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| CBS News: The US Was Double-Billed for Projects in Wuhan Fauci: You Know, Sometimes Labs Leak Naturally-Evolved Viruses » March 13, 2023
THE MORNING RANT – Here We Go Again? Major (Super-Woke) Tech Bank FailsThe nation’s 16th largest bank, Silicon Valley Bank (SVB), just failed and went into receivership by the FDIC. Are we about to see another economic crisis along the lines of the dot-com bust in 1999 or the financial crisis in 2008? I hope not, but I won’t be surprised. All the experts who didn’t see this this bank failure coming are also the ones now saying they don’t see any reason why SVB’s failure would be “contagious.” My observation over the years is that politicians and regulators tend to be heavily influenced and persuaded by the financial masters of the universe, while also barely understanding what gambles they are taking. A very short summation of SVB’s failure is that it was awash in deposits, so it invested heavily in bonds. The market value of a bond goes down when interest rates rise, thus with rising rates the market value of those bonds subsequently decreased, and SVB did not hedge the interest rate risk. With the tech industry starting to struggle over the past year, SVB’s deposits started to decrease. To replace the departed cash, SVB had to sell bonds at a huge loss. SVB then went to the capital markets to try to raise more cash to prop up its balance sheet because of the bond losses. That spooked depositors who started rapidly withdrawing cash, and it also spooked investors who started dumping the stock. Last Friday the FDIC took control of the bank. The bank apparently had about $175 billion in deposits, of which about $150 billion was not FDIC insured. (The FDIC insures up to $250,000 per customer at a bank.) Reports are that withdraws on Thursday March 9 alone were $42 billion. The bank failed the next day. Investors are likely wiped out. The stock peaked at over $700 per share in October 2021, and was at $275 per share just a week ago before tumbling to $106 per share when trading was suspended. SVB was one of the stocks in the S&P 500, but it was replaced in that index on Friday. Did I mention that experts really don’t understand what financiers are doing? CNBC’s stock market “expert” and carnival barker Jim Cramer was advising people to buy SVB stock just last month at $320 per share.
Speaking of CEO Greg Becker, whose total compensation in 2022 was estimated at $14.2 million, many of you are likely concerned how SVB’s failure might financially impact him. Like you, I am heartsick at the thought of Becker losing his 8-figure compensation package, but there is some good news for him, as he shrewdly sold over 12,000 SVB shares less than two weeks ago – shares that would now be worthless. SVB Chief Sold $3.6 Million in Stock Days Before Bank’s Failure Silicon Valley Bank Chief Executive Officer Greg Becker sold $3.6 million of company stock under a trading plan less than two weeks before the firm disclosed extensive losses that led to its failure. The sale of 12,451 shares on Feb. 27 was the first time in more than a year that Becker had sold shares… Lucky timing, probably. The significance of what happens as a result of SVB’s failure isn’t just the immediate financial impact, it’s also the behavioral impact that ricochets elsewhere. If large depositors lose some of their uninsured deposits, it could also cause bank runs at other banks. [Late breaking news: the Treasury Department announced Sunday night that uninsured depositors at Silicon Valley Bank and Signature Bank, another bank that failed over the weekend, will not lose any uninsured deposits. There are no guarantees about other banks, but the message being sent is that depositors need not fear losing their money if a bank fails due to a bank run. All actions have unforeseen consequences, as will this one. – Buck] In addition, there has been a perception of a dot-com type tech bust happening. Will the failure of the flagship bank of tech culture serve as an accelerator for the decline of the tech industry? There could be many ripples from SVB’s failure that we’ll only be able to see in hindsight. Or maybe there will be none. But when well-connected financiers start imploding, history tells me to be wary. I doubt FTX and Silicon Valley Bank will be the last big financial implosions in the news this year. And finally, was Silicon Valley Bank another woke, left-wing corporation spouting off about diversity and decarbonization? Of course it was. From its 2022 Environmental, Social and Governance (ESG) Report SVB’s ESG program centers on the positive impact its innovative clients make and is built around six strategic initiatives designed to support long-term sustainability for the company: Our ability to make a meaningful difference for people and the planet, and to address the systemic risk that climate change presents, is magnified by the outsized impact our innovative clients make. There’s more:
Seriously, Silicon Valley Bank’s failure occurred at the intersection of net-zero, wokeness, asset-less tech companies riding a bubble, fancy financiers, and business/political corruption. They reap the rewards when their gambles pay off, then they pass the burden to taxpayers when their gambles fail. As a taxpayer I am fed up with bailing these people out. [buck.throckmorton at protonmail dot com] | Recent Comments
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The Morning Report — 12/30/24 Daily Tech News 30 December 2024 Sunday Overnight Open Thread - December 29, 2024 [Doof] Gun Thread: Post Christmas and Pre-New Year 2024 Edition! Food Thread: Raccoons, Brisket, And Latkes...A Match Made In Heaven! First-World Problems... The Progressives Love Lawfare...Payback Is A B*tch! Sunday Morning Book Thread - 12-29-2024 ["Perfessor" Squirrel] Daily Tech News 29 December 2024 Search
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