Silicon Valley Bank

"Silicon Valley Bank Fails After Run on Deposits": https://nyti.ms/3Jc9PXr

I've been avoiding this story all day long.

You see it was the headline on the NYT, the WaPo, the WSJ, everywhere but the LAT, which was eclipsed in its blizzard reporting by the NYT. That's like Celine Dion making the best rap record. Unfathomable.

So if you're addicted to the news apps...

Well, maybe you're not. Good for you. As long as you're not testifying as to the truth. Because you've got to read 'em all, constantly, to get a feel for the pulse of the country, which no one seems to have anymore.

And to do this, you must read the mainstream publications, which you must pay for. Too many lefties deride the "Times' and burrow down into the hole of self-described truthsters with blogs. Ditto on the right. Everybody needs to scan the Fox News site to get a feel for what is titillating the right, what is left out. As for its veracity... If this were the sixties, if this were any time before the internet era, Tucker Carlson would be the new Joe McCarthy. History. As for Rupert Murdoch, he does this again and again and remains unscathed. Remember the phone-hacking scandal in England? You might be the only one. And the sacrificial lamb, Rebekah Brooks? Rupert rehired her. Meet the new boss, same as the old boss.

Anyway, the headline, the #1 story on the news apps, usually refreshes as the day goes on. And especially in the evening, when the physical paper is put to bed. That's right, unless there's an earthquake or a terrorist attack, there's not much news overnight, because on the east coast, where the news is minted, everybody is asleep. But it's a rare night when the morning's headline is still the evening's headline. God, school shootings can be displaced faster than the story with Silicon Valley Bank. What's up?

Well, I've never heard of Silicon Valley Bank. I figured it was a small institution. But it's not. It had about $200 billion in assets. And...

What you've got to understand is the federal government only guarantees 250k in deposits. That might sound like an extreme amount to you, but then you don't realize that America is inundated with millionaires, because of their real estate if nothing else.

And then there are those with nothing.

Today the WSJ featured this article:

"Fear Over Social Security's Future Leads Some to Claim Retirement Benefits Early - Filing for benefits before full retirement age is a gamble, say economists and financial advisers": https://on.wsj.com/3YMK6KY

That's a free link, and if you're interested in the timing of taking Social Security you should definitely read it. Then again, don't. Rely on your friends, because they know more than the experts. Isn't that the scourge of America?

And people aren't concerned with getting Covid... But when it comes to money, they don't want to lose theirs!

Now the banks rely on you being fearful and lazy. If you're not sophisticated, if you don't have a financial advisor, you're probably not moving all your money around to get the best return. For over a decade, returns on checking and savings accounts at commercial banks have been nearly infinitesimal. But over the past year, especially the past six months, rates have skyrocketed elsewhere. Insiders know this, those with real money know this and...

They're not going to leave their money in low-interest accounts.

You can get close to 5% easily. That's about four points more than your standard bank is paying, and you're still losing money to inflation.

So, the sophisticated investors, those with far in excess of 250k, are pulling their money from low-interest paying banks.

Which means the banks have to have the cash to pay them.

Which means the banks have to sell assets to get the cash.

And if the assets are bonds, the return keeps going up, so your old bonds have to be liquidated at a loss. And Silicon Valley Bank lost $2 billion trying to satisfy withdrawals.

But it still wasn't enough. The bank crashed. The government took it over. Which means if you had less than 250k in your account, you're good. If you had more... You get a piece of paper saying you will get...hopefully 100%, but it depends on the liquidation of the bank. Last time around, the 2008 crisis, with IndyMac, you got 50 cents on the dollar.

So if you've got money in one of these banks, that is not diversified, like First Republic...withdraw your money tonight!

But if you think I'm writing about banking...

The point is we can no longer rely on institutions. As for the experts, they seem to be in it for themselves. And the public? They're looking for trouble. That's the new paradigm. No one wants to accept the truth, especially when it's uttered by the elite. It can't be true. You do know the Covid vaccine doesn't work. It kills you. Stop taking all your vaccines. Like the Christian Scientists. You don't need no stinking medicine.

