much debt, so rates won’t keep pace with the Fed.
I think another thing worth mentioning here is birth rates: millenials and younger gen-x’rs didn’t/haven’t had enough kids. All those single or childless people out there slaving away at their Mc-jobs are probably having a crisis of meaning as they near their late 30’s and 40’s without a family to provide for. Some people can do it, but given the sheer numbers, there are enough people questioning just why they are doing what they’re doing. Consumerism can only motivate people so far.
Anyway, I think it will be interesting over the next few years as more and more of the boomers retire from positions in key infrastructure jobs. Anyone else betting a bunch of stuff is just going to stop working?
#158 Sail Away on 03.11.23 at 8:23 pm
#148 Faron on 03.11.23 at 7:10 pm
I knew it was a mistake giving you a fix. Hey, only 42% of your comments are about me today. Good work, Obsesso!
—
Aw, shucks. 100% of Yukon Elvis’ comments were about/toward me yesterday. Try harder. I suggest, instead of trolling me from the get-go, you troll continuously. People like that kind of on-topic commenting. Like Penny Henny did today. v. nice.
People who invest in Banks do what the banks allow, they don’t make the rules.
Appears the head honcho’s started cashing in months or weeks before the failure.
Sounds kind of familiar…
They should go to jail.
No excuses.
On the plus side, I’m just watching The National and SVB has knocked the war in Ukraine out of the lead so, there’s that. Ukraine is not even in the top five.
These posts:
….over the last few days by GF mafia
……are accelerating to the point the residual/collateral energy benefits should be harnessed and be placed on altar of ” Eat the Bugs” Greta….
#$47 Hmmmm
“this blog is getting real good at fomenting hate in all its forms. Never thought I’d see the day”
+++
The truth is “hateful”?
Sniffle sniffle.
Life is so unfair.
In 2075
When all the Boomers are long dead….who will you blame then?
Ah right. The Boomers.
SVB isn’t a domino, it’s the canary in the coal mine.
Rates went up too much too fast and now we’re faced with consequences. Going from a 0.25% to a 4.75% borrowing rate isn’t a 4.50% increase your the cost of funds. It’s an 1,800% increase. In a year. As banking analyst Chris Whalen put it, “Most banks are not insolvent. But every bank is sitting on losses.”
The Fed won’t be able to tighten any further. They might not cut right away but they’ll have to at least pause their hikes. Rumours of the Pivot’s death have been greatly exaggerated.
So Ponzius wants to blame Trump without really having a clue about what caused SVBs downfall (hint: massive holdings of fixed income bought at high prices due to the Fed’s ZIRP policies and regulatory capital requirements).
But let’s talk about the regulatory angle shall we?
Turns out that Barney Frank was actually a strong supporter when, as the WaPo reported at the time: “As Senate Democrats successfully pushed into law a plan that rolls back post-financial-crisis banking rules, Barney Frank was a go-to figure.”
What’s really funny (except to those suffering from Trump is to blame for everything disease) is that Barney was on the Board of Directors of Signature Bank of NY, which was just closed along with SVB and which bank was mainly known for refusing to do business with, you guessed it, Donald Trump.
Karma sure has a sense of humour.
A little bit of truth for the haters:
https://www.washingtonpost.com/news/wonk/wp/2018/05/24/a-lot-of-people-heard-what-barney-frank-said-about-the-new-banking-law-few-knew-he-works-for-a-bank/
@#48 Quintillian
“Rich kids, born with a silver spoon in their mouths, who have never worked at a real job.”
+++
Like the Gen X Prime Minister?
@#60 Old Adam
“You’re looking at things as a 64 year old, but if you could talk to the 24 year old version of yourself he would probably have a different opinion of things.”
+++
Yes, because the younger version …lacked experience… Doh!
@#67 NUTS
“Am I missing something here? How are Boomers being blamed for the unaffordable house prices? Is it not the buyer who sets the price? ”
++++
Please take your rational discussion to the Woke asylum where you will be shouted down as a traitor….for speaking the truth…..
#51 jess on 03.12.23 at 6:36 pm
…All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
… Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, …
Ahem, yes, no losses borne by taxpayers & a special assessment on banks.
