cone said:

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the black swan event this time was the fed raising interest rates

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I actually had this discussion earlier today, everything is always fine "until". All these genius bankers with their multiple ivy league educations and 7 figure salaries had everything figured out; they were bullet proof unless the fed raised rates, now they're sitting on massive unrealized losses.

or you let the stuff starting to stink sit on your books for too long

sounds like the SVB risk manager was asleep at the wheel

Dies Irae said:

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cone said:

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the black swan event this time was the fed raising interest rates

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I actually had this discussion earlier today, everything is always fine "until". All these genius bankers with their multiple ivy league educations and 7 figure salaries had everything figured out; they were bullet proof unless the fed raised rates, now they're sitting on massive unrealized losses.

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Pride before the fall. Guess the skying was just too good in Big Sky this year.

People are pulling their money out from Bankrupt Credit Suisse. pic.twitter.com/NE2iZu5WXL

— IamFed (@IamFed2) March 13, 2023

will25u said:

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People are pulling their money out from Bankrupt Credit Suisse. pic.twitter.com/NE2iZu5WXL

— IamFed (@IamFed2) March 13, 2023

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No surprise here.

Quote:

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I actually had this discussion earlier today, everything is always fine "until". All these genius bankers with their multiple ivy league educations and 7 figure salaries had everything figured out; they were bullet proof unless the fed raised rates, now they're sitting on massive unrealized losses.

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Except the rising interest rates wouldn't have been an issue if it weren't for the bank run.

will25u said:

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People are pulling their money out from Bankrupt Credit Suisse. pic.twitter.com/NE2iZu5WXL

— IamFed (@IamFed2) March 13, 2023

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This is the one to watch.

Tomato TomAHto

The moves they were making to cover those outflows would have hurt the share prices tremendously but wouldn't have sunk the bank.

Dumb question alert: are we on the hook (meaning do we have to wait for Joe Biden and Janet Yellen to learn what a franc is) for this one, or is this somehow a European problem?

Credit Suisse shares hit new low https://t.co/P17gn5a5Rl pic.twitter.com/QVkStrhWcS

— Reuters (@Reuters) March 13, 2023

Dies Irae said:

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Four Seasons Landscaping said:

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Quote:

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I actually had this discussion earlier today, everything is always fine "until". All these genius bankers with their multiple ivy league educations and 7 figure salaries had everything figured out; they were bullet proof unless the fed raised rates, now they're sitting on massive unrealized losses.

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Except the rising interest rates wouldn't have been an issue if it weren't for the bank run.

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I don't think it's fair to call the initial cash outflows a bank run, this was just startups needing their deposits as they were burning through cash since they weren't able to get as many investment dollars.

What started the run was when they noticed "hey, they're taking massive losses on their securities to shore up liquidity, maybe they're not solid".

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And the reason for the lack of investment dollars is the Fed shrinking money supply. Between lack of liquidity in the market and rising interest rates, it's a double whammy for banks. Conservative banks, with large bond portfolios are getting whacked on value and return. Leveraged banks are making a positive NIM but are now at risk of running out of liquidity

All of these posts point to one thing: central banking sucks.

the key to Margin Call isn't that the Demi Moore (risk officer) character is stupid or careless or evil

it's that's she powerless in her job

Margin Call was a situation where the firm was actually going to lose money and they were hit by taking TOO MUCH risk.

SVB was going to take a huge hit but still had their customer's money; it was just tied up in overly conservative assets.

It's easy to pull up the 2008 memes, but this isn't a 2008 situation.

cgh1999 said:

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Dies Irae said:

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Four Seasons Landscaping said:

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Quote:

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I actually had this discussion earlier today, everything is always fine "until". All these genius bankers with their multiple ivy league educations and 7 figure salaries had everything figured out; they were bullet proof unless the fed raised rates, now they're sitting on massive unrealized losses.

---

Except the rising interest rates wouldn't have been an issue if it weren't for the bank run.

---

I don't think it's fair to call the initial cash outflows a bank run, this was just startups needing their deposits as they were burning through cash since they weren't able to get as many investment dollars.

What started the run was when they noticed "hey, they're taking massive losses on their securities to shore up liquidity, maybe they're not solid".

---

And the reason for the lack of investment dollars is the Fed shrinking money supply. Between lack of liquidity in the market and rising interest rates, it's a double whammy for banks. Conservative banks, with large bond portfolios are getting whacked on value and return. Leveraged banks are making a positive NIM but are now at risk of running out of liquidity

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yes, everything is always fun when money is nearly free, you can literally break the economy overnight by moving interest rates above 4 and holding them there.

CM Trump Voter said:

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All of these posts point to one thing: central banking sucks.

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$21 trillion of unnecessary money has improved everyone's lifestyle, but made a mockery of our financial system. The rich will continue to get richer and the poor will be taken care of. Middle class will take all of the hits.

it's not

but my point is that it's human nature to think maybe we can make it through this perceived gauntlet without any of the potential pain

why call foul when we're not in real trouble yet?

The analogy I've been using all week is that America and our economy has become morbidly obese. We got to 1000+ pounds over a 40 year period. The Fed has essentially cut off the leg trying to cause weight loss overnight.

Significant pain is required to fully restabilize our economy. But that means everyone will suffer. Zero chance that happens. The government needs to stop spending so much money. Consumers need to stop spending so much money. Lifestyles need to be adjusted. Good luck getting that to happen.

