Since I entered Friday massively short, and have zero buying power left, I was bored enough to wander over to a place I’ve never been in my life – – the Silicon Valley Bank website – – and take a look around.
I thought I’d share some nuggets from there, since, for the moment, the website is still up and running. As you might guess, since this is a financial institution, it is absolutely SLATHERED with virtue-signaling. Indeed, there’s not a white male to be found anywhere except for their actual senior leadership page, which is the kind of do-as-I-say-not-as-I-do hypocrisyrampant in modern American corporations, particularly banks.
Let’s stroll around, shall we? We begin, naturally, on the home page itself where the organization declares itself to be all about proactive (now there’s a corporate-speak gem for you) guidance for the long run. The long run as in “your bank will not go into receivership on March 10, 2023.” I guess that didn’t work out as planned.
It only takes a moment to run smack dab into the sea of the stock photographs of every gender, race, height, weight, and hairstyle imaginable as the soon-to-be-bankrupt corporation declared its commitment to living its values.
What are they, you ask? Well, they spell them right out, and they include integrity, empathy, embracing diverse (of course) perspective, and – – my favorite – – “We take responsibility.” That’ll be put to the test soon, I imagine.
It’s nice the Twitter revelations pulled back a bit of the curtain, but it barely debts the complex. From C.J. Hopkins at consentfactory.org:
I think something is seriously wrong with my brain. Yesterday, I hallucinated that Matt Taibbi and Michael Shellenberger testified before a subcommittee of the US House of Representatives about the Censorship Industrial Complex, i.e., the US arm of the global official propaganda and disinformation apparatus that has been waging an all-out war on dissent for the better part of the last six years.
“We learned Twitter, Facebook, Google, and other companies developed a formal system for taking in moderation ‘requests’ from every corner of government: the FBI, DHS, HHS, DOD, the Global Engagement Center at State, even the CIA. For every government agency scanning Twitter, there were perhaps 20 quasi-private entities doing the same, including Stanford’s Election Integrity Project, Newsguard, the Global Disinformation Index, and others, many taxpayer-funded.” (Matt Taibbi’s Statement to Congress)
It’s never pretty when a big bank shuts its doors. From Tyler Durden at zerohedge.com:
For most people in America, the news that a ‘bank in Silicon Valley’ has failed will be forgotten quicker than a story about soaring shoplifting in their local supermarket.
Reality is that the contagion of the shuttering of the 18th largest bank in the US are widespread.
SVB is in fact the second largest (by assets) bank failure in US history after WaMu.
First things first, there is a long line of depositors who are over the $250,000 FDIC insured limit (in fact only somewhere between 3 and 7% of total deposits are insured). The following list, while incomplete, is approximately sorted by size of exposure:
USDC – Crypto Stablecoin run by Circle – Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25% portion of USDC reserves held in cash. While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally.
ROKU – Roku had 26% of its cash, $487 million with Silicon Valley Bank
BLOCKFI – BlockFi has $227 million in “unprotected” funds in Silicon Valley Bank, according to a bankruptcy document, and may be in violation of U.S. bankruptcy law.
RBLX – Roblox said 5% of its $3b cash and securities balance is held at SVB.
Warren Buffett defended stock buybacks in Berkshire Hathaway’s annual letter, pushing back on those railing against the practice he believes benefits all shareholders.
“When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).”
The media latched on to this quote with both hands, apparently not taking the time to read what Warren Buffett actually wrote in his annual letter. (Emphasis mine.)
“The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices.
Just as surely, when a company overpays for repurchases, the continuing shareholders lose. At such times, gains flow only to the selling shareholders and to the friendly, but expensive, investment banker who recommended the foolish purchases.
Gains from value-accretive repurchases, it should be emphasized, benefit all owners – in every respect.”
Mr. Buffett is correct that if repurchases are done at a “value-accretive” price, they can benefit all shareholders by increasing the size of their ownership in the company. Unlike the mainstream narrative, this is NOT a “return of capital to shareholders,” but just the opposite of a shareholder dilution.
Unfortunately, while the mainstream media quickly jumped on those opposed to share repurchases, their lack of reading what Mr. Buffett stated is critically important to what is happening in the financial markets today.
