And now for something really important...SVB failure.

[lustylad]

Originally Posted by VitaMan

I also have more experience with banks, savings and loans, and real estate lenders than you ever will have.

Respectfully, it doesn't show in the quality or depth of your comments in this thread.


L. William Seidman you ain't!

[The_Waco_Kid]

Originally Posted by Texas Contrarian

And how often does a stampede of frenzied withdrawals occur in a vacuum, absent panic about the angst creating an underlying cause popping up as a catalyst? The concern about the safety of deposits arose as the news broke of SVB's terrible capital ratio deterioration and failed attempt to raise equity. You keep talking about the symptom of the disease; not its underlying cause. That was the point I made earlier, which you obviously missed (or didn't understand).

correct. panic runs don't "just happen". it takes cause and effect. the cause is reports of a bank's shaky financial status and the effect is panicked customers rushing to pull out all their money. the same thing helped bring down FTX when some chinese dude who runs a competing crypto exchange posted on twitter that a deal to buy FTX fell through and questioned the solvency of Alameda Research. this led to a run on FTX by customers who soon found out their accounts were empty because sammy bank-fraud had already raided FTX to prop up Alameda Research's bad investments, or more to the point loans coming due from backers that they couldn't cover due to their investment losses.

[lustylad]

Originally Posted by Texas Contrarian

And how often does a stampede of frenzied withdrawals occur in a vacuum, absent panic about the angst creating an underlying cause popping up as a catalyst? The concern about the safety of deposits arose as the news broke of SVB's terrible capital ratio deterioration and failed attempt to raise equity. You keep talking about the symptom of the disease; not its underlying cause. That was the point I made earlier, which you obviously missed (or didn't understand).

TC - I think the problem here is that VM doesn't think like an economist. To be fair, he's hardly the only eccie poster with this affliction. I'm sure you are familiar with that other poster who I've often referred to as a "simple-minded simpleton". He always jumps into arguments over whether A was caused entirely by B or entirely by C, when any thinking economist would acknowledge A was partially caused by each, so the more relevant (if nuanced) question should be how much causal effect should we attribute to each factor. That's why economists create models and plot regressions - to quantify and measure the relative strength of the multiple correlations involved.

In the case of the SVB bank failure, we're trying to keep the focus on not just the obvious immediate cause(s), but the antecedent causes as well. I like to explain these things using "but for" analysis. Something like this:

But for the recklessly over-stimulative fiscal policy of the Biden administration, inflation would not have soared from 1.2% at the start of 2021 to 9.1% a year and a half later.

But for the spike in inflation, the Federal Reserve would not have been compelled to tighten monetary policy and drive up interest rates (at least not as steeply or abruptly as it has done over the past year).

But for the steep climb in interest rates (and management's misguided affinity for LT versus ST securities), the market value of SVB's HTM investment book would not have cratered.

But for the public focus on the magnitude of unrealized losses in SVB's investment book, depositors wouldn't have gotten nervous and lost confidence.

But for this depositor loss of confidence, there would have been no run on deposits at SVB.

But for the deposit run, there would have been no SVB bank failure.


I hope I've dumbed it down enough. Let's see if we get any intelligent responses.

[VitaMan]

You tried valiantly, but failed to go far enough. The cause of SVB failure must have been Covid. Without that there would have been no need to stimulate.

Per your way of thinking.

You're right there in Pittsburgh. When are you going to start spending time at the University of Pittsburgh or Carnegie Mellon ?

[Precious_b]

Originally Posted by The_Waco_Kid

nothing is too big to fail. including this

Woot! Puerto Rico is the Goldilock size!

[The_Waco_Kid]

Originally Posted by Precious_b

Woot! Puerto Rico is the Goldilock size!

if you say so

[The_Waco_Kid]

Originally Posted by VitaMan

You tried valiantly, but failed to go far enough. The cause of SVB failure must have been Covid. Without that there would have been no need to stimulate.

Per your way of thinking.

You're right there in Pittsburgh. When are you going to start spending time at the University of Pittsburgh or Carnegie Mellon ?

who used covid to helicopter dump trillions of unneeded money into the economy?



Biden and the Democrats

[VitaMan]

You don't seem to understand, Waco. But that is understandable.

"for want of a nail the shoe was lost"

[The_Waco_Kid]

Originally Posted by VitaMan

You don't seem to understand, Waco. But that is understandable.

"for want of a nail the shoe was lost"

i understand you can't prove what you claim. find someone .. who understands the situation .. an expert .. who agrees with you.



we'll wait.

[VitaMan]

I'm not claiming anything, Waco.

If there was no stampede, the bank would not have failed.

If the uninsured deposits were not at 90%, maybe there would have been no bank run.

If advisors had not told some clients to withdraw their deposits, maybe there would have been no bank run.

If rumors hadn't spread that some customers were withdrawing their money maybe there would not have been a stampede.

yadayadayada

[eccieuser9500]

Originally Posted by VitaMan

You don't seem to understand, Waco. But that is understandable.

"for want of a nail the shoe was lost"

Originally Posted by The_Waco_Kid

i understand you can't prove what you claim. find someone .. who understands the situation .. an expert .. who agrees with you.



we'll wait.

I don't think like an economist. Old joke paraphrased: Economists/Accountants know the cost of everything and the value of nothing. This has turned into a decent thread. Kudos to Barley.

[Tiny]

Originally Posted by VitaMan

You tried valiantly, but failed to go far enough. The cause of SVB failure must have been Covid. Without that there would have been no need to stimulate.

Per your way of thinking.

You're right there in Pittsburgh. When are you going to start spending time at the University of Pittsburgh or Carnegie Mellon ?

VitaMan, LL has admitted he's an Ivy League grad. And he's obviously got a strong background in economics. He might just be a professor at the University of Pittsburgh or Carnegie Mellon. I kind of doubt it though. He's got too much common sense to be an academic.

Thanks for being the foil. It gave the rest of us a chance to listen and learn.

[VitaMan]

Maybe the word "exacerbate" is a good way to conclude this thread

[The_Waco_Kid]

Originally Posted by VitaMan

I'm not claiming anything, Waco.

If there was no stampede, the bank would not have failed.

If the uninsured deposits were not at 90%, maybe there would have been no bank run.

If advisors had not told some clients to withdraw their deposits, maybe there would have been no bank run.

If rumors hadn't spread that some customers were withdrawing their money maybe there would not have been a stampede.

yadayadayada

still waiting for you to prove what you claim. financial advisors have a fiduciary obligation to clients to advise them to get out of bad investments. would you have listened?

[VitaMan]

Really no interest any longer in your nonsense, Waco.

Why not spend your time answering the 80 other threads you haven't responded to. And that is just this week.