Jerome Powell going to push through a rate hike of 1500bps to watch society burn

U.S. Regional Bank Stocks Now:


1. Western Alliance, $WAL: -75%
2. First Republic, $FRC: -65%
3. Zions Bancorp, $ZION: -43%
4. PacWest, $PACW: -41%
5. Comerica, $CMA: -33%
6. Fifth Third, $FITB: -20%

Markets are betting that SVB's collapse broke the regional bank system.

I am still amazed that Pook claimed earlier in this thread the best financial course of action would be to put your money in a medium or small regional bank!!

Quote:

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why call foul when we're not in real trouble yet?

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That's actually a good analogy.

The parents in the stands make bad calls all the time.

cgh1999 said:

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The analogy I've been using all week is that America and our economy has become morbidly obese. We got to 1000+ pounds over a 40 year period. The Fed has essentially cut off the leg trying to cause weight loss overnight.

Significant pain is required to fully restabilize our economy. But that means everyone will suffer. Zero chance that happens. The government needs to stop spending so much money. Consumers need to stop spending so much money. Lifestyles need to be adjusted. Good luck getting that to happen.

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Yea, this system of perpetual bank bailout to prevent wide spread economic consequences is consistent with the behavior of politicians who are on short term election cycles and don't want the inevitable damage inflicted on their watch. So the can gets kicked further down the road, where the wide spread economic consequences will be more dire and far-reaching than if we just got it over with now.

agwrestler said:

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Forgive my ignorance. I only took a single class on west campus. Is there a post that summarizes this situation in layman terms? ....and who are we upset with?

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a very large bank in California massively grew over the last three years from "free money' being loaned at near 0% interest rates

they purchased billions of dollars worth of bonds with a low yield

when the Federal Reserve began to raise rates a year ago, those bonds and investments began to lose value for the bank customers. because you can get 7% return on I-Bonds and 6% returns on some other types of bonds and treasury bills.

so the clients of the bank start saying 'I want my money moved to better paying investments" but to do that then the bank has to sell of what they have- at a steep loss

eventually, other people at the bank hear about what is going on- and they all want their money out as well. then everyone demands their money back- and the bank can't pay them anymore.

now imagine this same scenario at numerous banks right now..

will25u said:

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People are pulling their money out from Bankrupt Credit Suisse. pic.twitter.com/NE2iZu5WXL

— IamFed (@IamFed2) March 13, 2023

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When even the Swiss banks are collapsing..

heap big problemo!!

and Credit Suisse is a MASSIVE bank.

if Deutsche Bank starts to totter we are really in for it.

Don't know what this means, but...

2Y 72bps below Fed Funds. It's over pic.twitter.com/JyGSRgRBdU

— zerohedge (@zerohedge) March 13, 2023

If I am bringing worthless info over, just let me know and I'll stop.

LMCane said:

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will25u said:

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People are pulling their money out from Bankrupt Credit Suisse. pic.twitter.com/NE2iZu5WXL

— IamFed (@IamFed2) March 13, 2023

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When even the Swiss banks are collapsing..

heap big problemo!!

and Credit Suisse is a MASSIVE bank.

if Deutsche Bank starts to totter we are really in for it.

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Credit Suisse is more legacy than player at the moment, it's big but I'd be surprised if it's still in the Top 50 and has been a dog for a while.

Markets up over 1.25%. Oh boy. This is insanity.

will25u said:

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Don't know what this means, but...

2Y 72bps below Fed Funds. It's over pic.twitter.com/JyGSRgRBdU

— zerohedge (@zerohedge) March 13, 2023

If I am bringing worthless info over, just let me know and I'll stop.

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The market is pricing in a Fed rate cut. The 2 year t-bill is .72% below the Fed rate, which means its likely going down.

LMCane said:

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will25u said:

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People are pulling their money out from Bankrupt Credit Suisse. pic.twitter.com/NE2iZu5WXL

— IamFed (@IamFed2) March 13, 2023

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When even the Swiss banks are collapsing..

heap big problemo!!

and Credit Suisse is a MASSIVE bank.

if Deutsche Bank starts to totter we are really in for it.

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Credit Suisse has been in known trouble for a long time. This is priced in some.

Size of bank failures since 2000. pic.twitter.com/sQ0z1gH205

— Mises Caucus (@LPMisesCaucus) March 12, 2023

LMCane said:

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agwrestler said:

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Forgive my ignorance. I only took a single class on west campus. Is there a post that summarizes this situation in layman terms? ....and who are we upset with?

---

a very large bank in California massively grew over the last three years from "free money' being loaned at near 0% interest rates

they purchased billions of dollars worth of bonds with a low yield

when the Federal Reserve began to raise rates a year ago, those bonds and investments began to lose value for the bank customers. because you can get 7% return on I-Bonds and 6% returns on some other types of bonds and treasury bills.

so the clients of the bank start saying 'I want my money moved to better paying investments" but to do that then the bank has to sell of what they have- at a steep loss

eventually, other people at the bank hear about what is going on- and they all want their money out as well. then everyone demands their money back- and the bank can't pay them anymore.

now imagine this same scenario at numerous banks right now..

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The bolded part isn't really correct.

The early drawdowns were a function of customers needed operating cash AND not receiving additional investments from VC. The rest was a bank run.

makes complete sense to me

cone said:

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makes complete sense to me

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Of course it makes sense. More inflation.

So really, this is the backing system trying to tell the fed to stop turning off the cheap money spigot or they'll go nuclear and destroy everything in a gigantic worthless bond suicide pact?