Author Topic: Banks Failing: Is It 2008 Again?  (Read 31951 times)

Online ExGingi

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Offline avromie7

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Re: is it 2008 again?
« Reply #22 on: March 10, 2023, 01:59:28 PM »
https://twitter.com/EconguyRosie/status/1634265940467625984
If I had $250k+ in an FDIC insured account, I'd definitely be running to withdraw.
I wonder what people who type "u" instead of "you" do with all their free time.

Offline dm123

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Re: is it 2008 again?
« Reply #23 on: March 10, 2023, 01:59:49 PM »
In one sentence: Mismatch of assets and liabilities terms coupled with rising interest rates.

yes but I guess I want to know what's the mismatch here? Something unique to SVB or a sector that is incorrectly valued and the bubble popping has started showing?

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Re: is it 2008 again?
« Reply #24 on: March 10, 2023, 02:07:09 PM »
yes but I guess I want to know what's the mismatch here? Something unique to SVB or a sector that is incorrectly valued and the bubble popping has started showing?

The mismatch is present in ALL banks. The liabilities are short-term (demand deposit) while assets are mostly longer-term (mortgages, or other loans). An inverted yield curve (especially at the current extreme, where retail savers are pulling out bank deposits and buying T-Bills and notes, or banks have to pay more for their liabilities, while their assets are low yielding) exacerbates the problem. And when the tide goes out you discover who has been swimming naked.
I've been waiting over 5 years with bated breath for someone to say that!
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Offline YitzyS

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Re: is it 2008 again?
« Reply #25 on: March 10, 2023, 02:12:26 PM »
So am I the silly one for "snagging" two SIVB stocks last night for a "deal price" of $82, down from $267 the previous day?

Offline CountValentine

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Re: is it 2008 again?
« Reply #26 on: March 10, 2023, 02:13:53 PM »
This is part of the problem that SVB (and many other banks) faced. Deposits being pulled out (i.e. liabilities being realized) and parked in safe T-Bills which are yielding more than bank deposits (and are safer). If banks are forced to raise rates they pay for deposits, yet their assets are locked in long-term low-interest loans or bonds - "Houston, we've got a problem".
What about the mortgages at 3-4%? They can't give savings rates of 5%. That has to hurt, no?
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Re: is it 2008 again?
« Reply #27 on: March 10, 2023, 02:14:07 PM »
So am I the silly one for "snagging" two SIVB stocks last night for a "deal price" of $82, down from $267 the previous day?

It's called "catching a falling knife".
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Offline dm123

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Re: is it 2008 again?
« Reply #28 on: March 10, 2023, 02:14:35 PM »
The mismatch is present in ALL banks. The liabilities are short-term (demand deposit) while assets are mostly longer-term (mortgages, or other loans). An inverted yield curve (especially at the current extreme, where retail savers are pulling out bank deposits and buying T-Bills and notes, or banks have to pay more for their liabilities, while their assets are low yielding) exacerbates the problem. And when the tide goes out you discover who has been swimming naked.

Ah so the problem here is the liabilities are being unexpectedly called at much higher than normal volume?
(basically it's CV's fault for going so heavy into Treasuries?  :) )


I saw on the thread posted earlier the big banks are covered, did that mean this isn't an issue for them/they have heavier regulation that protects from this happening or is it in reference to specifically overvalued tech?
https://twitter.com/GRDecter/status/1634241473192312844

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Re: is it 2008 again?
« Reply #29 on: March 10, 2023, 02:14:51 PM »
What about the mortgages at 3-4%? They can't give savings rates of 5%. That has to hurt, no?

Exactly, as I wrote:
The mismatch is present in ALL banks. The liabilities are short-term (demand deposit) while assets are mostly longer-term (mortgages, or other loans). An inverted yield curve (especially at the current extreme, where retail savers are pulling out bank deposits and buying T-Bills and notes, or banks have to pay more for their liabilities, while their assets are low yielding) exacerbates the problem. And when the tide goes out you discover who has been swimming naked.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

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Re: is it 2008 again?
« Reply #30 on: March 10, 2023, 02:15:36 PM »
So am I the silly one for "snagging" two SIVB stocks last night for a "deal price" of $82, down from $267 the previous day?
I am the stupid one for not listen to someone in a private group we call a guru.  ;)
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Re: is it 2008 again?
« Reply #31 on: March 10, 2023, 02:16:21 PM »

I saw on the thread posted earlier the big banks are covered,

https://twitter.com/EconguyRosie/status/1634265940467625984

As far as I can recall, in the aftermath of 2008 some analysts were pointing out how banks regularly fail (due to the mismatches).
« Last Edit: March 10, 2023, 02:19:47 PM by ExGingi »
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Re: is it 2008 again?
« Reply #32 on: March 10, 2023, 02:17:23 PM »
(basically it's CV's fault for going so heavy into Treasuries?  :) )
Not my fault as 90%+ of the funds came from CU's.  :)
Banks are so yesterday.
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Re: is it 2008 again?
« Reply #33 on: March 10, 2023, 02:19:07 PM »


So what did Barr mean by saying larger institutions are insulated against the same deposit outflow?

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Re: is it 2008 again?
« Reply #34 on: March 10, 2023, 02:21:04 PM »
So what did Barr mean by saying larger institutions are insulated against the same deposit outflow?

What did Bernanke mean when he said it would be "contained"?

Can you imagine the size of bank runs that would happen today if anyone would hint that this is systemwide?
I've been waiting over 5 years with bated breath for someone to say that!
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Re: is it 2008 again?
« Reply #36 on: March 10, 2023, 02:22:05 PM »
Not my fault as 90%+ of the funds came from CU's.  :)
CUs Banks are so yesterday. It's all in the full faith and credit now.

FTFY
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Re: is it 2008 again?
« Reply #37 on: March 10, 2023, 02:25:43 PM »
FTFY
CU's serve a very useful purpose. Puts the UPS method to shame.  ;)
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Re: is it 2008 again?
« Reply #38 on: March 10, 2023, 02:29:37 PM »
I would keep an eye on stocks in the last 30-60 minutes. Maybe some will not want to be long over the weekend?
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Re: is it 2008 again?
« Reply #39 on: March 10, 2023, 03:26:15 PM »
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan