Why is SVB the "dangerous precedent that can engage in reckless behavior with little or no consequences?" What about the fat cat "bro" investor that made the call(s), text(s), post(s), etc. that caused $42Billion in deposits to leave the bank in two days? Do not scapegoat SVB or the US government for this mess, scapegoat the "bro" capitalist that got all his money and friend's money out and took down a bank in two days! What the hell? This same "bro" capitalist would also like to see rumors float around cyber space that this is the beginning of a national bank take-over (JC help us) because he also has a hand in national politicians that want to take down the government, Crypto, and would like to see the FED stop raising rates to keep his negative cash flow tech enterprises afloat, not to mention his cyber spy company. While I would like to get back to 5% mortgages for cash flow positive rentals, lets stop the real steal ... our national financial stability and if he can do it democracy. Just "Google" the SVB news on Friday and then read the "bros" bio! Yuck!
I'll put it simply, all those Yale, Brown,Stanford graduates bro capitalist are just bunch of FOMO haha even you don't need to be smart to be "bro capitalist".
It is the inventor that's smart, and those "bro capitalists" are just forcing everyone around him to invest in the inventor, and withdraw at the same too, that's the name of the game.
That's why the freaking stupid about these bro capitalists are that the number of unicorn startup in 2022 triples in 2021 alone compare to 2022, while decreased by a third in 2023. How could tech invention is related to the interest rate if you think about it lol
It is worth noting part of the increase in start-ups is heavy in Data/AI & Security space. I agree with everything you said but there was a natural acceleration in those domains because of what is going on. Particularly in AI related. Everybody is just tackling that at light speed without really knowing what they will find so to speak - and so a lot more start-ups.
But everything you just said about the VC/PE firms is why I’ve been so vocal about Thiel. And if he or his buddies swoop in to buy - and the govt lets it happen it’s a joke.
@James Hamling Those countries you named - didn’t recover in months. We differ in that I think it would take the better part of 3-5 years to recover and 10 to really grow. Otherwise yes we see the same issue with the big banks.
@Christopher Sandys Yeah, I think the Banking System is worse than flawed and probably needs a collapse. It's bloated and corrupt and doesn't serve the people it's supposed to - us. It serves and protects those in power only. Let's all pull out our money and put it under our mattresses today.....doesn't that sound kinda fun?
And you think currency would have value if that happened?
Civilization will always find a currency.
Currency has existed a lot longer than the U.S. has existed. Even in the U.S. currency has changed many times.
What form the prevailing currency of a nation takes, will always change, adjust, move.
USD collapses, there will be the Amero, DGC, whatever. It means little to nothing to me, if prevailing currency becomes Chickens, ok, I'll just start collecting rents in chickens.
Currency collapse and change has worked out so well in other countries. Shrug it’s apparent to me this is more politics (and i don’t mean political) so it is what it is. I’d be fine for breaking up the big big banks that are too big to fail. I have no interest in dealing with the rebuilding the whole US financial system. Nor the fun of finding out what happens to all my properties when it does happen - nor retirement, no brokerage accounts and even the cash on hand I have.
I plan to retire young. Don’t need that mess.
Nobody is talking about the countless masses of banks who DIDN'T screw up, and are just fine. No, all that matters is a handout for the F'd ones because God forbid there be any negative consequences ever. THIS IS INSANE!
IF any one of the big banks - Citi, Wells, JPMC, or BOA fail. You and I both know it won’t end there. And NO the system is not designed for that.
Any one of them would likely collapse the us financial system. So it’s not that simple and you shouldn’t be acting like it is.
What's funny is if Citi,wells,JPM falls then the middle-eastern shayk or Chinese mogul would come to bid and rescue the institution, but the institution would not allow it because the politicians can't bash them anymore in CNN lol....it's just yesterday news some Dubai princess would rescue SVB lol
So SVB is a good buy because it actually has the assets to cover this. It wa sa timing issue.
That said SVB had something like 220billion in assets. JPMC has:
$2,690.905B
Not comparable and nobody is saving it except maybe the Federal govt. but probably not even them. If they go under it rill ripple across the globe. And that’s sort of the problem the ripple will be tsunami. Not the dinky little wave we saw this past week.
GOOD!
Look, your missing the entire accountability item.
If the whole system is such a frail little whisper than it NEEDS to come falling down, if that's it's gravity than it needs to hurry up and happen. A slow bleed is no better. It NEEDS to reap it's standing so something BETTER, stronger can take it's place.
But if you keep propping up a rotten structure, nothing new can grow in it's place.