Who do you suppose will pay for this?, the banks will certainly not take a loss; it is you, the depositor who is also a taxpayer, that will bear the cost with higher fees and less interest on deposits, etc. Either way, its always the same people who end up paying. The banks never lose.
@#85 Down
“Appears the head honcho’s started cashing in months or weeks before the failure.”
+++
SVB handed out 2022 staff bonuses …just before the Feds walked in to take over.
https://www.nbcnews.com/news/us-news/silicon-valley-bank-employees-received-annual-bonuses-hours-government-rcna74508#:~:text=The%20size%20of%20the%20payouts,%2C%20according%20to%20Glassdoor.com.
Not the best optics when the public may have to spend billions on insured bank customers accounts.
Stop.The.War.
#81 Sail Away on 03.12.23 at 8:32 pm
#61 Ponzius Pilatus on 03.12.23 at 7:18 pm
And to this day, I try to put my emotions and prejudices aside, and try to see the other side of the coin.
—————
As demonstrated by your deep fondness and appreciation for plumbers: a solid profession where qualified professionals do regulated, certified work for legit fees.
————————
As I said.
Nothing to do with emotion and prejudices.
Just cool and rational assessment that plummers’ wages are not commensurate with their education level.
I.e. compared to Doctors, Engineers and yes, Accountants.
#92 AnonyMusk on 03.12.23 at 9:32 pm
So Ponzius wants to blame Trump without really having a clue about what caused SVBs downfall (hint: massive holdings of fixed income bought at high prices due to the Fed’s ZIRP policies and regulatory capital requirements).
————————
Oh,
Jeez.
Someone is actually reading my posts.
But, go back and read it again.
This time with your brain engaged.
Biden: On Monday morning, I will speak about how we will maintain a resilient banking system to protect our historic economic recovery.
20:43 Mar 12
lol!!!!! What a clown!
Why wait till Monday morning< why not today and now?
Trying to band-aid the market open?
G. U just drop a pic of your critter?
Cute lil bugger
OriginalAdam on 03.12.23 at 7:18 pm
#12 TSA on 03.12.23 at 4:59 pm
“Me being a 64 year “Old Guy”, love the last sentence. The ‘Old Guy / Person Life Experiences’ is so disregarded by the youngsters over the last decade and a bit. Having said that, there are sure are also a lot of old guys messing things up around the globe these days, especially south of our border, embarrassing to say the least!”
————
I understand you’re upset about the “youngsters” disregarding the older generation that has experience. But, hasn’t it always been that way? Don’t tell me that 64 year olds weren’t saying the same thing about boomers in the 1960’s when your generation burned bra’s and burned flags, and had sex and did drugs. That was the boomer generation in their late teens and early 20’s. So, why do you expect youngsters today to be any different? You’re looking at things as a 64 year old, but if you could talk to the 24 year old version of yourself he would probably have a different opinion of things.
https://youtu.be/4gi9zFRBCIM
Sorry still love this from my early years, damm I miss them !
Oh yes, I have a 30 year old version of myself, and yes he does definitely has a very different opinion of things.
#17 DON on 03.11.23 at 11:30 am
… I have never heard of anyone on their death bed wishing they had spent more hours at work…
#197 XEQT and Chill on 03.12.23 at 11:32 am
Nobody on their deathbed wishes they spent more time at the office.
*************************
I see this all the time, and it’s wrong. I bet loads of people who have to work until they die at age 75+ wish that they had worked harder and retired at ~40 instead.
I’m very sure that I won’t be on my deathbed wishing I’d kept working and “mailing it in” for decades instead of hustling and getting out early.
——————–
I see so many young people who love WFH because they can “get all their work done in 2-4h” and only a handful who have the revelation that they can work 2 jobs that way and make huge bank.
I can only dream of having had such an opportunity, the closest I had was overtime at +50%, and I gobbled up every hour I could–try asking someone to work paid overtime these days…
#97 Ponzius Pilatus on 03.12.23 at 9:49 pm
Just cool and rational assessment that plummers’ wages are not commensurate with their education level.
—————
Blasphemy! Christopher Plummer and Julie Andrews restored Austria’s reputation on the world stage.
Worth every penny.
Let them reap what they sow…
When your deposit base is made up almost entirely of people also without fundamental moral principals….
