Silicon Valley Bank (SVB) Collapses

[leadcounsel]

Greenspan is single handedly the most responsible person for the mess we're in right now - his decades long orgy of low interest rates. Greenspan is a goon, an idiot, a slobbering moron. And the fact he served under 3 or 4 presidents shows you how shortsighted our leaders and system is.

Our system is like a drug addict, hopelessly addicted but unwilling to take even the smallest step to fix themselves. We've had an overheated housing market for decades and now we have rampant inflation. There is only one fix for that and that is to raise interest rates, and raise them far higher than they are now.

But no, our financial system and government refuse to pull the needle out of their arms. Inflationary times result in higher prices and higher wages. This is a cornucopia of income opportunity for our fearless cronies; increased property taxes, increased income taxes, increased sales taxes, etc. Neither the government or financial system has any incentive whatsoever to tame inflation. Inflation is their only game.

Scott

Agreed x 1000.

With the caveat that it is almost entirely the fault of the greedy rich at the top who just cannot control their insatiable appetites to hoard more money, more wealth, more power, etc. Heck the top 1% own and control more than the bottom 90% but they just lust after another nickel even if it destroys local economies. It really is sad they have this much power, and our fiat very cleverly allows this with manipulation, scams, frauds, etc.

Sally the homemaker, Juanita the housekeeper, Jim the handyman, etc. we're all just victims and pawns, and it really is upsetting. We lose our houses, our jobs, our savings, etc. b/c these power-brokers at the top manipulate, steal, launder, scam, etc. to line their pockets. That's all this is about.

 

[slo town]

I remember his "easy money policies" but he hasn't been in office since 2006 and the federal funds rate averaged 6.0% during his time in office only very briefly getting to 1.0% in 2003/4. That's still higher than the 0.10% it was from 2009-2016 and 2020-21.

Greenspan was head of the Fed from 1987 to 2006. He became Fed chairman after Paul Volker, the person singlehandedly responsible for taming runaway inflation in the late '70s and early '80s. Greenspan inherited Volker's high interest rates, which skewed his average interest rate. Greenspan's term saw ever decreasing interest rates.

One of the biggest housing bubbles of all time started during Greenspan's term in office. I bought a nice home in 1984 for $179K and sold in it 2000 for $750K. Talk about inflation!!!!

Scott

 

[PWMDMD]

Greenspan was head of the Fed from 1987 to 2006. He became Fed chairman after Paul Volker, the person singlehandedly responsible for taming runaway inflation in the late '70s and early '80s. Greenspan inherited Volker's high interest rates, which skewed his average interest rate. Greenspan's term saw ever decreasing interest rates.

One of the biggest housing bubbles of all time started during Greenspan's term in office. I bought a nice home in 1984 for $179K and sold in it 2000 for $750K. Talk about inflation!!!!

Scott

But that was still almost 20 years and three Fed chairmen ago. At what point does our current situation stop being his fault? Like 2080?

Not defending him…just not someone I deem relevant in today’s conversation.

 

[slo town]

I remember his "easy money policies" but he hasn't been in office since 2006 and the federal funds rate averaged 6.0% during his time in office only very briefly getting to 1.0% in 2003/4. That's still higher than the 0.10% it was from 2009-2016 and 2020-21.

And the rates you cite illustrate the problem perfectly. We've had 35 years of low interest rates. Remember the term "helicopter Ben" during Bernanke's term? Low interest rates weren't enough, we needed something called quantitative easing!

And then we have Janet Yellen, Fed Chair from 2014 to 2018. And now she's Treasury Secretary. IMO, this is no different than a high ranking military official taking a consulting role with a defense contractor. There is a natural conflict of interest.

Our entire financial system and federal government is self serving and blatantly corrupt.

Scott

 

[stormgol]

https://www.wsj.com/articles/the-si...ed-fdic-deposit-limit-dodd-frank-run-cc80761e

 

[PWMDMD]

And the rates you cite illustrate the problem perfectly. We've had 35 years of low interest rates. Remember the term "helicopter Ben" during Bernanke's term? Low interest rates weren't enough, we needed something called qualitative easing!

