Current issues with the market - Any ideas on avoiding the end?

[NoReturn]

Edit: What about stock/401K/IRA confiscation?

Not my keys, not my assets?

 

[mindlessobserver]

You're not, under normal circumstances the only way out is government intervention at this stage (because it literally becomes impossible for private citizens to intervene on this magnitude). There's really only a few ways out of this that is palpable and that's a major stretch:
1) Re-denomination of the currency. Would go as well as you would expect.
2) World War. After all, ruling class debts are forgiven, and will only be only dimly remember after the nightmarish storm is over if you win.
3) Some sort of voodoo black magic where the feds go sacrifice children or something to create an entirely new mechanism that makes no sense to anyone.
4) Something similar to the gold confiscation of FDR. I suspect this may be the most likely.

Edit: What about stock/401K/IRA confiscation?

It's a dirty secret, but all investment accounts of this nature are not the property of the people paying into them. They are the property of the bank who assumes a fiduciary duty to provide reasonable returns. Hell, you don't even technically own the money in your own checking account if we get down to brass tacks.

However, both the government and the banks know that the quickest way to turn Wall Street into a forest of corpses that makes Vlad Tepes blush would be to use those accounts to bailout the banks and federal debt.

Setting that aside I am worried because the autistic rant that is my OP is rapidly turning into prophecy. Inflation hit, the fed started to apply the breaks and now the Bond Market is showing signs of a meltdown. And the banks need those bonds to make good on literally everything

 

[Strix454]

Edit: What about stock/401K/IRA confiscation?

The confiscation of US 401K and IRA accounts briefly came up during the 2008 financial crisis. The idea was to seize the money to deal with the crisis and that people would be allowed participation in some new government retirement program.
Argentina actually did it in 2008 and has raided private pension money at other times.

 

[Darkholme's Dungeon]

I post this tweet without comment:

The best data-driven take on #svb that I've seen (thanks CW) -- TLDR: all deposit holders should be made whole... As mentioned, we think the deposits on balance sheet are very likely to see 100% recovery. One positive aspect of the SVB balance sheet is that such a high % of their assets were invested in government backed securities which should make for a faster liquidation and therefore ability to recover a large % of the deposits. These are far easier to value and liquidate than individual loans. To summarize, there are about $165bn deposits on balance sheet. We think the combination of cash, securities, and loan sales to generate cash will produce ~$180bn of cash. This should provide enough coverage for the deposits. A significant % of this, ~67%, should be able to be recovered fairly quickly (within the next week) such that the FDIC should be able to deliver a large % of existing deposits in the next week, and the remaining will come as they sell the loan portfolio. To the extent helpful, the detail behind this is: - Today, they have about $39bn of cash and pro forma cash from the recent sale of their AFS (available for sale) securities book. - In addition, there is $91bn of HTM (held to maturity) securities. These are highly liquid government backed securities. The value of these securities if they were to be sold is $15bn lower - this is where the equity hole / value gap is, as these are securities they purchased in 2020-2021 when rates were lower and now are worth less because rates have moved higher. These should be easily sold next week. If we assume an incremental $5bn buffer on top of the $15bn it means they can generate proceeds of $71bn in cash. - Between existing cash and the securities sale proceeds, they should be able to have $110bn of cash proceeds in the next week. This is 67% of the deposit liabilities. - What is left is $74bn of loans. These will take longer to sell, but should generate ~$70bn of proceeds even with a buffer/discount assumed because of it being a forced sale. For context, the majority of these loans (70%) were in fund banking and private bank which historically are safe, low credit loss loans. We assumed a $5bn buffer to get to the $69bn which is likely conservative given the make up of the loans, but given the forced sale think helps frame the range of outcomes. - With the loan sale, this will generate a total of $179bn, or 108% of the $165bn deposit liability.

I do post this below as what I think most of us would call copesplaining:

1/ FDIC has sold ~ half of SVB's assets. SVB's customers will have $250k unfrozen on Monday, and ~50% of the remaining balance dividended to depositers within 1-2 days of Monday (money market accounts likely to get 100%).
2/ The remainder will be dependent upon future recoveries; most recovery will be within 3-6 months.
3/ If a company also had a lending relationship with SVB, then any unrecovered deposit can generally be written off against the outstanding loan balance.

I think Monday (earliest stock open in US/EU/China/India) is make or break day. Watch for shenanigans on opening for those markets.