Put down the keyboard and back away slowly. Then nobody gets hurt. – Garth
——————————————–
Well at least I’m not the only crazy nut who thinks this way….
————-
While Florida Governor Ron DeSantis has not yet declared he is running for president in the 2024 presidential election, he did share his thoughts on the collapse of Silicon Valley Bank on Sunday.
“This bank, they’re so concerned with DEI and politics and all kinds of stuff, I think that really diverted from them focusing on their core mission,” DeSantis told Maria Bartiromo on “Sunday Morning Futures,”
#99 Don on 03.12.23 at 9:59 pm
Biden: On Monday morning, I will speak about how we will maintain a resilient banking system to protect our historic economic recovery.
20:43 Mar 12
lol!!!!! What a clown!
Why wait till Monday morning< why not today and now?
Trying to band-aid the market open?
……….
Not jumping to a solution is usually a good idea.
DELETED
#61 Ponzius Pilatus on 03.12.23 at 7:18 pm
Agreed!
@#103 Sail Away
“Blasphemy! Christopher Plummer and Julie Andrews restored Austria’s reputation on the world stage.”
+++
Thats a Bingo!
https://www.youtube.com/watch?v=6f0T6UV-HiI
Yeah inflation isn’t over here or it’s just the same as usual with Canada…
Franks 2×740.0 ml was $9.99 a few months back at the local Superstore here in BC. It’s now $12.99.
Garth I respect all your analysis, but let’s be honest nothing is getting better. Unless people stand up or as my dad said, stopping taking it… then this country is doomed.
You think Loblaws and that swine Galon Weston is going to reduce the cost of Franks hot sauce. Nope.
I think you mean wisdom. Anyone can have experience at any age. The old person advantage is wisdom.
It should be mandatory for everyone under 40 years old to watch the Grapes of Wrath. And Woody Harrelson is my hero for telling a joke on SNL, causing many thin skinned marxists to be triggered. Huh? What’s up with that? Woody for President. Dave Chappelle for Vice President. Jesse Ventura for Secretary of Defense. Bill Marr for Secretary of State.
Imagine if they use these failures as a precursor to the introduction of a governmental or global digital currency on the guise that they can monitor and prevent any more of these post Lehman like failures.
All for our protection of course.
Yes, I’m rubbing my hands with glee. This big Spring Sale on bank stocks and to a lesser extent, all stocks, has me happy happy happy. I’ve been waiting for a sell off since November, cashing up, letting the divvies stack. All the while the portfolio kept working, up 8% . Up 6% in January alone !!!
Down 2% on a panic? Nothing burger, free money made back faster than expected as Biden has bought 100% of the debt. As usual, if you sold, you lost. Will they never learn? I’m not buying the entire index, instead picking selectively. It’s the only way to beat inflation.
What Biden has done over the weekend on top of the other 5 trillion budget top up, will just prolong the inflation we already have. Because of that we have to invest smarter. There’s a lot of snowbirds who are saying they’re not going back.
Where you save is on your cost of living. Where I live it costs a quarter to live what it would in Canada for what I think is a far better standard of life. Losing millions of retired and “quiet quitting” Canadians is hurting communities big and small, especially small. What’s the justification? These people can’t trust the current government with their lives, and they’re voting with thier wallets.
I’ve started trading online since 1992, spending more and more time in sunny climate countries. Going from vacation schedules, to trading more time off by foregoing income, to a standard 6 months on 6 months away, it wasn’t a shock to the system to now permanent “away”.
It’s a lot of things, not just the low cost of living. I made a note one day, a long time ago, that people are generally less “snarky” here than in Canada. The “happiness quotient” is a lot higher, and you know, you can’t put a price on happiness. I noticed that while living in Texas, people are happier. Could it be that lower taxes produce less stress?
Don’t start on the health care disaster in Canada. I have great private care hospitals on demand, and not hearing Justin deny another scandal will probably add a decade onto my life. You might have your own story, but from where I sit, I see a lot more retired and WFH Canadians these days checking out with no plans to go back.
Crazy that the US financial system is so shaky that they have to bail out depositors at SVB. These dda holders all knew the 250k rules, what a joke that the US Gov has to step in to backstop an FI with 8b under management. An absolute minnow of a Bank needs government support.
