Doesn't apply to retirement accounts. Also depends if account is jointly held, that could extend FDIC coverage to $500k per institution..
Silicon Valley Bank (SVB) Collapses
- Thread starter The Critic
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No the world is not dependent on the US dollar for long…
The Saudi’s are actively looking bingo going away from the “petrodollar”…
For good reason…
Serious question: How close was SVB to cryptocurrency and the like?
Quick duck-duck: https://duckduckgo.com/?t=ffab&q=silicon+valley+bank+crypto&ia=web
Quick duck-duck: https://duckduckgo.com/?t=ffab&q=silicon+valley+bank+crypto&ia=web
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Let me put it this way. Everything in finance is about risk. Why do bonds pay less than equities? Because bonds are a contract from the issuer promising you back your principal + interest over a certain time frame and giving you first rights to that money if things go south. Equities promise you nothing other than ownership in the company. Why is the yield curve normally positive? There is risk to you lending your money out over a long period of time compared to a shorter period of time. Why is the yield curve currently inverted? These are not normal times and short-term risks are deemed greater than long-term risks. Pure risk, liquidity risk, speculative risk, inflation risk, credit risk, etc, etc. Risk is also more about risk perception.
People buy US debt because of there is a low risk of not getting their money + interest back. People buy US dollars because there is a low risk of our currency falling off a cliff. Other governments can push their new currency all they want but what they really have to be able to do is convince the world that their currency is less risky than the US dollar and changing the minds of billions of people is not easy. Fun fact, most of the US debt is held by the US. government - medicare, highway, and bank deposit insurance, retirement for military/civil service, about $6.8T. The Fed then owns the second most US debt in the form of Treasuries $6.1T. "Other public debt" is $18.2T. Of that other public debt, no single foreign country owns more than $1.1T.
Our debt service is currently $400B per year or wait for it...a moderate Powerball winning. Key point...all that money is not "lost". People like you and me make money from it and put it back into the economy which gets taxed again and lots of people simply buy more US debt with it. These treasuries have varying maturity dates and so a very predictable debt service schedule. That borrowed money is again used by the US government to fund economic activity. Much of that "debt" is transformed into increased GDP. Want to own more US debt than Japan? - there was a $2.04B Powerball. Can we continue down this road indefinitely, that road being increasing the national debt +20% between 2017 and 2021? No, but this is exactly what I was hearing as a kid in the late 90's and here we are. Somehow we've been able to figure it out and if we can't it will mean the end of the world as we know it. There is no scenario where the US economy collapses and doesn't take down the entire world economy with it. What can I say...I'm an optimist.
Can it still head south? Sure, defaulting on the US debt by not raising the debt ceiling wouldn't be great. Keep reducing inflows by giving tax cuts based on the belief of trickle-down economics. Here's a hint - wealthy people don't share when you give them tax breaks - they just keep more of the money. Keep spending more money on the greatest welfare system in this country, the military - that's directed at defense contractors and not the people in the military. We spend 40% of the total world expenditures on the military. China spends 14%, India 3%, UK 3%, Russia 3%, France 3%, and Germany 1.5%. Continue ignoring health care costs and pretending that the market will contain costs without oversight - health care is sucking Medicare dry. It was $200B per year in 2000 and $700B in 2020.
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In a nutshell.
I think most large worth individuals have most of it in property, or investments, with a professional fiduciary money manager. Lots of muni bonds (tax exempt, of course), real estate, etc. IMO that's why so many real estate transactions here in Cincinnati are by OOS corporations-they're looking for someplace to park their $$$.
More dominos will be falling very soon.
Yes, this one I remember but forgot about it until your post.
What drives me nuts about him and others sometimes is his pick of high P/E valuation stocks.
I dont see these people as geniuses. More like actors AFTER a stock makes a move, dress it up to make it look like they were there.
Its really just a show and I think many people can picks sold stocks with solid earnings and do just as well.
My problem is when it is a high valuation stock they put people at risk because you hear all the wonderful things but not th other side of the story and has been a big sticking point for me as you know with one of those stocks he has on the board in your first video (it starts with "T")
Gosh, why is anyone touching that stock or better said why were they when it was selling over 100% higher? Where are the excuses now and why no warnings that T is in the same business as another dozen companies? I dont get the special status. Yes, they were the pioneers of the new "engine" but where were the warnings that everyone else on the planet is now going to make them?
I dont know, its early, still drinking my coffee and not sure if I am explaining myself.
I have to admit, its interesting and I am blindsided by the stupidity of people that make more money in one month or year that I may make in my lifetime *LOL*
These people so arrogant and money flow so easy that they dont take precautions and diversify billions of dollars in corporate operating income?
Hey, Im dumb! But guess what? I could have worked for these companies and protected them far better by not feeling "cool" keeping my entire companies cash flow in a bank just because it has the word "Silicon" in it.
16th largest bank only because those very people were so ignorant. Did they every think to spread out a little to the big national banks that we all know the names for a little diversification ??
Honesty, I can only laugh about it. I am going to be VERY curious, since Tesla is mostly made up of non institutional investors. I wonder how many of them will (or will not) be affected by seeing the Tesla name up on Cramers board as he was promoting SVB. Will they make a dash? I have no idea.
We live in interesting times, hey, I got an idea! Let's add another 20 Trillion onto the national debt for the next crisis!
Maybe one day ... my little slice of bitcoin will turn into something big or not.
...and I have been very lackluster about another one that I have a fair amount, not worth much but both have been steady for the last decade.
If the other one ever took off (and most likely never will, but wont go away either) anyway. I dont want to be one of those stories about it sitting on an unused computer, which it is right now. For years *LOL* I have to get it off the hard drive and trust my wife is going to find the "key" once we settle into our new home. We made sure to put it in a place we wont lose it, wherever that may be. Again, not worth much at all.
but... who knows? one day? Na, most not likely
This is cool. Folks invest in crypto currencies and the crypto companies place some of the funds into SVB to lend to highly leveraged high tech companies with massive burn rates. What can go wrong?
Yes, we’re going to find the cryptos had a major role in bringing down the SVB, just like packaged junk bonds from sub prime mortgages did damage to banks in 2009.
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It will be interesting but if I am understanding it correctly bank funds were tied up in long term bonds or something and couldn't meet the liquid demands ONCE they told investors whey needed to sell some off 2+ billion off to meet demands.
Furthermore they had 42 BILLION in Withdrawals on Thursday. Once the Feds dish the assets out to other banks SVB customers may not be out as much as we think.
I have NO idea if I am thinking correctly just todays thoughts. Im sure not a pretty picture but I am wondering considering the disaster maybe those at risk wont loose as much as we think.
For sure, it will be interesting next week!
It will be interesting if Elon Musk is truly considering buying SVB or is he jsut talking out of his hat again.
"Elon Musk tweeted late Friday he was "open to the idea" of buying the failed Silicon Valley Bank."
"Elon Musk tweeted late Friday he was "open to the idea" of buying the failed Silicon Valley Bank."
I'm not throwing stones at you, Lubener, but with all this talk of $250K or $500K FDIC insured accounts....great. But when the stuff really hits the fan and the house of cards collapses I have very little confidence that I'll ever see the money I have my IRA/401K accounts. That money exists as nothing more than a line item on a ledger sheet. My cash does not exist.
Scott
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We'll see if the concept of bail-ins gets used here. The investors may be required to forfeit a portion of their deposits rather than relying on a government bailout.
He kind of has a history of that. Maybe do opposite and you will be better off
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