Banking was NOT always like this. Take mortgages and '08', the result was a far better, stronger mortgage system so strong that this epic inflation run has had zero effect on those mortgage holders in most part because the system is far healthier today than in '07'.
Your entire argument is your so scared of the cleansing cycle, that no, let's just keep propping up this broken, corrupt broken thing because of fear for having any time of pain and change.
It NEEDS to come down so we can get back to health. This is a dangerous day and if continue down this path, in years to come this time will be looked back upon as when Pandoras Box was opened.
For somebody so smart on certain things it’s a blind answer just because you don’t like the context/morality (or whatever word you want to use) of it. I could care less about right or wrong here. I also think people are overplaying the executives corruption in some cases (either way punish the executive with jail time and lifetime bans). I care about what keeps the economy functioning. Absolutely any bank can crumble on a bank run. They don’t have the cash to survive it.
Furthermore you would absolutely destroy property values in the US if the model changed like you are describing. We would be back to $200k median home prices in a heart beat. Credit markets and liquidity would dry up and the house of cards comes tumbling down.
There is no telling what the other side of depression would bring. And thats what it would be a Great Depression - total reset.
I get where your coming from, but it's a place of emotional response, fear, not logic and mathematical reasoning.
A run on a bank is not a normal or ordinary thing, and most any bank could either (a) service a run or (b) go under from a run, what determines is the size of the run, and underlying operation of the bank. This is a NON-argument item because it ALSO stands true that anyone could run an automobile into a crowded sidewalk at any time, correct?
What matters here is WHY this run on the bank occurred, and it was with specific reasons. FDIC has existing policies for such, what's happening here is a PERVERSION of the rules to make exception for specific groups.
Again, RULES EXIST FOR EXACTLY THIS, and the politicians are running in demanding OTHER ACTIONS be done, with OUR $, with the Gov. powers given to them NOT for doing this because there has been no vote for such, no rule for such, this is SUBVERTING the rules.
And NO, following the rules would NOT bring an end to everything, the sky will not fall, LIFE WILL GO ON.
The argument your using here is the exact same argument that has empowered Dictators and Tyrants for generations. The fear of the cleansing cycle, emphasis on "CYCLE", so instead just turn away and let the powers that be run a 2 rule system, rules for the elite and rules for everyone else.
I actually know people personally affected by Leyman bro's collapse, personally, and I am here saying this. And guess what, so are they. Because with those losses it changed them. They took far greater care in how they placed there capital going forward. yes, a pinful lesson learned BUT a lesson learned none the less.
Society WITHOUT accountability is NOT freedom.
Again, the price to this action is far worse than the natural actions that the economy would have if left to follow it's design. Your fear of the sky falling is not logical nor justified, it's a talking point being feed to you by that political machine defending it's self-interest, NOT the mass populous interest.
There is THOUSANDS of small banks who could and would win considerably if corporate interest was allowed to reap it's fate. But no, we are ignoring that and regurgitating talking points that we should all believe that life hinges on corporate health.
We the people do NOT need corporate interests. We don't. SMALL BUSINESS could, and would, in-fill ANY "void" left.
This would NOT bring down every bank, that's just a totally emotional response ignoring all mathematics.
Just wait, I am telling you here, as the days go by you WILL see this is a complete BS scam of an action, politically motivated to protect political allies not the American people, not the American Economy.
Which by the way, how F'd is the Fed now. How F'd is the American middle class. Now it's pressed that rate increases hurts the elite too much so the general populous just has to suffer the ravages of inflation and shut-up and suck it down because MIDDLE CLASS DOESNT HAVE LOBBIEST.
Step away from emotion, do the math, work it through, there is 0 risk to banking system as a whole, only a risk to big banking. Again, there enemy #1 is small business. Diversification of deposits would be a GREAT win for small business, for small local banks who are the healthiest alternative. They would gain tons of deposits from DECENTRALIZATION of depositors.
As for liquidity, don't make me laugh. There is SOOOoooo much liquidity out there it's a non-issue, the centralization of that liquidity is the issue, as seen in this exact instance. LET IT BURN and the $ DECENTRALIZE.
Those banks couldn’t service the scale of debt and volume of people you are describing. Not for several years. I agree with you that the big banks need ot be broken up. But not through a crash. The system will freeze and credit will break. Hell just the volume of deposits coming in from the regional banks has forced the big banks to change policy. Doing that in reverse with far bigger scale problems - it won’t work. not to mention the wealth lost in the intervening period.
I agree with you a lot of regionals would love to step up. Working closely with them I have an idea of their ability to scale and it doesn’t match even if just one of the big banks were to crash let alone all of them.