There is a takeaway here – there is no free market, make no mistake. Stay invested, governments will never let markets fail. Until they can’t, when the party ends look out.
#55
Western Alliance Bancorp
PacWest Bancorp
The ones to watch.
Wages spiraling up, prices next, so BoC will have to raise rates.
https://ca.finance.yahoo.com/news/canadas-jobs-engine-slower-growth-wage-growth-reaccelerates-133832699.html
Wow….just watching a business line feed announcing Canada Pension Plan buying a money losing software company in Provo Utah for $12.5 billion. Is this our Liberal governments idea of investing in Canadian tech start ups?
I think the market has the right for concern. It’s not so much a question of individual bank risk or systemic risk really, it’s a question of write downs for annual reports.
https://www.cnn.com/2023/03/12/investing/stocks-week-ahead/index.html
CNBC had a similar story yesterday. Of course, write downs can mean drama for stock values ratcheting fear and explaining some of the market sell off, but its the mood of the markets as a whole. These rate hikes are just beginning to hit the numbers and they won’t be pretty.
A start up bank won’t be missed in the big picture, but there are some small to mid sized banks out there that will struggle in a high rate environment. Most won’t be affected by a startup bank gone bust in Cali, but there will be others and it pivots back to inflation and more rate hikes.
How high could the terminal rate go? Could be 5.5%. Could be less if something systemic and serious breaks first. That would be the worst case, because that would mean sticky inflation coupled with a Fed that has run out of room to raise rates, that’s the worst case.
Will we see, it’s out of my purview, I’ve been too distracted. As long as it’s a bank here and a bank there, that’s no biggie. But if we start seeing 4 or 5 mom and pops hitting the skids every day… and that’s the issue with, say, student loan forgiveness. Is this a millennial student bailout, or is it a small to medium sized bank bailout? Housing debt, credit cards, cars, student loans, would removing some student loans be enough to move the needle? It’s a valid question.
It’s like I said a while back, the system will be tested. Bond ratings, zombies, triple C & B credit freezing up, A’s slowing down significantly, lets think about it, it has to happen for the Fed to suck money out of the supply as new money is created through credit. The Fed bloated the money supply to the degree that the Fed now has to shrink the supply or face the continued wrecking ball of high inflation. M2’s negative now and will be for a while, not an accident:
https://www.longtermtrends.net/m2-money-supply-vs-inflation/
I haven’t made my opinions a secret on this blog, from Friedman’s ghost to bond profiteering from the vice chair of the Fed in charge of monetary policy, to just how telegraphed a gut punch this is to the U.S. economy from inflation to the Fed response. This became obvious to me when I researched Friedman’s ghost.
It’s pretty simple, when the Fed increases the money supply chasing the same amount of widgets, the price of said widgets goes up but it takes time to hit the system. Along the way, it creates the mother of all wealth effects until inflation hits (like after the election) but it’s the degrees of which the supply is increased right, the degrees.
The Federal government under Trump more than doubled the Fed debt under his 4 year watch (8 trillion in new Fed deficit spending, 5.5 trillion of fresh debt on the Federal Reserve’s balance sheet and the pop in the Repo market, 2 trillion). That’s $ $15.5 trillion in fresh debt out of a total of $ 27.5 when Trump was shown the door. Some has assets backing it up, most of it doesn’t.
I’ve argued that this is politically motivated under the guise of pandemic crisis. Was there a need to take mortgage rates to a record low below 3% by buying $2.45 trillion in MBS’s as an example spawning a new housing bubble in the U.S.? I don’t think 1 dollar of that money needed to be spent and gassed a housing bubble.
We do need to look back and ask ourselves what happened here and why specifically in the U.S. and Canada and if big mistakes were made, hold them to account so they don’t repeat themselves otherwise, it’ll likely happen again. To my knowledge for example, nothing has been reformed in the case of Clarida’s bond duration adventures.
Democrats talked about it and to my knowledge, the bill to reform Federal reserve governor investment policy quietly died with a new congress, while Powell announced on a late Friday that internal investigations found nothing wrong. Makes a guy turn to religion:
https://www.biblegateway.com/passage/?search=Psalm+23&version=NASB1995
Probably doesn’t need to be said, but it looks like a rough week coming to U.S. stocks.
