Silvergate toast too. Rates to high for banks to handle. Fed might be forced to pivot and ensue high inflation.
I don't think the Fed will capitulate at any point. They know this inflationary spiral is their fault due to keeping rates too low for too long. If they capitulate here it will not take long for the fed to get abolished in the chaos that happens afterwards. Probably two to three election cycles before the pitchforks control the House and then it will be all over. Pitchforks BTW come in both right and left flavors.
I'm only mildly concerned, but brace for the overreaction. I love the first round of reporting to come out -- "SVB was not immediately available for comment." After this passes, we should give serious thought to reviving the pillory.
The VC's are starting their pleading campaign early because they're not going to be able to claim that the ATM's will stop working the way the TARP proponents could. If the government bails out this sector of the banking industry it will be purely welfare for billionaires and I doubt there is a proponent for that particular class of action anywhere in government at the moment.
My two biggest concerns at the moment: (1) that the words "Bear Stearns" are being uttered within the walls of SVG as the lawyers workshop a backdoor, and (2) that some Congressdink is right now drafting a bill to incorporate USPS & Sons Bank. Either of the two will turn mild concern into outright terror.
This is why I built an underground bunker. All you motherfuckers are toast when the cannibalism starts.
For once, I agree with you. They’re already crying. It’s their own fault they mismanaged their funds in one of the largest industries in the world.
One of the biggest reasons just to let nature run it's course here is that an unknown factor in recent years will re-enter the process of valuing investments, that being the re-entry of actual moral hazard into the realm of high finance. 2007-2009 destroyed multiple pillars of capitalism. First the lack of accountability for the CDO-inspired crisis effectively let some of the biggest white collar criminals in history, people who were openly defrauding the public, off the hook. Second, the crisis allowed the fundamental pillar of capitalism, that your rewards came with risks, to erode into something unrecognizable. Third, the Fed and other central banks around the world began the long process of making money free for people who already were in the top 1% in terms of wealth. This eventually redistributed so much wealth into that group that Democracy became eroded as wealth overrode common sense in government policies worldwide. Letting a few big banks go under right about now is not only sensible it is long overdue.
If things start breaking then they will be under extreme pressure to back off. As long as things don't break they can stay the course which they have been doing. I'm surprised something hasn't broke yet but timing in markets is hard to predict. Not sure if the bank issue is nothing or the start of something bigger. I'll just sit back and watch.
We need new terms. Moral hazard stopped being a real thing a while ago. "Moral Speedbump" might be more appropriate.
I think we're past the point where speedbumps are effective. I think we need to recreate the fear of failure. We need a few high-flying CEO's in a barrel and suspenders photo op and the worst of them taking perp walks.
I was saying something different than you were reading. My fault, not yours. The real takeaway should be - with all the ways we've bailed out, guaranteed or embraced the concept of "too big to fail," it's no longer your grandfather's moral hazard.