And then we have Janet Yellen, Fed Chair from 2014 to 2018. And now she's Treasury Secretary. IMO, this is no different than a high ranking military official taking a consulting role with a defense contractor. There is a natural conflict of interest.

Our entire financial system and federal government is self serving and blatantly corrupt.

Don’t forget an unprecedented period of prosperity - even if the chicken have come home to roost.

 

[SC Maintenance]

Greenspan is single handedly the most responsible person for the mess we're in right now - his decades long orgy of low interest rates.

Greenspan, the Bernanke, Yellen, Powell - if it had been different people the results would be the same. Remember its a voting committee, the chairman isn't an emperor. Also, Volker is held on a pedestal for stopping 70's inflation, but they also offset that with spending via government debt - so we got lower inflation and out of control govt. spending.

The fed's role in the world is to create constantly sinking value of the dollar, in order to penalize savers. They come right out and say it - there current target is for your savings to shrink in value by 2% per year. The current rate is officially now around 6% loss every year, in reality its likely even higher. Inflation is simply your savings becoming worth less.

 

[SC Maintenance]

Don’t forget an unprecedented period of prosperity - even if the chicken have come home to roost.

The working class for the most part missed out on the entire period of prosperity. There wages didn't keep up - even before the latest inflation average household income lagged the rest of the economy.

 

[brianl703]

I guess I'm old school. To me the primary purpose of a business was to produce a product or service that earned them a profit, the profit used to make payroll, fund future expansion, etc.

Paleocapitalism.

Wall Street has become a speculative parasite that feeds off the system for its own gain.

Neocapitalism.

 

[PWMDMD]

Greenspan, the Bernanke, Yellen, Powell - if it had been different people the results would be the same. Remember its a voting committee, the chairman isn't an emperor. Also, Volker is held on a pedestal for stopping 70's inflation, but they also offset that with spending via government debt - so we got lower inflation and out of control govt. spending.

The fed's role in the world is to create constantly sinking value of the dollar, in order to penalize savers. They come right out and say it - there current target is for your savings to shrink in value by 2% per year. The current rate is officially now around 6% loss every year, in reality its likely even higher. Inflation is simply your savings becoming worth less.

The only thing worse than inflation is stagflation or deflation. Pick one or the other but mild inflation occurs in a growing healthy economy, stagflation in stagnant economy, and deflation in a very sick contracting economy. There is no choice whereby the economy grows and there is no inflation. Inflation is a consequence of growth.

 

[PWMDMD]

The working class for the most part missed out on the entire period of prosperity. There wages didn't keep up - even before the latest inflation average household income lagged the rest of the economy.

Don’t know where you live but in central mass were all enjoying prosperity, my life being much better than my parent’s lives in the 80’s and 90’s.

 

[SC Maintenance]

Don’t know where you live but in central mass were all enjoying prosperity, my life being much better than my parent’s lives in the 80’s and 90’s.

You, like me, are likely in the top half of income distribution. I personally have benefitted greatly as well.

However if your in the bottom half of income distribution your lot has not improved at all - the chart below is inflation adjusted income by income percentile - Red line is 1980, blue line is current. Notice the divergence at the half way mark.

I make no claims whether this is good or bad or why it happened, just pointing out that half the population completely missed this "unprecedented period of prosperity" and hence may feel differently about it than you or I might.

https://dqydj.com/household-income-by-year/

 

[PimTac]

You, like me, are likely in the top half of income distribution. I personally have benefitted greatly as well.

However if your in the bottom half of income distribution your lot has not improved at all - the chart below is inflation adjusted income by income percentile - Red line is 1980, blue line is current. Notice the divergence at the half way mark.

I make no claims whether this is good or bad or why it happened, just pointing out that half the population completely missed this "unprecedented period of prosperity" and hence may feel differently about it than you or I might.

https://dqydj.com/household-income-by-year/

View attachment 144764

Part of that is due to automation and other advances that allowed workers to do more work in the same time frame. Outsourcing also had a big effect on the working class. The result was that workers displaced by this had to take jobs in different sectors that usually paid less or they were starting over on the pay scale.