@#118 DeeDee
The month wouldn’t be complete without a catatonic Tome from the closet economist.
Billionaire hedge fund manager Bill Ackman has, meanwhile, compared the fall of SVB to the same developments with Bear Stearns, the first bank to collapse at the start of the 2007-2008 global financial crisis.
This is the second biggest bank collapse 9$207 billion) since 2000 after Washington Mutual at $307 billion.
Gonna’ hurt.
The Silicon Valley Bank debacle is what happens when you let a bunch of woke-ideology ESG fixated adolescents run a bank. Just imagine what they’d do if they ran a country. Like Canada…..
Just for fun let’s have and ESG acronym contest. I’ll start off:
Every Shareholder Gutted
Electricity Snorting Gretas
Equal Squalor Goal
Equity Shares Garbage
Play along! It’s easy and fun.
I think Scott Adams of Dilbert fame called ESG the bastard child of Wokeism and Wall Street Bankers.
If the bastard child had explosive diarrhea.
Woke up this morning to find that HSBC bought the UK arm of SVB for…wait for it…£1. That’s right, one British pound. Math is hard.
“First, don’t expect dominoes to fall. SVB mattered a lot to a volatile sector and a slew of corporate depositors, but it’s not bringing down any of the big guys. Nor will this cause the CB to panic, kick into reverse and drop rates. The Fed will hike again a week from Wednesday.”
Oh really? First Republic Bank is down 66% in premarket today….I’m sure it’s nothing…..right? I believe that is called contagion. Does this mean the financial system is collapsing…nope…Will it give The Fed pause and cover to not go the full 50 and only 25 or no hike at all hike. Likely, will that exacerbate things because we are still dealing with an inflationary environment? Yes. What we have is a classic cluster…you know what.
#97 Ponzius Pilatus on 03.12.23 at 9:49 pm
As I said.
Nothing to do with emotion and prejudices.
Just cool and rational assessment that plummers’ wages are not commensurate with their education level.
I.e. compared to Doctors, Engineers and yes, Accountants.
========================
Your fatal error is using credentials to measure the value of a profession. Touting education is just your way to feel better that you earn less than the guy getting his hands dirty.
A cool and rational assessment would be that a profession that provides the means for clean, accessible water and sanitation if equally as valuable as any doctor and engineer.
Certainly far more than any accountant, which don’t even belong on the same list.
Consider the loss of your toilet compared to the loss of the guy doing your books and it becomes clear pretty right quick where the value is.
Sold my Republic Bank puts this morning, premium paid was steep on Friday but walked away with just over 100k.
Not bad for a weekends work.
NYSE halt Western Alliance for additional information, last at $12.40.
NYSE halt the First Republic for additional information, last at $28.56.
IMO, hard landing ahead. I only hope that contagion doesn’t drag Canada in to the vortex.
https://www.youtube.com/watch?v=wdoggdSekjY&ab_channel=WindWalkTravelVideos%CA%AC
Hey, I appreciate the financial advice.
But if capitalism (in its current form) is so great, you wouldn’t need to worry about socialism. We’ve had a nice thirty-year run of not having any alternative system to compete with. A lot of players chose to exploit that fact by chopping out a lot of the safeguards that made western capitalism a winner for most of the 20th century.
Offshore the jobs, jack up educational requirements for hte same kind of work, jack up the price of that education, let financial games and rent-seeking and middlemanning divert more and more wealth away from actually doing things of value.
Encourage the best minds of an entire generation to focus on making computers do tricks; why would anyone with a brain spend seven years becoming a doctor or antibiotic specialist or developing carbon capture technology when you could learn to code and maybe become Mark Zuckerbergovernight? Maybe 3% of this led to actual useful things and the rest, pointless and quickly-obsolete parlour tricks.
If you want a widespread work ethic, you need people to trust that work will be rewarded. (It’s been a long time since we’ve been able to say that the kind of not-working that poor people do is lucrative; welfare queens in Cadillacs and all that. It was never true but enough people believed it long enough to break the social safety net.)
Capitalism in its current form means that everything worth having and enjoying is behind some kind of paywall. (Time with friends and family? Relaxing with the sunset? Living indoors, eating simple food and reading a book? Maybe when you’re done working your second side hustle.)