The confiscation of US 401K and IRA accounts briefly came up during the 2008 financial crisis. The idea was to seize the money to deal with the crisis and that people would be allowed participation in some new government retirement program.

It won't be "allow", it'll be at bayonet point required.

However, both the government and the banks know that the quickest way to turn Wall Street into a forest of corpses that makes Vlad Tepes blush would be to use those accounts to bailout the banks and federal debt.

Yes, but the tools for repression have vastly increased (alongside the decent of human cognitive ability). All they need to do is to just track and arrest (or shoot) everyone who plots a GPS route to NYC or the DC area. You think most people remember how to use a map anymore?

Setting that aside I am worried because the autistic rant that is my OP is rapidly turning into prophecy. Inflation hit, the fed started to apply the breaks and now the Bond Market is showing signs of a meltdown. And the banks need those bonds to make good on literally everything

The issue is that everything runs on debt now days. Buy a house, car, etc? All debt. Even people are using debt via credit cards for groceries. I don't see a way out of it unless we go back to bartering and a "cash in hand or GTFO" attitude. It'll be a very painful, long transition.
I encourge all to stock up on ammo, supplies, and medicine. Maybe resolve.

 

[mindlessobserver]

The issue is that everything runs on debt now days. Buy a house, car, etc? All debt. Even people are using debt via credit cards for groceries. I don't see a way out of it unless we go back to bartering and a "cash in hand or GTFO" attitude. It'll be a very painful, long transition.

This is probably also fueling the inflation the Fed is having a hard time getting under control. The last time these sorts of market parameters occured was in the 1970s, and the Fed putting the brakes on things was very straight foreword because the entire concept of consumer debt was a very niche thing. Debts in those days were not securities, and not something you could use to buy 20 dollars in gas and a pack of cigarettes.

In their minutes, the Federal Reserve seems bemused as to why inflation has not stopped, and only slowed down slightly in response to their repeated interest rate hikes. And the reason is people have credit cards with 5 to 10 thousand dollar limits on them and are using them to keep buying the same shit they used to buy with cash before things started getting more expensive. Its allowing the consumer economy to absorb the price shock of the past two years. But those credit limits are not infinite, nor is the ability of the retards running them up to repay them.

 

[LinkinParkxNaruto[AMV]]

So apparently what happened with SVB is their primary accounts were held by venture capital start ups. However, Venture Capital is drying up in Silicon Valley, so deposits have slowed down.

So its not all bad.

 

[Darkholme's Dungeon]

Debts in those days were not securities, and not something you could use to buy 20 dollars in gas and a pack of cigarettes.

Well there's one "solution" that would be hilarious. Repeal the 13th amendment.

In their minutes, the Federal Reserve seems bemused as to why inflation has not stopped, and only slowed down slightly in response to their repeated interest rate hikes. And the reason is people have credit cards with 5 to 10 thousand dollar limits on them and are using them to keep buying the same shit they used to buy with cash before things started getting more expensive. Its allowing the consumer economy to absorb the price shock of the past two years. But those credit limits are not infinite, nor is the ability of the retards running them up to repay them.

The other thing they are missing is that America of the 70s is not the America is now, yet they are trying to use an old solution to a new problem (not like the Fed can do much else). There's been a continuous decline of what the US can export as a manufactured good as well as the share of American manufacturing.
You can almost always* find a buyer for agricultural, natural resources, and manufactured goods despite inflation. You can't always find a buyer for financial instruments, something that does not physically exist and is not instructively worth value (aside maybe the paper it was made of), despite what they want you to believe.
I think China, Vietnam and India are going to be the biggest benefactors this time around provided they themselves don't crash and burn. Of course, a total systems collapse scenario is entirely possible with no survivors since the world is so interconnected these days.

Ford and GM overhired during the pandemic... It seems the last few years they're either in a mass hiring or a layoff of some sort.

That's horrifying. I guess they're functionally government bureaucracy and corporate (with the worst of both) at this point so it's constantly rotting from the inside while expanding on the surface ... until it finally comes crashing down as a hollow husk to be satanically revived by some voodoo congressional ritual. Ironically Tesla seems to have it's shit relatively straight and that's coming from someone who hates EVs since I put fires out for my spare time.

*Assuming your product actually works and isn't abysmally failed out of the box like GM Oldsmobile 350 or International 6.4.

