Since I’m still dragging, this may not be to my normal level of in the weeds, but we need to cover the current financial issues that start with SVB. Well, it really starts with the Federal Government and certain former members of same including Barney Frank, working hard to avoid or even roll-back provisions of Dodd-Frank. Yep, same person who helped regulate the banks worked against that same regulation while on the board of a bank that just got shut down. More on that in a bit.
First, let’s review some of the information out there. Start with this piece by Francis Turner guest posting at Sarah’s. Good overview, good links, and as always with something by Francis some good food for thought. One thing to add: anything by Francis is worth reading, as even if you end up disagreeing with his conclusion(s), you get a lot of food for thought and additional points for consideration.
When it comes to SVB, Signature Bank, and others, keep an eye on Hot Air, Instapundit, and on Twitter I’m finding Frog News/Frog Capital to be an interesting and occasionally contrarian take on things. Pretty much have to agree with David Strom that this was truly the dumbest take on SVB out there. Recommend reading the posts by Beege Welborn in chronological order. This post by the inimitable Stephen Green, and all the links in it, are well worth the read.
My short take is: against every rule, law, and promise, the Federal Government has stepped in to make everyone right in regards SVB, including Democrat megadonors, the Brit Twits, and others including the Chinese economy which was seriously impacted by SVB; the Signature Bank action is interesting since the trigger(s) for such actions did not appear to be reached and even Barney Frank himself noted that it might be related to the creation of a Federal Cryptocurrency; and, we are not done yet.
Is the U.S. banking system and economy in trouble: yes. Are there going to be a massive number of bank failures? Not at this time. Personally, I would be unsurprised if a few more U.S. banks did not go under. Where I expect to see more impacts are overseas, particularly if opposition prevents making fully right the Chinese investors and companies. The Brits seem to have acted to prevent serious issues there, for all that my thoughts about HSBC and their activities are not printable. Am I concerned about what is going on and could happen? Hell YES! All the more so since Jim Cramer has come out saying everything is going to be okay. If I had made investments by going against his recommendations, I’d be richer than Elon Musk right now.
I’m broke, so any investments I make are likely to be in canned goods and ammunition (joke for the humor impaired). If you do have an investment advisor, might not be a bad idea to talk with them about options for dealing with bad economic times. In other words, be prepared, be patient, and be careful.
Also, if you are working with or invested in ANY institution that is heavily into DIE, a la SVB and others, allow me to echo Kruge from Star Trek III: Get out! Get out of there! Get out! There is not a single institution involved or in trouble, including the Federal Government, that was not far more into DIE than into their fiduciary and regulatory responsibilities. Incestuously so in many cases. Seriously, look at where you have your money and if they are heavily into DIE, some thinking may be in order. This is not financial advice nor do I offer such. It is, however, a suggestion to think, get advice, and act in YOUR best interest at every level of your life.
Keep your eyes open, the important things where you can find them in the dark, and be prepared. Economically or otherwise, things are likely to get wild.
Update: BINGO!
Update II: Things are interesting and going to remain so. First Republic is in trouble, but also note the non-U.S. banks getting heat. Expect to see that accelerate.