Sunday, March 12, 2023

Bank Runs

By now most people know that Silicon Valley Bank is going belly up. It looks like your classic bank run. Did you know that Silvergate shut down the day before? They specialized in servicing the crypto market and are part of the ongoing FTX fallout. 

Are these isolated incidents or is it going to get a whole lot worse? All I know for sure is that you don’t want to go to Jim Cramer for advice. A month ago he was recommending people buy Silicon Valley Bank. 

I am not a financial advisor. It had to be said. However, to me it just makes sense to avoid any bank heavily involved with crypto. That’s a given. All the major FTX people have been arrested but that won’t do your bank deposits much good. 

Then you have to ask yourself how many other banks are exposed the way Silicon Valley was. From what I could gather they had a lot of deposited from startup investor money. Rising interests rates put them in a bind where they lost billions. 

So how bad is this going to be? Bank regulations were proposed after the 2008 crash but those were mostly gutted. Powerful interests didn’t want that kind of oversight. If this goes sideways it could get interesting again.

You might want to have funds handy in case your bank suddenly closes its doors. Deposits are generally insured to $250,000 but it could take time for your insurance payout. I don’t deal much with big banks. Most of my financial day to day business is through a local credit union. 

About the only thing I plan on doing is to buy a couple more bags of rice. That’s the level my finances generally run at. Then again, rice is real and you can eat it -which is more than you can say about bank deposits in a failed bank.



  1. Common sense idea 6 Bears. A couple bags of rice, maybe some dry beans, some canned soup.

    All will rise in value over the next year and you can eat them. Unlike electronic digits.

    Banks are VERY Intra-related, incestuous even. At Zerohedge it's clear that Kellen is quite busy working to BACKSTOP the banks before this afternoon's pre-market futures trade.

    Anyway, they run it, it's going to get bumpy for a week or worse.

    If Bank Holiday gets mentioned GET SERIOUS about last minute top off supplies.

    You might say I've cash in the home, but stores RUN on CREDIT. Truckers run on CREDIT. When I was a trucker credit card denied was a end of the road deal breaker.

  2. A busy weekend saving the bankers for Yellen it seems. Bailouts again, just other words used for PR. "The taxpayer will not be on the hook", yeah right. The Fed isn't Federal, they make profit doing the in-between the banks and the Federal Government.

    Somebody is going to pay that tab. So far since the Fed was born it hasn't been the banks losing money.

    Be interesting to see if Biden's teleprompter reading Monday 0800 EST goes on time and Biden on script. Last couple of times the Doctoring him up took longer than expected and was delayed over an hour past schedule.

    Given how Powels's mumbling can strike high % up and down in the stock market just how exciting can Bidens off script Scranton stories do here?

    Let's see how many plates the Yellen juggler can keep in the air this week.

    How many decades ago did we lose capitalism as so a failed bank could well, FAIL? The ongoing cronyism makes a banks "Failures" painless and thus they feel free to make even more dangerous "Bets" instead of old school basic banking.

    Someday the plates will fall, all of them. Gravity vs illusion.

    You can ignore reality, but you cannot ignore the consequences of ignoring reality.
    Ann Rand

  3. Both of the aforementioned monetary companies both relied on a very unstable market, "Crypto." We'll probably see a big shift back to Gold and Cash in other medium sized institutions. If the shut downs start running like an out of control Cancer then, protect your assets, and investing in a certain amount of led as well as the rice and canned soup might be in order.

  4. Looking even more "Interesting" as in Chinese Curse in the international Banking world.

    Is it soup yet?

  5. The government is even covering those with more than $250,000 in the bank. While that stabilizes the banking system, it also rewards bad behavior.

  6. 6 Bears you make that sound almost good? Where do you think those millions of dollars X as many banks want to tap it come from?

    If you believe the taxpayer isn't on the hook just like last time, I'd like to sell you a bridge. So far in the past 20 years no bank has taken a serious loss if they worked with the fed.

    Rewarding bad behavior in 2008 didn't do anything useful but blow a bigger bubble to pop. Let's pump more air err Air into the bubble.

    Have you read a book called When Money died? Well worth reading.

    So far the contagion is world wide so it will take an ENORMOUS amount of freshly printed money to paper over that bleeding wound.

    Remember the Great Depression was World Wide.

    1. Two days ago I had a conversation with a colleague about the Great Depression relating it to SVB and other's. I reminded him that just before the banks closed on Black Friday and a couple days before, the behavior of a couple of the large monetary institutes had lending practices that were spiraling out of control with no, "Real" resources to back them. Then, today a cascade effect is beginning. Hopefully there are protective measures in the works?