So much for shrinking the Fed's balance sheet. Not a bad deal if you can get it; give me your shitty collateral and I'll give you 100 cents on the dollar. Folks, its no accident the Fed doesn't have to mark to market. With all the shit on the Fed's balance sheet you can supply the world with mushrooms for eternity. Never, never call/expect an arsonist to put out your fire. Way past time to abolish the Fed :-)
A seasoned CFO would have purchased interest rate swaps to hedge the risk of rising rates. This was completely preventable. As they say; get Woke go Broke :-)
Watching the unfolding SVB debacle and attendant events, reading, and listening over the past few days, continually being baffled, amused, angry, sad, and becoming more cynical reminds me of characters straight out of the Marx Brothers’ “Duck Soup.” This unholy mess of economic chaos is of truly farcical proportions, a nonstop bather of buffoonery with statements like, “no losses will be borne by the taxpayers,” to “there will be no bailout,” to “but wait—we have a new treasury-backed bank funding program—BTFP—no prob! We’ll just print more money and throw it after bad. Isn’t that what we do? What could possibly go wrong?” No scriptwriter could get away with a plot so ridiculous and convoluted. The blind leading the blind… or as Bugs would say, “What a lot of maroons!” I find myself sometimes roaring with laughter if it all weren’t so sad and unnecessary.
How long before the Ukraine ends up on the Fed's balance sheet? Jay Pow and the rest of the apparatchiks at the Fed have a real affinity for shitty collateral :-)
This is right on but add comments on why the poor manpower plans at all the tech companies. They all seem to over hire in 2021=22 and now fire tens of thousands but to the govt. all is well on jobs and the economy. I never saw coordinated manpower planning stupidity like this before. Amazon, google, sales force MSFT all doing same.
My memory is nearly 80 years old, probably reaching some sort of expiration date and its storage capacity is at a point that with every new piece of information absorbed something falls off the back of the cart but I remember your opening line as “this is a fine kettle of fish you got me into Stanly” but then again, maybe I’m wrong. Which leads me to the second thing I don’t remember well and that is the banking bill Trump signed in 2018. It was primarily dealing with e-banking, identity security and a special category of “banks too big fail“ from the thousands of other banks when it came to stress testing their systems - at least as I remember the key points. SVb deposits nearly quadrupled from 50 billion in 2018 and had virtually no bonds in its bond portfolio in1st Q of 2020 and in 2 short years (the Great Flood of Money years) it held roughly speaking 140 billion with close to 70+% held in “Hold to maturity” with 6+ year average maturity. Virtually free money on one side of the equation and bonds priced at a fixed interest rate on the other side. What could possibly go wrong with that scenario? Since the media and the President has already assign the blame to Trump who currently is also culpable for the border crisis, the war in Ukraine and the East Palestine train wreck, is there anyone here in our BPR world who can identify what specific rules Trump abrogated with his trademark flourishing signature that allowed svb to do that? Maybe there was a sub section dealing with stupidity that I didn’t catch.
Actually, being able to collateralize a loan with bonds worth less now but pay Par at maturity seems like a reasonable idea as long as that happens and the bank pays interest on the loan. Curious what the average maturity is on SVB’s bond portfolio. One would hope that they didnt go real long.
So the Federal Reserve repressed interest rates for the last 13 plus years and thus created a Mount Everest of negative yielding bonds/debt. Now ask yourself this question; who's dumb enough to buy this shit. The answer is anyone other than Banks. The Banks have Jay Pow and the Fed to dump this crap on. The Federal Reserve; shit eaters extraordinaire :-)
A while back I started, out of the blue, getting emails from a bloke called Louis Gantz. He reckons BTFP means Buy The Fed Pivot. Gold especially, I suppose.
After SVB and Signature there seems to be a total bank support scheme. Does it have anything do do with the fact that the two banks mentioned have big players, one in the San Francisco FED and the other in government( congress or the senate)?
The progressives want to return to Glass-Steagall and full scale Dodd-Frank (what about Moe-Curley-Larry?). Some of them argue that banks shouldn't have shareholders (in other words, nationalize the banks) since the interests of shareholders may conflict with the interests of depositors. They never let a disaster go to waste in the march to more government control over our lives. Also, I thought the bank regulators, bank stock analysts, and bank rating agencies were closely monitoring the banks like SVB for problems, yet I don't recall anyone warning us before SVB imploded. That's what I love about BPR. You aren't asleep at the wheel!