Here’s a winning strategy. Increase the load on the electric grid with electric cars while plugging the infrastructure into intermittent wind and solar power and letting its infrastructure go to pot. From Milton Exrati at The Epoch Times via zerohedge.com:
As more and more irritated customers become certain that power shortages and blackouts have become more common, the electric grid’s problems receive more attention. They should. Shortages and blackouts have in fact become much more common than they once were. The electric power grid has become increasingly fragile and considerably less reliable. This is especially troubling because, at the same time, Washington and several states plan to burden it further with electric cars and an increase in the use of electric appliances.
In part, the power problem reflects the increased reliance on inherently intermittent wind and solar sources. But this straightforward fact of life is only part of the story behind the electric grid’s problems. Matters are much more complicated.
Evidence of failure is irrefutable and has sometimes appeared with great drama. A 2021 cold snap in Texas, for example, led to widespread blackouts and the death of 250 people. California has for years regularly imposed rolling brownouts and blackouts on utility customers. Just this past Christmas season, unusually cold weather across the country prompted utilities from Massachusetts and New York across the Midwest and into the south to beg their customers to turn down their thermostats and delay their use of appliances. Millions lost power for days in North Carolina and Tennessee. Downed power lines caused some of the problems, but in many cases electric utilities simply had to cut off power to some in order to a total crash of their systems. The incidence of prolonged blackouts for all reasons has doubled since 2013.
The green lobby, predictably, blames the problem on how climate change has created more severe weather. The fossil fuel industry and its allies in Congress, equally predictably, blame the problem on the unreliability of wind and solar. No doubt there is truth on both sides, though many of these points are debatable. One point, however, is not subject to cavil—that the wind does not always blow, and the sun does not always shine. Even in the face of this reality, these problems would seem to be something engineers could find solutions and investments could implement. But there is a complication, because most of the country uses regional transmission organizations (RTOs) to buy and sell power.
Of course it was the deadly drug that received FDA approval. From Dr. Joseph Mercola at theburningplatform.com:
The antiviral drug remdesivir, brand name Veklury, is approved for use against COVID-19 despite research showing it lacks effectiveness and can cause high rates of organ failure
John Beaudoin is calling for a criminal investigation into remdesivir, citing data that it may have killed 100,000 people in the U.S.
Beaudoin received all the death certificates in Massachusetts from 2015 to 2022, finding 1,840 excess deaths from acute renal failure from January 1, 2021, to November 30, 2022, which he believes may be due to remdesivir
A study published in The Lancet found “no clinical benefit” from the use of remdesivir in hospitalized patients
The U.S. government pays hospitals a 20% upcharge on the entire hospital bill when remdesivir is used
The U.S. Food and Drug Administration authorized the experimental antiviral drug remdesivir, brand name Veklury, for emergency use against COVID-19 in May 2020.1 By October 2020, it had received full approval.2 It remains a primary treatment for COVID-19 in hospitals, despite research showing it lacks effectiveness3 and can cause high rates of organ failure.4
Do rising interest rates break inflation or the economy and financial markets first? From MN Gordon at economicprism.com:
Expectations were great. When 2023 started, there was a general sense that the stock and bond markets had turned over a new leaf. A repeat of 2022 was out of the question.
The primary assumption was that inflation would relent. After that, everything else would neatly fall in line. Specifically, interest rates would decline, and the next great stock market boom would bubble up just in time to bailout the meager retirement savings of aging baby boomers.
That was the general outlook when 2023 commenced. But instead, the opposite is now happening. Inflation is persisting. Interest rates are rising. And stock and real estate prices are headed down, down, down.
This week, for example, Fed Chair Jerome Powell, in his semi-annual Congressional testimony, clarified that interest rates would go “higher than previously anticipated.” He also noted that, if needed, he’s “prepared to increase the pace of rate hikes.”
In other words, the much-anticipated Powell pivot has gone on indefinite hiatus. You can fight the Fed and buy stocks if you must. But you won’t likely be very happy with the results.
Moreover, Fed rate hikes are only part of the story. To be clear, the Fed’s rate hikes are to the federal funds rate. However, they do, in fact, influence Treasury rates.
Since March 2022, the Fed has hiked the federal funds rate from a target range of 0 to 0.25 percent to a range of 4.50 to 4.75 percent. As a result, and over this duration, the 2-year Treasury yield has jumped from 1.75 to over 5 percent.