 

[tulskij_tochnyj]

I think FDIC will make all SVB depositors whole. Cost of trust crisis would be way higher than cost of plugging a hole in SVB's balance sheet.

There's been a continuous decline of what the US can export as a manufactured good as well as the share of American manufacturing.

Who really gives a fuck when the US can export inflation? As long as dollar retain its status of world reserve currency, debt won't be an issue.

 

[Strix454]

This is probably also fueling the inflation the Fed is having a hard time getting under control. The last time these sorts of market parameters occured was in the 1970s, and the Fed putting the brakes on things was very straight foreword because the entire concept of consumer debt was a very niche thing. Debts in those days were not securities, and not something you could use to buy 20 dollars in gas and a pack of cigarettes.

The problem back in those days before the securitization of debt was that a severe economic problem in a particular region of the country could end up severely hurting all the banks in that area. Securitization was originally sold as a way of addressing local risk within the banking system. The idea was to lessen risk by spreading it out.

But as usually happens, there are unintended consequences. The problem with securitization of debt was that it moved the risk from being local/regional within the banking system to a situation where it became a systemic risk to the entire banking system.

The Fed putting the brakes on in the 1970s was not a quite a straightfoward experience. Stopping inflation took constant interest rate increases from 1977 to 1981. Five years of rate increases going from 7% to 20%. Like now, they kept raising rates and nothing would happen.

 

[ATI Escapee]

I am completely retarded when it comes to the market. If anyone would humor my uninformed question, Id be really greatful.

The Fed basically wants people to lose jobs to curb inflation. If zero bailout were to happen with svb, only dividing up value gained from asset sell off to try to make account holders whole again, would that not satisfy the economic pain needed to increase the value of the dollar? If a bailout happens, won't inflation increase?

 

[Quindoll]

I am completely retarded when it comes to the market. If anyone would humor my uninformed question, Id be really greatful.

The Fed basically wants people to lose jobs to curb inflation. If zero bailout were to happen with svb, only dividing up value gained from asset sell off to try to make account holders whole again, would that not satisfy the economic pain needed to increase the value of the dollar? If a bailout happens, won't inflation increase?

Nah. The amount of money is too small relative to the US economy.

Would be like you trying to save on the electricity bill by changing one or two lightbulbs to LEDs instead of using the bicycle more and your electric vehicle less.

 

[Darkholme's Dungeon]

I think FDIC will make all SVB depositors whole. Cost of trust crisis would be way higher than cost of plugging a hole in SVB's balance sheet.

Yellen says no bailout... (Archive)

WILMINGTON, Del. (AP) — Treasury Secretary Janet Yellen said Sunday that the federal government would not bail out Silicon Valley Bank, but is working to help depositors who are concerned about their money.

Yellen, in an interview with CBS’ “Face the Nation,” provided few details on the government’s next steps. But she emphasized that the situation was much different from the financial crisis almost 15 years ago, which led to bank bailouts to protect the industry.
“We’re not going to do that again,” she said. “But we are concerned about depositors, and we’re focused on trying to meet their needs.”
With Wall Street rattled, Yellen tried to reassure Americans that there will be no domino effect after the collapse of Silicon Valley Bank [...]
“The American banking system is really safe and well capitalized,” she said. “It’s resilient.”
[...]
“The problems with the tech sector aren’t at the heart of the problems at this bank,” she said [...]
Yellen said she expected regulators to consider “a wide range of available options,” including the acquisition of Silicon Valley Bank by another institution. So far, however, no buyer has stepped forward [...]
“I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation,” Yellen said. “I can’t really provide further details at this time.”

Uh oh Silicon bros, I don't feel so good.....

But as usually happens, there are unintended consequences. The problem with securitization of debt was that it moved the risk from being local/regional within the banking system to a situation where it became a systemic risk to the entire banking system.

The issue with diluting risk in this method is that eventually everyone doesn't realize that just delays blowing up the whole system with zero survivors. The question is if we're at that point now.

 

[Fascist Kirk]

Its not a panic if your first. Silver Bro's and cash under bed chads feeling pretty good right now. The Ramsey I am debt free feel alright as well. This is a gloriouse shit show, and I have my popcorn and Mike N Ikes enjoying the show! Ron Paul was right, this is a planned take down, and they are going to push there new CBDC bullshit.
The People can refuse it, the people can rize up, the Peaple can start demanding these CEO's Hang from Light Poles! Some times you have to get mad, some times you have to say I am mad as hell and I am not going to take it anymore!
All this time while the left and the right have been yelling at eachother both parties sat in DC passing every spending bill imaginable for war, for social programs, for Ukraine, for what ever well its Pay day motherfuckers. Instead of being the meal, consider making them cock suckers the meal first! You want your kids on a CBDC no off ramps no freedom, enslaved for eternity?

