New Tractor Sales Are Declining

[Torvy]

I read one financial commentary yesterday that said the fed's history is to "tighten until something breaks."

Still very ironic that investing in treasury obligations considered among the safest debt instruments but which paid low rates led to this bank's failure when the current interest rate is still modest.

I'm wondering if any of the apparently academically stellar staff economists warned the higher ups this could happen before the fed lowered rates so much to start with or if they were so focused on math that they lost sight of any practical consequences that could ensue?

That is what they are saying, but that is categorically NOT what caused the bank failure. Poor management that was too focused on other things rather than competence led to it's failure. The problem was not the Fed. It was the idiocy of the decision makers at the banks for not acting prudently.

 

[MinnesotaEric]

Getting back to money, one crude measure of the value of today's money is to look at the value of a Kennedy half dollar which is currently worth $7.6643 for its silver content.

1964 Kennedy Silver Half Dollar Melt Value - Coinflation

Welcome to Coinflation and everything you need to know about the 1964 Silver John F. Kennedy Half Dollar. This site measures the pure metal value or current melt value of U.S. circulating and pre-1965 silver coins (ignoring the numismatic value, some people call it junk silver too). Values for...

www.coinflation.com

Here's the ironic thing about the SVB bank failure. According to the NY Times, SVB apparently bought a huge amount of US Treasuries which are supposedly among the safest investments in the world. But they bought them when rates were low. When bank depositors asked to withdraw funds, the bank sold those investments at a $2 billion dollar loss because interest rates had risen since the bank bought Treasuries and therefore the Treasuries had to be discounted to be sold. Silicon Valley Bank Fails After Run on Deposits

Interesting what begins to happen when they take away the endless supply of low, low interest rates.

Looking at SVB, the highest, best quality assets they owned were their Treasuries. But when the Fed raises interest rates by 500 basis points in 14 months, that action alone significantly drops the value of those same, high-quality Treasuries. This is in the context of the SVB also owning mortgage-back securities, and horsetrading with companies involved in Crypto.

Now with three banks shuttered over the last few days, we've closed all the avenues for crypto to be converted into US dollars by any domestic commercial bank as well as closed what would have become an alternate banking system for rapid exchanges of crypto into dollars.

The shiny light out of this is that it sure made for another good swing trade to buy into crypto and sell into strength this morning as people started to recognize that holding dollars may not be as safe an idea with the fed signaling that while it wants to raise rates to fight inflation, it will hold off while the treasury prints more money to cover bank failures ('cause there isn't enough money left to cover any more bank failures despite yesterday's Presidential press-briefing—listen to the three unanswered questions by the reporters as the President left the podium—and the Presidential Press Secretary being more concerned about diversity than discussing where the country is going and being run and what we can do next)

 

[MinnesotaEric]

pssst...riptides. For the umpteenth time.

"Management did not design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements".

....effective risk assessment process.... a common denominator that seems to have escaped some banks.

Yeah so? Shoddy management. Seems like a lot of banks have this issue of late.

Okay, you're a bank with a charter that can leverage itself. As such it doesn't matter what kind or quality of assets you own, if you suffer a bank run due to a lack of confidence on the part of your depositors, you're out of business, period (Cf. Money as Debt to understand that all fractional reserve money systems are "faith-based").

Put the above thought into the context of the following thought:

During a period of low-interest, nearly-free money, any idiot or group of idiots can make more money without any skills in risk management. During such easy times, companies get lazy and take on practices that are less than good business practices and are more culturally influenced virtue signals that they are a "good" company as judged by the winds of culture. The result is that the smartest guys in the room are often displaced in favor of whatever the wind is blowing in. Parse what I just said carefully since it isn't allowed for us to share what we really think on social media.

 

[TN8Man]

Never let a crisis go to waste ... and we seem to see a crisis often lately.

Look for a big push for CBDC in the wake of this current banking crisis.

They tried to sneak in a poison pill in South Dakota. Good thing South Dekota has Kristi Noem.

Kristi Noem said in an interview that the same tactics are currently being used in several other states.

Kristi Noem Vetoes New Bill Aimed At Digital Currency​

​

 

[lman]

I went to the Dr. a week ago. Hadn't seen him in about 3 years. Their office would not take a $20 dollar bill for the co-pay. I had to use my plastic. I guess U.S. currency is beginning to be history.

 

[2manyrocks]

According to PBS, the FDIC reported that banks held US Treasuries and other securities with $620 billion of unrealized losses as of 2022 year end. What to know about the Silicon Valley Bank collapse

 

[jyoutz]

I went to the Dr. a week ago. Hadn't seen him in about 3 years. Their office would not take a $20 dollar bill for the co-pay. I had to use my plastic. I guess U.S. currency is beginning to be history.

Many businesses no longer want to carry cash to the bank for deposits with the security risks and time that involves. It’s also a security risk to have large stashes on premises that are subject to robbery.

 

[Hay Dude]

I went to the Dr. a week ago. Hadn't seen him in about 3 years. Their office would not take a $20 dollar bill for the co-pay. I had to use my plastic. I guess U.S. currency is beginning to be history.

Some things are changing so fast.
Other things that really need improvement, like education to name one of dozens, keep failing year after year, decade after decade and nothing is done.

 

[nova3930]

Many businesses no longer want to carry cash to the bank for deposits with the security risks and time that involves. It’s also a security risk to have large stashes on premises that are subject to robbery

At our clinic if it wasn't for the number of old folks who only have cash I wouldn't accept it for those reasons. It's a big hassle to count up and reconcile the box daily, then head off out of my way to the bank at least once a week.

 

[ruffdog]

That is what they are saying, but that is categorically NOT what caused the bank failure. Poor management that was too focused on other things rather than competence led to it's failure. The problem was not the Fed. It was the idiocy of the decision makers at the banks for not acting prudently.

One thing I noticed with the SVB failure is the amount of depositors that were way over FDIC limits. Why were they sticking all that money in one bank? It turns out that some of the clients had clauses in their contracts requiring them to hold all or most of their money at SVB. These companies could not safely diversify their money for their own protection. This bank is sounding more like a ponzi scheme than a normal bank.

Silicon Valley Bank signed exclusive banking deals with some clients, leaving them unable to diversify