Current Events > Economics + Politics General - Part 1 - Let's party like it's 2008!

(+) Yeah! (+)

Two banks have now failed over the last few days with another that has ceased trading due to a 70% fall in share price. I'm not very au-fait with all this economics stuff but is there reason to be worried?

https://www.bbc.co.uk/news/live/business-64940883

https://gamefaqs.gamespot.com/a/user_image/3/7/5/AAfPfjAAERh3.png

Thank God I didn't buy the dip Friday

SHRlKE posted...

but is there reason to be worried?

Worried about what?

ellis123 posted...

Worried about what?

This being a repeat of 2008.

SHRlKE posted...

This being a repeat of 2008.

Then no. People are vastly more openly racist now.

[LFAQs-redacted-quote]

I was replying about the entire year of 2008, not about the financial crisis.

That is also "no" but because we are unlikely to give nearly the handout of 2008.

2008 was about social engineering and "private gains / public losses".
This time seems to be about loose venture capital drying out.

[LFAQs-redacted-quote]

No. I am more alluding to it just being much worse.

tag

Was this whole discourse about SVB over the weekend fear mongering by various VC people? I don't think it's hindsight speaking, but it seems like there has always been a method for uninsured deposits to be made whole.

https://twitter.com/ArmandDoma/status/1634338645237956608?t=--2FY-Lk4ar_iDJCfEQ4pw&s=19

If a bank fails, FDIC takes it over and they try to sell the assets to buyers. And the buyer will most likely make them whole, worst case they lose 5-10%. It seems like the real risk was that the full amounts would not have been available Monday morning. But people were scared of the money just being completely gone, which is just not a realistic scenario of what would have happened.

https://noahpinion.substack.com/p/preventing-panic-in-the-banking-sector?utm_source=substack&utm_medium=email

The next question becomes: What can the government do to prevent or stop a wider banking panic? Well, it starts with the FDIC.

The latter is what the FDIC is doing now, with SVB. SVB has been put into receivership, meaning that its shareholders have been wiped out and its employees will, after 45 days of getting paid to help clean up their mess, be out of a job. The FDIC is even now looking for a buyer, or buyers plural, for SVBs assets.

Whether its one buyer or several is actually pretty important. In most bank failures, the failed banks assets and deposits are both transferred to one other bank in other words, if youre a yesterday you had an account at SVB, today you have an account at some other bank, and you dont lose a penny of your deposits. There have been hundreds of bank failures since 2008, and this is almost always what happens. The most famous example of this was Washington Mutual in 2008, which was an even bigger bank than SVB. When WaMu failed, its assets and deposits just got transferred to JP Morgan Chase, and depositors kept all their money.

Anyway, if that fails, the FDIC has to go to Plan B, which is to sell off SVBs assets to various different buyers and send the proceeds to the depositors. This is not the optimal plan because theres a basic tradeoff here. On the one hand, the FDIC can try to sell as much as possible quickly, to help SVBs depositors make payroll this week. On the other hand, it can take its time to sell some of the assets, in order to get a good price for them, so that depositors dont end up losing any of their money.

I don't know all the exact details of Signature bank but SVB failed purely due to stupid decisions. There was nothing shady or corrupt and it wasn't based on some unstable platform with shady intentions like 2008. 2008 was a house of cards that collapsed. In summary, SVB had a shit ton of cash and thought, lets put the money to use but with the lowest risk possible - lets buy bonds. Well they bought bonds at literally the worst possible timing and now they're essentially losing money on it with interest rates skyrocketing immediately after that.

I think the issue is being overblown and that mentality that this is a huge becomes a self fulfilling prophecy and makes it a big deal. Literally everyone is getting their money. But once panic sets in its hard to reverse, its a slippery slope. Thats partly why Signature bank failed. Now 100 of 125 banks in the US with over 5bn are in the red today. Small bank stocks are plummeting. Panic is setting in. Thats the worst case scenario. But it won't be anywhere even remotely close to 2008.

However, the economy has been impending recession for a while and I wonder if this will accelerate that.

https://gamefaqs.gamespot.com/a/user_image/4/6/6/AAfUr8AAERjS.jpg

All kicking off over this plane incident over the Black Sea. Hopefully cooler heads prevail.

Feels nice to work in a financial institution that's in the green.

Credit Suisse one of the worlds biggest banks was 30% down earlier. Leaders round Europe are trying to calm the markets. Hoping this will blow over.

https://www.theguardian.com/business/2023/mar/15/credit-suisse-what-is-happening-at-swiss-bank-and-should-we-be-worried

send for the lifeboats?

https://www.thisismoney.co.uk/money/comment/article-11869421/ALEX-BRUMMER-Bank-lifeboats-launched-amid-banking-turmoil.html

https://gamefaqs.gamespot.com/a/user_image/6/0/4/AAfPfjAAETDM.jpg Fuck.