We are richer as a society than ever before, and yet the basics–a roof over your head (and no, Garth, I’m not talking about Owning Real Estate, I’m talking about rentals which have inflated with everything else), downtime, and a reasonable return of quality of life in exchange for labour–have risen out of reach for too many people.
To say nothing of the systematic destruction of the world’s ability to support a civilization. But burning fossil fuels meant profit now, so the future will just have to suck it up I guess. Try lecturing the West Antarctic Ice Sheet about work ethic. On this topic alone there is simply no comparison–none whatsoever–ever, in all of human history–in the willful and eyes-wide-open screwing of one generation by the previous. If only houses being too expensive was the worst of our problems!
If you want to chalk this up to a sudden, generation-wide epidemic of lack of character, be my guest. Though that begs the question, who raised them?
To me it looks more like they learned the lesson that was made more or less explicit forty years ago: you don’t owe anyone anything. Take all you can grab. Promises are made to be broken once the other guy has held up his end.
What you’re really seeing is the same philosophy cutting both ways.
What a sale on Banks, complete over reaction. Days like today are why I self invest and buy individual equities. Hard to time markets for sure, but you don’t need to when banks have a 1 day 10% sale because a regional made bad business decisions.
#126 millmech on 03.13.23 at 9:36 am
Sold my Republic Bank puts this morning, premium paid was steep on Friday but walked away with just over 100k.
Not bad for a weekends work.
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Good work! Never let a good panic go to waste.
This week’s play for us is not really a play. Just watch the seesawing and add to existing holdings where it makes sense. Same as always.
SVB should NOT be bailed out. Let the investors swing in the wind, I say. Just a face saving gesture by the exceptional fools who run the exceptionally corrupt U.S.A. corporation. Credit Swiss is the real black swan. Let’s get it on!!!
So it was internet chatter among its high-tech clients that led to the demise of SVB. I’m reminded of back in the late 1990s, when the internet was still in its early days. I thought that, with this new information technology, everyone would be better informed. That would bring an end to dumb old urban myths, and everyone would make better more informed decisions. Wow, did I ever get that one wrong.
#109 Tim on 03.13.23 at 12:03 am
Yeah inflation isn’t over here or it’s just the same as usual with Canada…
Franks 2×740.0 ml was $9.99 a few months back at the local Superstore here in BC. It’s now $12.99.
Garth I respect all your analysis, but let’s be honest nothing is getting better. Unless people stand up or as my dad said, stopping taking it… then this country is doomed.
You think Loblaws and that swine Galon Weston is going to reduce the cost of Franks hot sauce. Nope.
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Did you buy the hot sauce because you saw the commercial?
Lots of great hot sauces in Asian stores.
Or make them yourself.
Easy.
Just in case anyone believes Tesla safety disinformation occasionally spewed by malicious crampon (and SAR)-hating nutters, here’s the Q4 safety report. Go Elon!:
“According to the latest data Tesla cars driven with Autopilot engaged are still far safer than human drivers. In the final three months of last year there was one crash recorded for every 4.85 million miles with Autopilot engaged. That compares to one crash every 652,000 miles for all other cars, based on the most recent data available from the National Highway Traffic Safety Administration (NHTSA) and Federal Highway Administration (FHWA), last updated in 2021.”
https://www.tesla.com/VehicleSafetyReport
#126 millmech ” Sold my Republic Bank puts this morning, premium paid was steep on Friday but walked away with just over 100k.Not bad for a weekend’s work.”
Or did you?
Real traders don’t gloat to others.
Wall Street is having a heart attack today. More banks will implode shortly.
Looking very bad. Gold and silver anyone?
Dow is up 100 points. Some crash. – Garth
#135 Sailo
Probably not an apples/apples comparison as most accidents are on local streets and most auto-pilot is on highways. Not sure what the real numbers are, but it’s not as reported.
Silicon Valley Bank Was Named One Of America’s Best, 5 Days Before Fall!!
https://www.ndtv.com/world-news/silicon-valley-banks-downfall-boasting-forbes-best-banks-list-while-falling-apart-3854402
Bye- bye Forbes!
disrupt-ors indeed
the Silvergate Exchange Network (SEN).” That service also closed on March 3.
