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Are these banks or dominos?

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Easy-X
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PostPosted: 00:45 - 13 Mar 2023    Post subject: Are these banks or dominos? Reply with quote

US regulators bail out SVB customers, who can access all their money Monday

And a second one:

Quote:
The Fed also said Signature Bank was closed Sunday and that a similar system will be put in place for customers of that bank – all depositors will be made whole. And the Fed will make additional funding available for eligible financial institutions to prevent runs on similar banks Monday.


I can't say I know much about the American banking system but two banks in a week, hot on the heels of the FTX collapse, doesn't sound good Thinking
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Polarbear
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PostPosted: 02:01 - 13 Mar 2023    Post subject: Reply with quote

No where near 2008 problems but it can't be good.
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Skudd
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PostPosted: 10:19 - 13 Mar 2023    Post subject: Reply with quote

Is it because they are from Wokeland? Wokeland is starting to crumble from the inside and it seems the infighting on who is most victimized and who should put what bits in what bits and claim to be another bit person.
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The Artist
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PostPosted: 10:23 - 13 Mar 2023    Post subject: Reply with quote

Bail out seems like the wrong term. The funds were FDIC insured.

If you write off your car, you don't get bailed out by the insurance company.
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arry
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PostPosted: 10:43 - 13 Mar 2023    Post subject: Reply with quote

The Artist wrote:
Bail out seems like the wrong term. The funds were FDIC insured.

If you write off your car, you don't get bailed out by the insurance company.


The funds were insured to $250k.

Quote:
By guaranteeing all deposits – even the uninsured money that customers kept with the failed banks – the government aimed to prevent more bank runs


Rumour has it there were a lot of uninsured deposits, hence the bail-out, in order to stop confidence dwindling further.
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The Artist
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PostPosted: 13:03 - 13 Mar 2023    Post subject: Reply with quote

arry wrote:

The funds were insured to $250k.


Ah. Will be interesting to see how much additional cover they are providing.
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Easy-X
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PostPosted: 18:15 - 13 Mar 2023    Post subject: Reply with quote

It's getting worse:

https://edition.cnn.com/business/live-news/silicon-valley-bank-collapse-updates-03-13-23/index.html

Quote:
Biden plans to emphasize US banking system is "safe" in his Monday remarks


So it's official: the American financial system is fucked Shocked
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M.C
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PostPosted: 15:38 - 14 Mar 2023    Post subject: Reply with quote

Skudd wrote:
Is it because they are from Wokeland? Wokeland is starting to crumble from the inside and it seems the infighting on who is most victimized and who should put what bits in what bits and claim to be another bit person.

I think they were manly funding wanky tech startups, but they were definitely (from what I've seen) onboard, and I believe the other two banks that have failed were connected to the whole FTX/crypto collapse.

The Artist wrote:
arry wrote:

The funds were insured to $250k.


Ah. Will be interesting to see how much additional cover they are providing.

All deposits 'U.S. government guarantees all Silicon Valley Bank deposits'.

I recall the UK government doing the same with Northern Rock Thinking

https://pbs.twimg.com/media/E5ATUroWUAIuqQL.jpg
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Easy-X
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PostPosted: 17:50 - 14 Mar 2023    Post subject: Reply with quote

Reading into it a bit more it seems the wobbly banks in question had a lot of exposure to low yield government bonds and apparently these drop in value if interest rates climb quickly.

The question is whether the US government can stop a panic run on banks in general. Good job Biden's got some top men on the case...

https://upload.wikimedia.org/wikipedia/commons/thumb/3/35/Secretary_Janet_Yellen_portrait.jpg/220px-Secretary_Janet_Yellen_portrait.jpg

...oh dear Laughing
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Nobby the Bastard
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PostPosted: 18:15 - 14 Mar 2023    Post subject: Reply with quote

It's the usual cause of a business to crash, asset rich but cash poor and so can't meet immediate debts.

The difference between banks and any other business is if investor confidence falling results in small investors (people with bank accounts) pulling out (withdrawing all their cash) at the same time quite quickly the bank is suddenly and unpredicably unable to service it's debts.

If it wasn't for the cash investors withdrawing their cash because of a perceived reason to panic it wouldn't have happened and a slight downturn in profit can cause it.
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Easy-X
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PostPosted: 19:21 - 14 Mar 2023    Post subject: Reply with quote

I think the cash investors (the little people) were way down on the chain of events. Before that the directors sold off their stock options, the analysts noticed, the hedge funds start shorting and by the time Joe Shmoe hears about it it's usually too late.