Another factor is regional. Some regions did not fare as well as others. As an example the Seattle metro area is booming. Drive a couple of hours to the Washington coast and the cities of Aberdeen and Hoquiam and the economy is almost depression like.

 

[slo town]

Don’t forget an unprecedented period of prosperity - even if the chicken have come home to roost.

It was an unprecedented period of prosperity for some. Ask the people in manufacturing how well the last 35 years have treated them.

Perhaps more importantly, the difference between your period of prosperity and that of your parent's is your parents most likely did it on a single income. Nowadays dual incomes are required. Is that progress?

Scott

 

[slo town]

The fed's role in the world is to create constantly sinking value of the dollar, in order to penalize savers. They come right out and say it - there current target is for your savings to shrink in value by 2% per year. The current rate is officially now around 6% loss every year, in reality its likely even higher. Inflation is simply your savings becoming worth less.

Our system says that people should be responsible for their own retirement savings. But when you save your get penalized. The system wants you to do two things with your savings; 1) spend it, or 2) invest it in the Wall Street casino. Evil, pure evil.

Scott

 

[leadcounsel]

Our system says that people should be responsible for their own retirement savings. But when you save your get penalized. The system wants you to do two things with your savings; 1) spend it, or 2) invest it in the Wall Street casino. Evil, pure evil.

Scott

And ultimately we're all just plow horses to keep the system afloat and pay exorbitant taxes to support massive spending most of us don't agree with. And the victims of these big crashes and scandals, about every 5 years now.

 

[SC Maintenance]

Our system says that people should be responsible for their own retirement savings. But when you save your get penalized. The system wants you to do two things with your savings; 1) spend it, or 2) invest it in the Wall Street casino. Evil, pure evil.

Scott

Actually its worse.

The government feels 18 year olds are should be able to take out 10's of thousands in student loans for which they are responsible until payment is complete - very, very difficult to discharge in bankruptcy.

They however feel CEO's and other bank officials making millions a year can burn off billions of customer money and spin the place into bankruptcy, then walk off with their bonus paid hours before intact, and not be held accountable for any of it.

 

[dishdude]

Actually its worse.

The government feels 18 year olds are should be able to take out 10's of thousands in student loans for which they are responsible until payment is complete - very, very difficult to discharge in bankruptcy.

They however feel CEO's and other bank officials making millions a year can burn off billions of customer money and spin the place into bankruptcy, then walk off with their bonus paid hours before intact, and not be held accountable for any of it.

Take a look at what Sinclair did with all their RSNs (regional sport networks). They spun them off to a separate entity to bankrupt them while they held on to profitable assets. Amazing how companies can do this but the working man is expected to pay.

 

[GON]

Take a look at what Sinclair did with all their RSNs (regional sport networks). They spun them off to a separate entity to bankrupt them while they held on to profitable assets. Amazing how companies can do this but the working man is expected to pay.

I no longer hold equities for a like reason.

I owned stock in a bank holding company. The bank holding company was composed of a retail bank, and a inderect lender to subprime auto loans.

The holding company said the retail bank was not worth much, and spun the retail bank off to a private group made up of executives and board members of the bank holding company.

Six months later, the subprime auto lender went bankrupt. All the bank holding shareholders, to include me, lost all value. The board members and executives walked away with the retail bank , which was where the value was.

For doing this, the board of directors and corporate officers paid a fine of two million dollars. There retail bank went public again, and is worth over a billion dollars.

Very rigged game. I no longer invest in equities.

 

[dishdude]

I no longer hold equities for a like reason.

I owned stock in a bank holding company. The bank holding company was composed of a retail bank, and a inderect lender to subprime auto loans.

The holding company said the retail bank was not worth much, and spun the retail bank off to a private group made up of executives and board members of the bank holding company.

Six months later, the subprime auto lender went bankrupt. All the bank holding shareholders, to include me, lost all value. The board members and executives walked away with the retail bank , which was where the value was.

For doing this, the board of directors and corporate officers paid a fine of two million dollars. There retail bank went public again, and is worth over a billion dollars.

Very rigged game. I no longer invest in equities.

I stick to index funds, tough to beat the S&P 500.