It's the bank of choice for a few crypto platforms. But they can just move to another one with no financial losses. The concern is that the regulators in the U.S. are putting pressure on banks not to deal with crypto platforms. Traditional finance is feeling threatened, and rightly so.

I think the bigger issue with price action is the resistance I mentioned previously in the $23-25k range. Equally the downside support around $20k looks like it will take some breaking. I see big buy and sell walls.

My expectations of a boring year remain intact. Things are likely to start rolling around the halving in April 2024. My best guess is we will be around the $30k mark by that point. The cycle continues to play out as per the script.

Bitcoin's relative strength and Alt's relative weakness is also as expected. Eth is a surprise though. Conventional thought is that it should be showing more weakness. There is an unlock of staked Eth in early Apri which may cause some down side. After that date I am going to sell some Btc in to Eth. I think Eth will run faster in a bull market and I want a good size position when things start rolling. I won't be buying any with cash, just transferring my Btc. Still too early to think about Alts IMO. I am thinking they bleed against Btc for a good while yet. But then vastly outperform post halving.

Another one bites the dust

https://www.cnbc.com/2023/03/08/silv...ting-bank.html
But depositors should be okay

I am hearing about a run on SVB Bank now. Haven't heard of it, not sure if it's a big one over there. But I think it is going to get worse for you guys if the FED continues on its current path. The rates will break the economy. The U.S. has a very high debt now and at these rates the interest can't be serviced for any length of time. It's trillions in interest alone. Because of your high debt the current rates are simply unsustainable.

Listening to Lyn Alden, incredibly impressive economist, she was saying the U.S. social security system has 10-15 years left in it at the current trajectory. Only way out is to print more money which will further drive inflation. She expects inflation to dip this year but come back with avengeance.

Another topic was bank held fractional reserves. Only 7% of your money is actually held in the average bank, 93% is being gambled with. How long will 7% last in a bank run? How quickly can they get hold of the gambled capital? FDIC insurance is a house of cards. If there is bank contagion where several have runs and collapse, forget about it. The whole banking system is a ponzi scheme. Down the line its likely to come unstuck at some point.

I am pretty confident the low is in for Bitcoin, although obviously not for sure. Who knows what the world brings next. I am seeing a big dent in the $20k ish resistance on chain. A lot of buy orders eaten up.

Glad I took the profits. My break even for this cycle is now around $13k because I took those profits at $23 and $25k.

Starting to get tempted to spend some of my BTC on altcoins. May well spend 2% today. Tough call.

Re: only way is to print more money, she is wrong. The SS gap has been known for a while and currently estimated to come to a head in circa 2034'ish if nothing is done. It won't go bust but projections I've read is it'll only have enough to cover 75%'ish.

Many ideas out there. It comes down to raise taxes (e.g. not necessarily printing money), lower benefits, increasing retirement age or some combination. See link to an article by AARP (well respected & the US senior citizens organization) on the options, pros & cons

Front Office Football Central - View Single Post - The Biden Presidency - 2020

Reading up on SVB

SVB Races to Prevent Bank Run as Funds Advise Pulling Cash

The catalyst (?). Article doesn't go into details on the "significant loss", I'd like to know if it was somehow related to FTX or like.

The run


Hard to see how this bank survives, and if it does, it'll be a much smaller self.

Sounds like you know more the me. I am just an interested observer in U.S. economics. One thing she said that did come to mind is your demographics. Top heavy with an aging population. She seemed to think the working population would struggle to come up with the tax dollars even with rises. But yeah, just raising retirement age totally make sense. That would be a get out.

These proposed fixes (e.g. it'll be a combination of options, not just one) are supposedly based on keeping SS solvent for next 75 years based on assumptions & projections (e.g. demographics, growth of entitlements etc.).

So in theory, whatever the solution is, whatever pain is dealt for the 2034 fix, it should keep the SS solvent for a while. But my guess is assumptions, projections etc. are optimistic and it'll be less than 55-75 years before we have to revisit.

I think US is just under the replaceable rate of 2.0x. We make it up with immigration so definitely not as bad as Japan (now) or China (future).

FDIC protects up to $250K per account (not person). I'll assume alot of the new startups have more than that per account. I'm thinking there'll be a fair number that'll be struggling significantly to make payroll.

Still want to know what the SVB "bad investments" were.

There are a lot of politicians doing their best to try and stop this.

It almost sounds like it wasn't like one big thing. Small start ups were depositing less, left the bank with a cash shortage, then the bank sold some bonds they held for a loss to shore up liquidity, which caused a major run on the bank. Then, collapse.

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And here I could have sworn that one of last month's pedantic pages long thread craps was that social security was, and I quote, an "imminent" "crisis".

If Trump Loses In November, What Do You Think Happens Next - Page 144 - Front Office Football Central

SI

Don't be this guy.


But hey, I'll play if you want. Give me your best shot if you want, go ahead and show everyone where I've contradicted myself. Please.

