Political Snap Shot
Written Mar. 16 11:59 pm EST
The financial experts commenting on the SVB collapse are correct in pointing out the Bankís bond position for short term interest rates that created a liquidity problem due to a bank run, but you need to look beyond this.
The board of SVB backed the acquisition of government short term bonds, as a fiscally responsible safe investment in a low inflationary environment with funds deposited by corporations and the rich elite. Their mistake was to invest more than they should have, but the only thought was to increase bank profits instead of sitting on deposits that were idle. This was the general tone in the banking industry as we transitioned from the Trump administration to the Biden. So what changed?
The Biden Administration while injecting money into the monetary system thought, they would defy the rules of economics. As they adapted the same principles of FDR by providing money to jump start the economy, held back by Covid restrictions, which they created. The US had approximately 1/6 of the deaths compared to all of the rest of the world. Why is that with all the advanced hospitals? Back to monetary policies: The difference was in the past, people worked for the money changing America in the days of FDR, while today they sat on their asses and others just plain stole the money by the 100s of billions.
When inflation started to rear its ugly head, the Biden Administration told America, primarily the bankers it was transitory, so they held their bond positions on his word. Thiel (PayPal co-founder) parroted the same statement recently, he did not think inflation was here and left his $50 million to prove a point, but told everyone in his circle to withdraw funds and they acted, thus creating the run on bank funds. He lied, as to the reason the money is still on deposit. Maybe a back door compensation for keeping his mouth shut and his funds in place. Definitely, he can write the loss off to lower his tax exposure. What about the woke agenda, as a cause due to mediocrity in talent to achieve diversity? Woke loans are pennies on the books and as for diversity in the banking industry, just walk into the elite trading floor for Goldman Sachs and look around the sea of white. Oh, oh, oh there is one.
The SVB general board and those place there (diversity) were not going to voice a word of caution or use common sense, as a push back of caution to the primary board members. They were appointed to be yes men of diversity, not give an opinion. To save face in the political arena, inflation caught most by surprise trapping banks that could have covered their losses sooner, if the truth was known. They would have shorted the Bonds, further plunging us into a financial collapse, as the Feds play catch up with rising interest rates. This is the folly of the Biden Administration and you pay the price for incompetence.
The banks did not expect corporations to use their own cash to finance new deals rather than pay for loans at inflated rates, thus the cash drain.. As for the run on the bank? This was caused by SVB own executives privy to the financial numbers and open financial positions, then sharing that information with their top clients (Thiel) who then spread the word to others. It was an inside job.
Today Biden or Newsom can not afford this banking financial collapse to occur, as some will dig deep, reveal the cause and admit the truth. So help is on the way by either a proxy bailout or an arranged bank takeover with backend compensation from the government to quietly cover the risk. What about Bidenís words on Mon. that investors and the banks will not get a bailout? He is lying or the truth comes out.
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