Sacks' first tweet has merit as far as it goes. Having a Board of Directors full of politicians instead of people who had a history of working in banking and finance for a living and a State Banking Regulator who unexplainably was AWOL are the issues. His second tweet is laughable. SVB's banking customers are getting a bailout funded by the US Government (who, we have to remind people at times) is a drain on the economic health of the country.
It is a bail out of rich depositors/investors who didn't pay attention to FDIC coverage limits. They chose foolishly to put way more money in one place than is insured, and now working class people are going to pay for rich peoples' foolish in the form of more price inflation. Whatever way you want to look at it, the rich are stealing from the working class. The working class are now justified in taking forceable action to protect their own property.
Here is the latest data. It shows prices are still inflating but the rate of increase is decreasing. At some point that will be mean price deflation but we are near that yet. This is all pre-SVB rich, foolish depositor bailouts which will exacerbate inflation. Looming Bank Failures Point to More Price Inflation as Real Wages Fall Again | Ryan McMaken
Perhaps a better way of handling depositor bailouts is to raise the legal $250,000 limit to $500,000 (or even more), then draw a line in the sand. Beyond that, no more. No bailouts of depositors above the federally insured amount.
Good idea Chop, but the line in the sand has gone from $50,000 to $100,000 to $250,000 now to non-existent. After SVB there might be a footnote amount, but Uncle Joe and Company have effectively done away with the FDIC and limits on "insured" bank accounts (but they will keep the FDIC open to keep from having to eliminate government jobs).
If the limit has already gone up multiple times the jig is up. It will be raised further when it becomes politically expedient.
My $2 wager is on deflation. Already told my wife we're holding off on her new car, new carpet and hardwoods, kitchen redo until summer 2024. Credit crunch in place, glut of materials in the next 12 months.
No doubt. But when credit is hard to find, bargains can be had because of overages in inventories. It'll happen. Cash is king, always has been. Good buying opportunities ahead
Inflation is the best thing that ever happened to food companies "Inflation is the best thing that ever happened to food companies Prices at the supermarket keep rising. So do corporate profits."
"Who exactly is making money off your expensive food?" Cargill: In fiscal year 2022, its revenue reached a record $165 billion. A record $6.68 billion of that was profit, double what its profits were in 2020. Its shareholders received $1.21 billion of those profits in dividends — yet another record. Tyson: more than doubled its profits between the first quarter of 2021 and the first quarter of 2022. General Mills: profits were up 97 percent Conagra: 22 percent profit increase in its last quarterly earnings report. Walmart: has seen its profits grow for the past several years, with a 7 percent jump between 2020 and 2021 The Mars family: Between 2020 and 2021, they added $21 billion to their fortunes. Inflation is the best thing that ever happened to food companies
Yes profits are increasing at both food companies and oil companies. But are the net profit margins increasing?
100% Inflation in Argentina So how did that happen? "Argentina’s longstanding practice of having the central bank print money to finance public spending is the main driver of inflation. More money chasing the same amount of goods bids up prices." As inflation nears 100% in Argentina, the political class struggles to respond
Argentina's President (presiding over 100% inflation): Alberto Fernandez -- a left-wing Peronista (a quasi-Socialist type) His "accomplishments" - doubled compensation for employees dismissed without just cause for 6 months - tax hikes on foreign currency purchases - tax hikes on ag exports - wealth tax hike - tax hikes on car sales - freeze on utlity rates - bonuses for retirees - bonuses for Universal Allocation per Child beneficiaries - food cards (food stamps) to 2 million more people Oh yeah, and Inflation rising to 100% Alberto Fernández - Wikipedia.
The usual script in world history is: A dictator comes after a guy like this who brought the country hyper-inflation.
https://thehill.com/opinion/finance...gress-as-bank-failures-limit-federal-reserve/ "The recent banking turmoil has curtailed the Fed’s ability to meaningfully hike interest rates to tame high inflation." "Additional rate increases would further devalue the Treasury bonds on banks’ balance sheets, risking more SVB-style bank runs. Bond yields have recently fallen to reflect this new reality."
So, to prevent further devaluing of the Treasury Bonds on banks' balance sheets, and further bank failures, the FED must stop raising rates. I guess we'll be seeing inflation around for quite some time...
Here's a differing opinion: https://www.cnbc.com/2023/03/20/kelly-evans-deflation-not-hyperinflation-is-the-real-risk-here.html
Former Coinbase CTO makes $2M bet on Bitcoin’s performance Balaji Srinivasan has predicted that Bitcoin will reach $1 million within 90 days due to hyperinflation in the United States.
https://www.washingtonpost.com/business/2023/03/19/inflation-interest-rates-bonds-svb/ "In recent years, banks — newly flush with extra deposits from pandemic-era savings and stimulus — bulked up on bonds and other fixed-rate investments like mortgage-backed securities. At SVB, fixed-rate securities made up nearly 60 percent of the bank’s assets at the end of 2022." "But as the Fed raised interest rates, those bonds became less valuable.SVB’s $91 billion portfolio of long-term securities was worth just $76 billion at the end of 2022. That $15 billion gap was far wider than the $1 billion shortfall the company reported a year earlier." Sounds like a poor investment strategy by the bank. Some investments do well; other investments do poorly. So who should bear the cost of their investing mistakes?
I'd like to see how the profits compare to other non food companies and especially how as a % they compare
Ha, the bank needs interest rates to stop rising and there’s speculation it will. The national debt needs rates to stop rising and who gives a rats a**.
Inflation could be here to stay. Next up—public indoctrination (Cough, I mean education…) campaigns to convince the masses that moderate inflation is actually a good thing; and arguments can be made that it is… I think Journey expressed the reality of inflation best: “ some will win, some will lose, some were born to sing the blues. Oh the movie never ends, it goes on and on and on and on…”.