But it's like those people stuck inside their homes in the San Bernardino Mountains. I've lived in the hinterlands, you don't think there's not enough infrastructure to ensure your safety. But not in the San Berdoos.

That's what we've learned in the past decade, certainly the past few years, that the government we thought we could rely on, we oftentimes can't.

And both parties are guilty, but the Republicans are far more guilty. Because their goal is to minimize the government.

Which is how we got into this mess. Trump got rid of Dodd-Frank, which would have prevented the Silicon Valley Bank crash, via a stress test at least.

And as far as no more regulations...

Regulations can be burdensome, but most are there to protect you, the public. Sarah Huckabee Sanders making it easier to hire minors? God, if she read the exposé on child labor in the NYT, she never would have done this. But if you're a Republican...you can't hew to the NYT. You can't hew to science, or history. Cut taxes and the poor will get wealthier and the deficit will disappear. How many times do they have to try this until they admit it never works?

And those footing the bill?

You. You're paying that 250k above. You're getting fewer services. Seemingly everyone is getting rich but you.

And you get enticed by scams. Turns out that's what crypto was, a giant casino, and never forget the house always has an edge.

And that internet GameStop run-up, and the one re AMC... Retail stores selling physical gaming software? See an Egghead store around the corner? Software went virtual nearly two decades ago, on the surface this makes no sense. As for AMC.. Statistics tell us fewer people are going to the movie theatre, why should its business improve dramatically?

But everybody is a mark.

That's one thing about losses. Somebody suffers. You think it's all paper, but it's not.

I mean how stupid was Silicon Valley Bank to not diversify its holdings? It was in the start-up business, lending for new companies. It'd be like a movie studio only investing in brand new filmmakers, not making any sequels... Odds are gonna run out at some point.

But in the interim, a whole bunch of people are getting rich.

And the odds of your local bank failing, which is probably a national bank anyway, are low, but once consumer confidence fades...you've got no idea what might happen.

So the moral of this story is...

You can't count on anyone but yourself these days.

Which does not mean you should be ignorant. No, gain as much information as you can and then make a decision, an educated decision.

And be wary of listening to your friends, people you run into. Most people are not sophisticated, and full of sh*t anyway. And they want to make themselves look good. And some are convincing salesmen...

Which means you should look to the experts, the traditional outlets listed above, like the NYT, WaPo and WSJ.

But these three have been denigrated to the point where if you mention their names people laugh.

But the joke is on them.

We live in an information economy. Which means those with the most information win. It's true in each and every business. Even ticketing. Those in the industry were laughing at the Congresspeople at that hearing... Because they didn't know what they were talking about.

And in the internet age there's a plethora of information online.

And yes, there are those proffering misinformation. You've got to separate the wheat from the chaff. But in our hobbled educational system people don't learn how to do that. And they're taught everybody is treated equally in this country and nobody is homosexual or trans and if you live in Florida, you start out a step behind and never catch up.

As for DeSantis talking about all the people leaving California for Florida... The number is de minimis. Even worse, it's older people with little wealth.

Hell, the statistics were in the LAT.

As for statistics, the facts that jumped out of that WSJ article regarding Social Security above were:

"The program provides 37% of men and 42% of women with half or more of their income, according to the Social Security Administration."

Which means that almost half the country is broke, or close to it.

You can't live on that amount of money.

And some never made enough money, which is why the minimum wage needs to be raised dramatically.

And then there are those who are financially unsophisticated, the NYT just printed an article stating re Lisa Marie Presley:

"'Sadly, since inheriting her father's estate in 1993, Lisa has twice squandered it,' they wrote. 'She now has only herself to blame for her financial and personal misfortunes.'": https://nyti.ms/3mD6Uz7

Forget sex education, first we must teach financial literacy in our schools. Then some people will realize they can't afford to have kids and will ultimately be better with birth control.

Maybe not, we do need sex education too.

But if you think someone is looking out for you and your money, that it will all work out, that that investment your buddy next door said was foolproof is...

You've got another think coming.

You need to educate yourself.

After all, the execs at Silicon Valley Bank got paid, they always do.

As for the depositors... The savvy with the most information got their money out. The rest?


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