It's amusing you think that someone has to do 12 rounds of splitting hairs to demonstrate they read other comments or to get permission to make their own on an internet message board.

SI

Yeah, I guess that's the answer then.

You really are this guy.


Let me know anytime if you want to show I contradicted myself.

The projected SS shortfall is 1.5% of GDP. There are plenty of options to close that gap and no need to rush to make cuts.

This SV Bank shit is infuriating with all sorts of politicians and tech guys now calling for a full bank bailout rather than honor just the FDIC insurance.

I wonder if the life expectancy dropping in this country helps Social Security out a bit.

Anyway, the SVB bankruptcy is a huge deal. Lot of insider trading before it happened and some big companies like Roku left holding the bag. 2nd largest bank collapse in history I believe.

https://youtu.be/TvMmbUyR2O4

This is the interview I was referring to. Also on Spotify. She publishes a newsletter with her detailed portfolio...

Strategic Investment Newsletter - Lyn Alden

Fairly low risk portfolio, plenty of dividend stocks. Highly diversified.

I found the interview pretty fascinating.

Does this factor in current interest rates? I would quesrion whether that figure is outdated as debt repayments have risen dramatically in a short period of time. Every interest rare rise changes that figure.

Agreed, with the underlying factor being the FEDs aggressive interest rate rises.

Going off on a tangent, the total FDIC insurance is apparently $230 billion according to my source. Roughly the size of SVP deposits. Caveat being most accounts at that particular bank are in excess of $250k. The FDIC looks light on face value though.

By far, second largest failure. Although not a bank, makes FTX seems miniscule by comparison.

(Oh yeah, I remember Washington Mutual now)

https://www.cnbc.com/2023/03/10/sili...-deposits.html

I wonder if FDIC had an early warning. Did SVB talk to them before trying to raise the $2B in additional capital on Wed or were they just as surprised around Wed-Thu-Fri. The FDIC seemed "prepared" to step in and reassure all those guaranteed deposits.

Wonder how much of the $188B deposits were not guaranteed by FDIC.

Yup, don't listen to Cramer.

There is some sort of inverse Cramer ETF out there. Will be interesting to see how it does.

CNBC's Jim Cramer touted Silicon Valley Bank stock

I saw today several large banks are going to work over te weekend on how to divvy up SVB into pieces. No one can swallow it whole, but they are hoping to find a way to divide it.

Days of Bear Stearns and Lehman Bros. I’m sure part of those discussions will be how to contain the ‘contagion’ from impacting their banks next week.

In addition to the not guaranteed excess of $250k, the impact to shareholders will hurt too. I guess not too big to fail

Looks like Peter Theil played a big role in this by telling his companies to withdraw all their money last week.

Yeah, let's bail out a bank whose CEO personally lobbied to have less regulatory oversight: Silicon Valley Bank chief pressed Congress to weaken risk regulations | Banking | The Guardian


NOTE: that's not the full article, just key bits.

Not even 10 years passed between 2008 and financial institutions successfully getting watered-down regulatory scrutiny that was specifically put in place to avoid another 2008, and here we are, a mere 15 years from 2008, watching a bank fail because of lessons we apparently did not learn from 2008.

This is not rocket science. In a sane world, this should result in more regulatory scrutiny, not less.

People who instigate a run on a bank do more human damage than someone who robs a convenience store, but I'm sure Thiel won't see any time for this anti-social behavior.

We have any kind of financial regulators with a back bone, Thiel would be under the microscope along with the short sellers that are absolutely cashing in on the collapse. If course we don't, and they know that.

They don’t want regulation

They want bail outs when their risky unregulated bets don’t pay off

It’s a feature not a bug


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I guess the counter arguement is that covering the deposits above the FDIC line isn't bailing out the owners as much as the depositors who aren't the ones that mismanaged the bank, but had just used the bank for their deposits.

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The real question in my mind is can a Fidelity ($3.9T assets) or Vanguard ($7T assets) fail? e.g. where vast majority of my retirement savings is in

I think (and hope) the answer is Yes but they'll be the last to fall. And if they do fall, it'll be the least of our problems. But considering how unexpectedly this all happened in 48 hours, I'm feeling just a tad uneasy.

"Vanguard is paid by the funds to provide administration and other services. If Vanguard ever did go bankrupt, the funds would not be affected and would simply hire another firm to provide these services."

FWIW, Lehman Bros had $680B in assets. SVB had about $211B.

I know completely different reasons and structure, but still a little reassuring that SVB is no where near the size of Lehman.

No idea how to assess the likelihood of contagion. Have to trust the FDIC or whoever has the eye on the ball here. It'd be interesting to be a fly on the wall in those meetings.

The big difference between a Fidelity and a retail bank like SVB (although Fidelity does do some retail banking) is that the vast majority of money invested "at Fidelity" is invested in products such as funds, equities, bonds, etc... where what is happening with your money is transparent. You put $1.5M into a S&P 500 Index fund, you literally have that much money in shares with that fund's ticker.