Negative yielding bonds is considered shitty collateral for those of us who have to trade our time for dollars. Oh its a much different situation for those who can conjure up dollars out of thin air. This is precisely why the Federal Reserve is also referred to as Shit Eaters :-)
So much for shrinking the Fed's balance sheet. Not a bad deal if you can get it; give me your shitty collateral and I'll give you 100 cents on the dollar. Folks, its no accident the Fed doesn't have to mark to market. With all the shit on the Fed's balance sheet you can supply the world with mushrooms for eternity. Never, never call/expect an arsonist to put out your fire. Way past time to abolish the Fed :-)
A seasoned CFO would have purchased interest rate swaps to hedge the risk of rising rates. This was completely preventable. As they say; get Woke go Broke :-)
Dear Bill,
Watching the unfolding SVB debacle and attendant events, reading, and listening over the past few days, continually being baffled, amused, angry, sad, and becoming more cynical reminds me of characters straight out of the Marx Brothers’ “Duck Soup.” This unholy mess of economic chaos is of truly farcical proportions, a nonstop bather of buffoonery with statements like, “no losses will be borne by the taxpayers,” to “there will be no bailout,” to “but wait—we have a new treasury-backed bank funding program—BTFP—no prob! We’ll just print more money and throw it after bad. Isn’t that what we do? What could possibly go wrong?” No scriptwriter could get away with a plot so ridiculous and convoluted. The blind leading the blind… or as Bugs would say, “What a lot of maroons!” I find myself sometimes roaring with laughter if it all weren’t so sad and unnecessary.
Hey Jay Pow; I bought my house for $1 million and it will only fetch $800K at the moment. How about you take it off my hands today for $1 million :-)
How long before the Ukraine ends up on the Fed's balance sheet? Jay Pow and the rest of the apparatchiks at the Fed have a real affinity for shitty collateral :-)
I guess this could quickly become a new business model. Create a bank, create a debt pile, get bankrupt and be well assisted by the state.
This is right on but add comments on why the poor manpower plans at all the tech companies. They all seem to over hire in 2021=22 and now fire tens of thousands but to the govt. all is well on jobs and the economy. I never saw coordinated manpower planning stupidity like this before. Amazon, google, sales force MSFT all doing same.
dRichard
My memory is nearly 80 years old, probably reaching some sort of expiration date and its storage capacity is at a point that with every new piece of information absorbed something falls off the back of the cart but I remember your opening line as “this is a fine kettle of fish you got me into Stanly” but then again, maybe I’m wrong. Which leads me to the second thing I don’t remember well and that is the banking bill Trump signed in 2018. It was primarily dealing with e-banking, identity security and a special category of “banks too big fail“ from the thousands of other banks when it came to stress testing their systems - at least as I remember the key points. SVb deposits nearly quadrupled from 50 billion in 2018 and had virtually no bonds in its bond portfolio in1st Q of 2020 and in 2 short years (the Great Flood of Money years) it held roughly speaking 140 billion with close to 70+% held in “Hold to maturity” with 6+ year average maturity. Virtually free money on one side of the equation and bonds priced at a fixed interest rate on the other side. What could possibly go wrong with that scenario? Since the media and the President has already assign the blame to Trump who currently is also culpable for the border crisis, the war in Ukraine and the East Palestine train wreck, is there anyone here in our BPR world who can identify what specific rules Trump abrogated with his trademark flourishing signature that allowed svb to do that? Maybe there was a sub section dealing with stupidity that I didn’t catch.
Actually, being able to collateralize a loan with bonds worth less now but pay Par at maturity seems like a reasonable idea as long as that happens and the bank pays interest on the loan. Curious what the average maturity is on SVB’s bond portfolio. One would hope that they didnt go real long.
So the Federal Reserve repressed interest rates for the last 13 plus years and thus created a Mount Everest of negative yielding bonds/debt. Now ask yourself this question; who's dumb enough to buy this shit. The answer is anyone other than Banks. The Banks have Jay Pow and the Fed to dump this crap on. The Federal Reserve; shit eaters extraordinaire :-)
A while back I started, out of the blue, getting emails from a bloke called Louis Gantz. He reckons BTFP means Buy The Fed Pivot. Gold especially, I suppose.
After SVB and Signature there seems to be a total bank support scheme. Does it have anything do do with the fact that the two banks mentioned have big players, one in the San Francisco FED and the other in government( congress or the senate)?
The progressives want to return to Glass-Steagall and full scale Dodd-Frank (what about Moe-Curley-Larry?). Some of them argue that banks shouldn't have shareholders (in other words, nationalize the banks) since the interests of shareholders may conflict with the interests of depositors. They never let a disaster go to waste in the march to more government control over our lives. Also, I thought the bank regulators, bank stock analysts, and bank rating agencies were closely monitoring the banks like SVB for problems, yet I don't recall anyone warning us before SVB imploded. That's what I love about BPR. You aren't asleep at the wheel!
Gold
https://elements.visualcapitalist.com/charted-30-years-of-central-bank-gold-demand/
still lovin it!
Negative yielding bonds is considered shitty collateral for those of us who have to trade our time for dollars. Oh its a much different situation for those who can conjure up dollars out of thin air. This is precisely why the Federal Reserve is also referred to as Shit Eaters :-)