 

[ATI Escapee]

Bailout and then some, and Signature bank fell

Joint Statement by the Department of the Treasury, Federal Reserve, a…

archived 12 Mar 2023 22:33:12 UTC

archive.is

https://home.treasury.gov/news/press-releases/jy1337

"Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. "

 

[mindlessobserver]

Bailout and then some, and Signature bank fell
View attachment 4762832

Joint Statement by the Department of the Treasury, Federal Reserve, a…

archived 12 Mar 2023 22:33:12 UTC

archive.is

https://home.treasury.gov/news/press-releases/jy1337

"Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. "

Tomorrow is going to be wild. I wonder how many people will actually move to withdraw accounts above the FDIC insurance limit. I bet every venture capitalist and investor is shitting their pants right now. How many of these banks are over leveraged on Treasury Bonds to backstop their accounts payable?

 

[Waifuwars]

Bailout and then some, and Signature bank fell

"Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. "

Signature Bank is a big name in the NYC/NE region. They had a big network since they were known to give you better deals if you had a good relationship with them. In fact, quite a few big landlords here use them so I wonder what they're going to do with the mortgages on their balance sheet. Minor power level, but a few of my old employers use them extensively so Monday is going to be a shitshow for sure.

At least no one's getting bailed out (yet).

 

[Strix454]

Signature Bank is a big name in the NYC/NE region. They had a big network since they were known to give you better deals if you had a good relationship with them. In fact, quite a few big landlords here use them so I wonder what they're going to do with the mortgages on their balance sheet. Minor power level, but a few of my old employers use them extensively so Monday is going to be a shitshow for sure.

The official propaganda story for the moment is that Signature was a "Crypto bank" and that the Biden Administration has saved the entire banking system from Crypto Risk.
Not alot of interest in the actual problem of banking reserves not quiet being what seem.

 

[The Punished Mitch]

Its not a panic if your first. Silver Bro's and cash under bed chads feeling pretty good right now. The Ramsey I am debt free feel alright as well. This is a gloriouse shit show, and I have my popcorn and Mike N Ikes enjoying the show! Ron Paul was right, this is a planned take down, and they are going to push there new CBDC bullshit.
The People can refuse it, the people can rize up, the Peaple can start demanding these CEO's Hang from Light Poles! Some times you have to get mad, some times you have to say I am mad as hell and I am not going to take it anymore!
All this time while the left and the right have been yelling at eachother both parties sat in DC passing every spending bill imaginable for war, for social programs, for Ukraine, for what ever well its Pay day motherfuckers. Instead of being the meal, consider making them cock suckers the meal first! You want your kids on a CBDC no off ramps no freedom, enslaved for eternity?

Americans are the most tragic people of all time. So thoroughly zogged and golemized that they can be trusted to remain docile even when handed the tools to end their enslavement.

 

[Fascist Kirk]

I watched the 2 day J Powell DC C-span show last week. and you look at both sides of the Isle, and J Powell himself. They all know they are all guilty and are pointing at each other while the house burns down around them

I Like history, this feels like a french revolution moment. and then as now its the same group doing the quackery with the money.

 

[mindlessobserver]

The official propaganda story for the moment is that Signature was a "Crypto bank" and that the Biden Administration has saved the entire banking system from Crypto Risk.
Not alot of interest in the actual problem of banking reserves not quiet being what seem.

Hilariously I think Crypto is going to skate through this. The Crypto Banks are not backed by Treasury Bonds. Coinbase in particular back stops its accounts with staked Ethereum which CANNOT BE WITHDRAWN right now because the Shanghai Upgrade is still in process and all the Staked Ether is locked for validation. It won't unlock for at least a few months. USDC lost the Peg because it had exposure to Silicon Valley Bank, but I expect it will regain thanks to massive inflow buying by Crypto speculators. Tether for its part has no exposure to the US Treasury Bond Market at all, with their reserves made up primarily of corporate bonds rather then Government bonds. Tether also has limited exposure to the US Banking system thanks to the US Government constantly hounding them.