When you put money into an account in a retail bank, your money isn't actually there. Retail banks take that money and invest it in order to get a return (some of which they might pay out to you for a typically paltry interest rate). Where that money goes is opaque to you as the customer, and instead you just trust that the bank will have your money when you ask for it.

It should be noted that the idea that banks shouldn't be allowed to do stupid things with your money and potentially lose it was part of the reason for the 1933 Banking Act (that is typically referred to as the Glass-Steagal Act) and the Dodd Frank Act of 2010. The former was repealed in 1999 and the major provisions of the latter were repealed in 2018. It's complete coincidence that The Great Recession happened within 10 years of 1999 and, should this "contagion" spread, ti will be complete coincidence that it's only 5 years after 2018.


Anyway, back to Fidelity. If Fidelity goes bankrupt, you still own those assets. All those funds would be managed by other entities. Its retail banking customers would suffer, of course, but that's a small part of the $10T it has "under management".

Of course, unlike banks like SVB, Fidelity isn't incented to do risky things to make money. It makes money through volume (all those transaction fees add up), and it attracts volume by being considered a safe & responsible (people in charge of 401k and pension programs don't want to face angry mobs should those mobs' retirement funds evaporate overnight).

Having said that, a bankruptcy by either Fidelity or Vanguard would have pretty big psychological impacts, at least, regarding faith in our financial system, which is why resisting calls to lessen regulatory scrutiny is so important. Especially since neither are public-traded companies.

Hmmmm, didn't think about the impact of SVB to other countries. UK may be hit also.

SVB contagion: UK arm shuts down, government scrambles and startups brace for the worst | TechCrunch

Yellen says no bailout by US Government.

I don’t disagree and hope this is the right call. Also hope the Feds try to facilitate an acquisition(s).

It looks like basically there was 200 tech founders on a group call on Thursday morning were someone brought up questions about SVB. That was basically Mrs. O'Leary's cow. Most if not all those founders immediately started pulling their deposits out, and then were shocked the bank failed.

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It is the right call policy wise. And it is the right politics.

Leadership.

Bailout

Govt announces that it has “approved actions…in a manner that fully protects all depositors” for Silicon Valley Bankhttps://t.co/0bMvRpLMUH

— Ken Klippenstein (@kenklippenstein) March 12, 2023

Apparently Signature Bank has also been closed. Article doesn't have a lot of info but assume proactive move & there is pretty good reason(s) to shut them down also.

https://www.cnbc.com/2023/03/12/regu...emic-risk.html

Bailout, sort of. Basically, all the stockholders are left holding the bag. It looks like the depositors are being made whole by the liquidity of the Fed, but the value of the banks assets is going to cover that funding. But the stockholders have lost all of their investment.

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Why does the Fed have to provide liquidity? Sorry, that's a bailout.

Complicated. Hard to explain. Smells fishy.

I wonder if Biden is going to actually draft the attack ads against himself, or if he’s gonna stop at just giving the GOP the raw material.

I am also dismayed that our political will for letting rich white conservative tech bros have to suffer a consequence for their actions lasted for about 18 hours.

Because they are the ones with cash? They are using the funds they have on hand through the FDIC to cover deposits. If they were propping the bank up to save investors, to me, that is a bailout. This is allowing depositors to keep their money and stay in business. I don't see how that is a bad thing.

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Chokepoint 2.0. They are aiming to shut U.S. retail out-of crypto. The irony is institutions are left free to do as they wish. Money is flooding in to Bitcoin and Eth right now. Seems like that's the flight to safety.

If the FDIC blow their wad on SVB, it seems like a gamble. That will leave the pot pretty empty.

Hammer, not really. The Fed at worse may loose 10% on this. That is a worse case scenario. SVB had really attractive assets, they just didn't have liquidity. By the end of this, it wouldn't surprise me if the Fed actually makes money on it all. The Fed wrote off all the unsecured debt SVB had and also are giving zero return to investors. So they are taking all the assets with the only liability being the deposits.

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How I read it is

1) Fed is not bailing out SVB. It's gone, stock shareholders are bust etc. There may still be a chance SVB will be acquired but it's essentially gone

2) Fed is bailing out depositors, even those above $250K. However, it'll be using the 'assets/deposits' of SVB to fund the depositors. How much is TBD but SVB does have significant 'assets/deposits' remaining

I read somewhere about $154B of unsecured deposits.

So guess it depends on how you define 'bailout'. According to Cornell ...

bailout | Wex | US Law | LII / Legal Information Institute.

Don't know what the real loss (or profit) will be but I generally agree with you.

Government made money out of the 2008 bailouts.

https://en.wikipedia.org/wiki/Emerge...on_Act_of_2008

If it's so attractive, why is the Fed involved? The bank can sell those "attractive assets" and pay back their customers on their own.

Lots of businesses have liquidity issues in this country. Seems that's only an issue when it hurts the incredibly wealthy.

It's a bailout because both you and I would not be getting this kind of advantage from the government.