“It’s not like it’s an approved product, it’s a non disapproved product, is one of the ways we talk about it in banking circles.”
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West Realm Shires.?
https://en.wikipedia.org/wiki/Dave_(company)
Dave Inc ?
6.90 USD -198.86 (-96.64%)
For more information, visit http://www.dave.com.
https://www.sec.gov/Archives/edgar/data/1841408/000119312522080609/d325306dex992.htm
The depth and intelligence here the last two days has been inspiring.
Chris Hedges in 2016, Replace “America” with “steerage section”:
“We live in two Americas. One America, now the minority, functions in a print-based, literate world. It can cope with complexity and has the intellectual tools to separate illusion from truth. The other America, which constitutes the majority, exists in a non-reality-based belief system. This America, dependent on skillfully manipulated images for information, has severed itself from the literate, print-based culture. It cannot differentiate between lies and truth. It is informed by simplistic, childish narratives and clichés. It is thrown into confusion by ambiguity, nuance and self-reflection. This divide, more than race, class or gender, more than rural or urban, believer or nonbeliever, red state or blue state, has split the country into radically distinct, unbridgeable and antagonistic entities. “
If the Fed comes out of today’s meeting and announces a rate cut, Tiff is going to accidently look like a genius for not following them upwards.
Nothing says ” incompetent ” like confidently signaling no likelihood of lower overnight rates, but then abruptly executing a precipitous reverse weasel while shouting “nothing to see here” in a strangled, squeaky voice.
Especially if you just confidently predicted no end to record low interest rates before exponentially raising said rates more rapidly than we’ve ever seen before.
Dow is up 100 points. Some crash. – Garth
But yesterday you boldly boasted the Dow Casino futures were racing toward 300
I boasted nothing but gave an accurate quote on futures at that moment. What is your agenda? – Garth
Only fools buy in British Columbia or Canada. Rent in BC and Canada. Take a million dollars to the USA to buy buy 20-50 houses – live off the rent checks for the rest of your lives. Sell all your overpriced homes and condos in BC and Canada and buy the good stuff that brings in 20% more American dollar rents with the exchange in the USA. 10 times the population and 10 times the demand in the USA.
https://biv.com/article/2023/03/west-coast-housing-market-shows-encouraging-signs-headed-spring-bcrea?utm_source=BIV+Newsletters%2C+effective+July+1%2C+2017&utm_campaign=225064e46e-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_16cfea3308-f66769357a-%5BLIST_EMAIL_ID%5D
Franks Hot Sauce?
What the hey?
Why would people do the equivalent of licking the sun and kill their taste buds ?
Only reason it didn’t crash is because they are subsiding the banksters again.
More inflation, deflation….
Pass debt onto consumer.
Smoke and mirrors.
#75 AM in MN on 03.12.23 at 8:16 pm
Put down the keyboard and back away slowly. Then nobody gets hurt. – Garth
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Go ahead….make my daze….
Dammit…
I miss the squirrel recipes…
#14 ‘crowded’ – seems like the system ate my earlier comment so let’s try again. One thing the federal government did right during Covid was to make vaccines available to those vulnerable segments (older folks) a priority. Think about the temptation to let ‘er rip from a budget point of view. CPP, OAS, GIS & health care budgets would likely have benefited from a drop in the senior population.
#67 ‘NUTS’ – I think envy rather than blame re: Boomers/RE. Those who want to buy want to be able to have what Boomers have without that pesky waiting/move up period. Also want Boomer house prices while earning today’s income. That is another factor forgotten by the Boomer-envious. They focus on the ‘really cheap’ RE prices without taking into account the ‘really low’ earned income of the day – or the ‘really high’ interest rates, ditto.
So…bond maths came for SVB. They won’t be the last.
TGIG
@Jeff Burke, post #141:
I don’t know if this group that believe in a non-reality-based belief system are the majority but there are a lot of them. It looks increasingly like the end of the Great American Empire. As I said in my comment number 133, I got it totally wrong in 1997 by thinking information technology would make everyone be better informed.
Utterly composed articles, thanks for information. “The bravest thing you can do when you are not brave is to profess courage and act accordingly.” by Corra Harris.
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