Ideas are the foundation of the brain standard, one of which is that only individuals have rights. This cuts through the collectivist dreck that passes for thought among most of the world’s so-called intellectuals. The variations of collectivism all disguise nothing more than brute force hiding behind propaganda. Their inevitable failures stem from their essential flaw: those that control the collective claim rights that negate those of the individual.
There are grounds for hope. From the ruins of impending collapse there will be some who reject collectivism and are committed to rebuilding on a foundation of individual rights. How they will protect those rights and whatever territories they stake out are what theoretical physicists sometimes call “engineering problems.” One advantage they’ll have, though, as the brain standard constituency—they’ll be smarter than their adversaries. Attention, imagination, and intelligence will be keenly focused on building from the ruins and protecting what they’ve built.
Here’s a thought experiment. Imagine someone invents a cheap, portable device that defends its bearer and his or her property from all violence from all sources, but has no offensive capability. The device is so cheap that virtually everyone can buy it, and charities are set up to donate it to those who can’t. The device is universally available and creates a world without violence.
How would such a world function? People would have to produce to survive, but absent mutual agreement no one would have an enforceable claim on anyone else’s production. There would be no coercive transfers of money or property. Disputes would be settled by negotiation and mediation. A body of civil law similar to English common law would develop. Surely such a society would figure out a way to deal with nonviolent crime.
The negation of violence would eliminate government’s nominal rationale: protecting citizens from violence. In the absence of government (and its violence), individuals and society as a whole would be free to advance as far as their capabilities will take them.
This extreme hypothetical offers a stark contrast with the absence of anything resembling freedom anywhere in the world today. Government and collectivism are top-down codependents based on violence and coercion. Their current manifestations are replaying the dreary and what should be the common knowledge lesson of history: they inevitably fail, often after a great deal of bloodshed.
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In the current jockeying among collectivist governments for the things over which they jockey, Russia’s and China’s are doing a better job than the U.S.’s. The former are the co-leaders of the Eurasian alliance and represent substantial politic and economic power. The latter is bankrupt, embroiled in yet another war it won’t win, and stands accused of sabotaging its most important European ally’s oil pipelines. At home, the U.S. government and its fellow travelers are in thrall to brain-dead ideologies that hasten the country’s disintegration.
Tom Luongo is not trying to be cute and his points and arguments are clear, which is not always the case. He takes a complicated set of issues and makes them understandable. This is one of his best. From Tom Luongo at tomluongo.me:
Live images flashing by Like windshields towards a fly Frozen in that fatal climb But the wheels of time, just pass you by -RUSH, “Between the Wheels”
In part I of this series I told you the war over the US dollar was over because the bane of domestic monetary policy, Eurodollar futures, lost the battle with SOFR, the new standard for pricing dollars.
The ignominious end of the Eurodollar system is a study in the evolution of markets, as a new system replaces an old one. Old systems don’t die overnight. We don’t flip a switch and wake up in a new reality, unless we are protagonists in a Philip K. Dick novel.
More than a decade ago I looked at the responses to President Obama cutting Iran out of the SWIFT system as the beginning of the end of the petrodollar system. The goal was to take Iran out of the global oil markets by shutting Iran out from the dominant dollar payment system.
Out of necessity Iran opened up trade with its major export partners, most notably India, in something other than dollars. India and Iran started up a ‘goods for oil’ trade, or as Bloomberg called it at the time, “Junk for Oil.”
The stick of sanctions created a new market for pricing Iranian oil and a way around the monopoly of US dollar oil trading. India, struggling with massive current account deficits because of their high energy import bill, welcomed the trade as a way to lessen the pressure on the rupee.
Iran needed goods. They worked out some barter trade and the first shallow cuts into the petrodollar system were made.
As for politicians and political issues, there is always the risk of partisan bias and offending those who cling to only one perspective.
Fortunately, my take on the left or the right of current politics is fairly agnostic, as I view nearly all politicos as crooked as a dog’s hind leg.
Thus, as I turn my lens toward the state of California and its failed governor, I hope readers of the left or right can dispense with politics and just stick to math so that we can all get past the swamp of red vs. blue opinions and respect the objective facts of red vs. black balance sheets.
And when it comes to the State of California, she’s deeply in the red, and serves, ironically, as yet another broader yet applicable metaphor of the world economy in general and the United States in particular.
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