SVB Collapse-How it happened...
SVB took risk and deposited their assets in mediocre, lesser stocks and long term low interest govt bonds-but many of their investors are Tech companies that need money often and there wasn't enough when they recently needed it.
Some of the poorly invested stocks were inflated government bonds. The government bought the long term bonds when rates were low. And as government kept printing money interest rates went up And banks like s v b could no longer afford the now better, higher interest bonds and had to leverage Clients money to the extreme.....and fearful clients came to withdraw 42 billion dollars thst wasn't there, oops!
They would invest (badly) in government bonds only to see those rates climb as the fed kept raising interest rates.
So the bonds weren't worth much ... The bottom line is very poor bank Investment management As well as government spending That causes inflation and subsequent rise in interest rates
Now SVP and investors want a bailout from the government. This would be
cronie capitalism. Biden and Yellen first said it won't happen(bailout) but where are they gonna get the money otherwise? They have now disguised the bailout. Just watch your prices go up more
It's the banks and government spiraling out if the control. Blame it on the government as they were the ones who incentivized banks to buy these long term, low interest bonds. Now theyre trying to blame Trump (and even Barney Frank of Frank-Dodd fame) and private sector people and looking for others people to blame. BIDEN should look no further than himself AND janet yellin and the federal reserve> see Peter Schiff, (SchiffGold.com) Who says 2% inflation will never come again in our lifetime (if you're over 60.)
According to Charles Payne, the problem with SBV started the day Biden took office and started spending money While giving it away like water with bailouts... , making it more profitable for many to stay at home as to work. Banks were no different , especially ones like SVB, Which spent more time being woke than running the business Most of their wewlthy borrowersĝ would spend up to the $250,000 level And knew that they would be bailed out. And most of the investors spent average $230,000. Imagine how much that's gonna cost the taxpayers as, basically, they're the ones That will be responsible for paying back the banks, Even though in most cases it wasnt their fault.
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