You always like to blame the plebs, Nobby Wink
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Nobby the Bastard
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PostPosted: 19:26 - 14 Mar 2023    Post subject: Reply with quote

Probably the hedge funds shorting that lowered investor confidence that caused the panic.

Hedge funds shorting can cause a business to go bust that wouldn't have had an issue if they hadn't. Cause and effect back to front.
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Easy-X
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PostPosted: 21:45 - 14 Mar 2023    Post subject: Reply with quote

You don't believe directors selling off shares is, how shall I put it, at least adjacent to dishonest ?
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Nobby the Bastard
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PostPosted: 21:52 - 14 Mar 2023    Post subject: Reply with quote

Yep. The trouble is proving it.

The way the market is set up, directors selling shares can cause hedge funds to short shares.

But there's no point directors having shares if they can't sell them.

By the same token where is the impetuous for the company to give out a nice dividend and have a good share price if the directors cannot own those shares. The directors of the company in a lot of limited companies are the only ones who have shares in it.

It's a vicious circle. Directors sell off shares for no particular reason, hedge funds start shorting, normal share holders start selling because of the hedge fund position, cash investors shit themselves, run on bank.
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Easy-X
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PostPosted: 10:32 - 15 Mar 2023    Post subject: Reply with quote

Nobby the Bastard wrote:
Directors sell off shares for no particular reason


I think the clue is when all of them do it at the same time. If the directors (seemingly) have no faith in the company why should anyone else?

If one director does it, e.g. something normal like planning to take early retirement in a few months, the share price is still likely to go down at least a bit with new shares dumped on the market so hedge funds are still right to take interest. Unless you believe "shorting" is dishonest which TBF is a perfectly valid viewpoint.

The difficulty is - and this applies beyond banks to publicly traded companies in general - if you draw attention there's always some flaw some skeleton in the closet to be found and the market reaction is not always proportional to the problem. "It's not great but it's the best worst system we have" to bastardise Churchill Thinking
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stinkwheel
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PostPosted: 10:55 - 15 Mar 2023    Post subject: Reply with quote

It's the same old problem, using borrowed money to borrow money with. Then when it turns out the money you borrowed first is costing you more than you're getting back from the second lot, everything implodes. But who could have predicted that? Rolling Eyes

In this case, I believe they had actually purchased government bonds but the interest rate has gone up a lot. If you had actually just invested in government bonds, they would be considered a rock-solid safe investment. However, while they are returning more than they did, they were purchased using other borrowed money which is costing them more to repay than the bonds are yeilding.
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DaddyStu
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PostPosted: 13:54 - 16 Mar 2023    Post subject: Reply with quote

Again, tosspot bankers messing about with money that isnt theirs.

We'll probably have to bail our lot out again if it gets any worse.

Never mind though - i'm sure we're all happy to work an extra few years before retirement. Especially if it means they get to buy a new yacht or 2.
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stinkwheel
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PostPosted: 16:48 - 16 Mar 2023    Post subject: Reply with quote

DaddyStu wrote:

Never mind though - i'm sure we're all happy to work an extra few years before retirement. Especially if it means they get to buy a new yacht or 2.


It's ok though because your pension pot is going to be tax free when it's over £1 million now so you can squeeze in an extra few years of work.
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MCN
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PostPosted: 17:02 - 16 Mar 2023    Post subject: Re: Are these banks or dominos? Reply with quote

Easy-X wrote:
US regulators bail out SVB customers, who can access all their money Monday

And a second one:

Quote:
The Fed also said Signature Bank was closed Sunday and that a similar system will be put in place for customers of that bank – all depositors will be made whole. And the Fed will make additional funding available for eligible financial institutions to prevent runs on similar banks Monday.


I can't say I know much about the American banking system but two banks in a week, hot on the heels of the FTX collapse, doesn't sound good Thinking


Because.... Cash was abandoned years ago when the robbing, conniving, thieving Bastirts in the world of finance decided cash/gold wasn't lucrative enough.

Now we rotate on the promises and opinions of R-Soles who are beyond the law.

So they play with world finance like a board game. Monopoly Money to them.

And when they get it wrong another shower of bastirts make profits from the misery created.

Bankers are the real criminals of life. Always have been.
They even pithed off Jethuth, for Chritht takes.

Governments are in bed with the banks, hence no effective controls or punishments.

Self Regulated Laughing Crying or Very sad
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