Thank the Fed.Here’s how the second-biggest bank collapse in U.S. history happened in just 48 hours
Here's how the second-biggest bank collapse in U.S. history happened in just 48 hours
As dust begins to settle on the biggest American bank failure since 2008, members of the VC community lament the role other investors played in SVB's demise.www.cnbc.com
Well, I can say straight up that the Fed has not done a single thing that I have found to be the least bit surprising at all, except perhaps to once again wait too long to begin raising rates. These people can’t be so dumb, they gambled and waited because Joe wanted a the pedal to the metal for false prosperity. Then of course, there is the fact that they had engaged in QE for far too long, because everyone loves to print money. Woo Hoooo!
DC loves banking consolidation. Not sure that they care how it happens, in the long run. They think fewer players is a good thing.
Did what little I could to try and poke around our local banks here in western Ohio.
When you can get a 2-year t-bill for 5% why keep your money in the bank. However more banks are raising their rates on their CD's which leads to less profit for the banks. As for SVB they do a lot of financing to venture capital and that well has dried up over the past year.
LOL who picked the current Fed chief and who was it that kept hounding him to keep rates low. Yellen and Powell both kept rates too low for too long though Powell started raising them in 18 to trumps bellyaching. Now of course he is raising them too fast to fight inflation without considering all the repercussions just as he should have never left them drop to zero as he was too fixated with the decline in the economy over the fallout from the govt. response to covid. However, rates overall are not historically out of whack if he stops raising them now as I can remember double digit interest rates in the 80's but unfortunately, we still have that boogeyman inflation still hanging over the economy, so Powell is in a bit of pickle much of his own doing.
This bank in particular was put in a bad position because they had huge deposit from the massive profits during Covid. They needed to get some return on those deposits so they bought bonds at a 1.7% yield for 10 years. Not an issue if you take those bonds to maturity. However when the Fed raised rates so fast and drastically it killed the stock market which meant investors needed a new place for their money. If the market can't get a return and they are looking for a safe investment you either put money in the bank at 1% or Bonds at 4.75%. They are going to pull money out of banks and invest in bonds.
Banks are starting to raise capital and offering competitive rates to shore up customer confidence.
The Fed is trying to control inflation that is being caused by wages.
Printing money and energy policies haven't caused inflation?
Bingo, current state inflation is very unique and unprecedented. The entire situation was exacerbated once Biden (and Trump) started offering stimulus to an economy that was already on fire and labor market that already had a shortage. The lesson learned in the future is we need to break the habit of offering stimulus every time there is a chance the economy might hit a rock in the road. No politico wants a recession on their watch to the point that they will do stupid things at the mere thought of one.
Not nearly responsible as wages.
It isn't even that as much as 10 million people leaving the work force early. 5 million boomers retired early and 5 million women left the workforce to raise kids.
I tell people the economy could shrink up back to 2012 levels and we would still have a labor shortage. Culture wars and our pitiful immigration policy have hurt our ability to bring in new people and new generations are so spoiled through luxurious living that they are no longer having kids because it is tough to drive Audis and go on 6 vacations a year when you have 3-4 mouths to feed. As you mention it will only get worse as more and more boomers leave the workforce. The United States as a whole peaked in the year 2000 when it comes to total workforce participation and has declined since due directly to the boomer generation. We have always depended on immigrants to fill those gaps and have gone away from that.
Total wages paid to employed Americans are up over a trillion dollars a year since 2020. That's serious economic stimulus for the economy.
Another casualty of the wrong headed covid lock down. A lot of people sitting home realized that they could retire early or live on one income.
It will take a massive over haul of numerous areas. First we need to keep women in the workforce while encouraging having a family. This means solving childcare cost as well as student loan repayments. Work from home can be a possible solution for some fields as well.
That's a stupid take especially for a Conservative. People making a decision on their own situation is a very Conservative thing to do. There is nothing wrong with people being in a position where they don't have to work.
And yet those two stimulus packages pale in comparison to the extra money in the economy every year from wage increases.
Very likely if people lose faith in banks.