Now if you want to create policy to dismantle the big banks? I’ll jump on board right now. But I’m not for crashing the system and rebooting. You are essentially saying light a wildfire with no idea what’s in the brush or if the cans there are full of gasoline. It could cause mass destruction.
Break-up and regulate? Sure all for it. While we are at it maybe we can do it with the telecom providers also.
@Christopher Sandys Yeah, I think the Banking System is worse than flawed and probably needs a collapse. It's bloated and corrupt and doesn't serve the people it's supposed to - us. It serves and protects those in power only. Let's all pull out our money and put it under our mattresses today.....doesn't that sound kinda fun?
And you think currency would have value if that happened?
Civilization will always find a currency.
A currency being the ke. NOt necessarily our FIAT currency. And your ignoring all the pain in between…..
The simple answer you’d have unemployment hitting Great Depression level. BTW the only thing that got us out of that was spending and the war. How do we get out of it this time around? Does the fed govt. have room for those programs this time around?
I seem to remember you being nearer to retirement age. Would you like having complete reset on everything? Retirement wiped out?
Everybody is speculating. The difference is I’m acknowledging the full country runs on the banking system. I’m acknowledging upending multiple massive industries (including property one of the biggest wealth creators in the US) is bad.
You’re speculating the country would bounce back almost immediately. GReat Depression shows thats unlikely which btw was some of the reasoning the Fed stepped in 08. There was an opportunity to stop it from happening again. And yes bringing the entire system to a halt - speculation but logical one. Some of you are stating we cna handle any company failing but haven’t answered how the country will magically bounce back when credit doesn’t exist and the banking system - granted a bloated and corrupt system - comes to a complex halt. That’s speculation without any history to back it up.
@Christopher Sandys Yeah, I think the Banking System is worse than flawed and probably needs a collapse. It's bloated and corrupt and doesn't serve the people it's supposed to - us. It serves and protects those in power only. Let's all pull out our money and put it under our mattresses today.....doesn't that sound kinda fun?
And you think currency would have value if that happened?
And why is that a bad thing......? I know the short-term answer, blah, blah, blah. Give me the long-term answer....
That’s only one element of a collapse of that type.
The simple answer you’d have unemployment hitting Great Depression level. BTW the only thing that got us out of that was spending and the war. How do we get out of it this time around? Does the fed govt. have room for those programs this time around?
I seem to remember you being nearer to retirement age. Would you like having complete reset on everything? Retirement wiped out?
You don’t have to like it but the financial system runs off this model. No bank can handle whats going on. And thats my point either we completely change the banking model (not just regulation) but product changes, rate changes, everything which will depress trillions in wealth. Or we can’t let certain elements fail. As far as I’m concerned the big 4 essentially are consumer extensions of the Fed Reserve.
As to regulation. Of course it will stick. For awhile. Just like it did after 08 and then people will loosen the regulations up as it slows down growth. Pendulum always swings hard - in both directions.
I'm not sure why you think I like or dislike the financial system. It is a system. It can be exploited as we can see based on the housing bubble that formed since 2011. And now it is being exploited to the down side. It can be changed to mitigate the collateral damage of crashes but that kind of change has to happen way before a bubble happens. So demanding change now it too little to late. Its like trying to reverse engine on a full speed super tanker a mile from shore. It you didn't start 5-10 miles earlier a crash is going to happen. The housing market is big. The economy is big. Like a supertanker. Trying to save it from a collapse now is too little too late.
The context is actually simple. We are talking about a recession. We are talking about 75% drops in housing. Mortgage product disappearing, credit disappearing. You are essentially talking about a total business meltdown.
So my question is why would you be ok with that? I’ve got no homes with less than 50% equity in them except one new one that is cash flowing massively. SO I’m technically fine but the reality is every single one of us would be hit if home prices drop 75%.
So no I’m rather confused. ON why you are ok breaking the system. It’s not a correction but a break. They are very different thigns.
Inflation hasn’t changed and won’t change. I’m not saying flood the economy with cash. I’m saying we don’t want it to stop flowing the way it is. Hold rates keep it high so there is low volume and much lower leverage being used. Which is whats happening.
Yep I bought in 08. Still deals to be had. 75% reductions, in home values, which I think is realistic if you break the banking system, not to mention all the systemic industries hit from tech to insurance to manufacturing.
08 wasn’t even that scary or bad. This would be. People need to look at how massive the big 4 are, compared to every other bank but also compared to the pain we saw with tiny collapses in 08. And I don’t mean just pure assets but % of assets compared to the whole system. If they were too big to fail in 08 - the too big to fail in 2023 has a whole other meaning.
I wasn’t over leveraged but back then I was buying small and being guided by people that knew the industry. These days I’m also not over leveraged as I called out earlier with 50% or more down on properties and 10-13 years left on mortgages. But then on top of it I could pay for every property, without a job, and without tenants for a year with my reserves. Both scenarios incredibly unliekly.
So yes will I respond since you are making inaccurate assumptions about me? And because you proved my point? Absolutely.
I actually have no problem admitted I am where I am and it has nothing to do with 08 and nothing to with good real estate buys although I’ve had a number of them. I am where I am because I have a w2 to fund six figures minimum of investments every year. That’s without the cash flow or existing properties and that’s on the low inside. So it’s rather easy to take capital and make value in it. I simply buy down the risk and hold solid reserves. Not rocket science although I do have more than a handful of good buys it has nothing to do with the success. Nor does 08.
As to 08 absolutely everybody in the industry was aware underwriting didn’t exist and was being bypassed. The mortgage securities - yes that got me off guard but the risk in the subprime mortgages - not one bit. Everybody could see it happening from fake incomes to fake valuations driving new purchases. And those existing valuations also had no money down. Hell everybodyy that got wiped out - if they had just been able to hold on several years - most of the country made money. Also i was in a Region thta only lost 16% during home value drops. It wasn’t all that painful compared to AZ, FL, Vegas, Cali.
And finally how you prove my point. SVB was tiny gnat. No real impact at 200 billion dollars. BAck then you are talking about credit halts and bank runs and how bad it was. But you aren’t acknowledging now thing. The fed stepped in and stopped BOA/Citi and other bank runs Had they collapsed you would have felt real pain. What we felt in 08 was nothing because no banks collapsed but you are syaing by me calling it not that bad that I don’t understand. It’s kind of funny.
BTW all those banks are about 800-1000% bigger now and hold a far greater % of the economy and assets. So it would be drastically worse.
Nobody is talking about the countless masses of banks who DIDN'T screw up, and are just fine. No, all that matters is a handout for the F'd ones because God forbid there be any negative consequences ever. THIS IS INSANE!
IF any one of the big banks - Citi, Wells, JPMC, or BOA fail. You and I both know it won’t end there. And NO the system is not designed for that.
Any one of them would likely collapse the us financial system. So it’s not that simple and you shouldn’t be acting like it is.
What's funny is if Citi,wells,JPM falls then the middle-eastern shayk or Chinese mogul would come to bid and rescue the institution, but the institution would not allow it because the politicians can't bash them anymore in CNN lol....it's just yesterday news some Dubai princess would rescue SVB lol
So SVB is a good buy because it actually has the assets to cover this. It wa sa timing issue.
That said SVB had something like 220billion in assets. JPMC has:
$2,690.905B
Not comparable and nobody is saving it except maybe the Federal govt. but probably not even them. If they go under it rill ripple across the globe. And that’s sort of the problem the ripple will be tsunami. Not the dinky little wave we saw this past week.
GOOD!
Look, your missing the entire accountability item.
If the whole system is such a frail little whisper than it NEEDS to come falling down, if that's it's gravity than it needs to hurry up and happen. A slow bleed is no better. It NEEDS to reap it's standing so something BETTER, stronger can take it's place.
But if you keep propping up a rotten structure, nothing new can grow in it's place.
Banking was NOT always like this. Take mortgages and '08', the result was a far better, stronger mortgage system so strong that this epic inflation run has had zero effect on those mortgage holders in most part because the system is far healthier today than in '07'.
Your entire argument is your so scared of the cleansing cycle, that no, let's just keep propping up this broken, corrupt broken thing because of fear for having any time of pain and change.
It NEEDS to come down so we can get back to health. This is a dangerous day and if continue down this path, in years to come this time will be looked back upon as when Pandoras Box was opened.
For somebody so smart on certain things it’s a blind answer just because you don’t like the context/morality (or whatever word you want to use) of it. I could care less about right or wrong here. I also think people are overplaying the executives corruption in some cases (either way punish the executive with jail time and lifetime bans). I care about what keeps the economy functioning. Absolutely any bank can crumble on a bank run. They don’t have the cash to survive it.
Furthermore you would absolutely destroy property values in the US if the model changed like you are describing. We would be back to $200k median home prices in a heart beat. Credit markets and liquidity would dry up and the house of cards comes tumbling down.
There is no telling what the other side of depression would bring. And thats what it would be a Great Depression - total reset.