The wheels start coming off of the Biden Economic MIRACLE!!™ bus.
A Blip On The Radar Or The Beginning Of The End?
Despite decades of working in financial services, mostly in customer facing roles where I kissed ass and took the heat for the screw-ups of others, I don’t fully understand what happened with Silicon Valley Bank but when a top 20 bank collapses, it is big news.
As others have pointed out, while SVB is a top-20 bank it pales in comparison to the really big players like Chase and Bank of America. Chase alone has something like $3.2 trillion in assets.
Notice that the bank right below them, Fifth Third Bank where I was a branch manager at a couple of locations, has slightly lower total assets but 1,104 branches while SVB only had 16 branches but more in “assets”. This was a very different kind of bank. Still it is a significant event getting little coverage because Sniffy Man Good is President instead of Orange Man Bad. It was also another opportunity to mock The Wrongest Man Alive, CNBC’s Jim Cramer, who is so reliably wrong you could base your investment strategy just off of doing the opposite of what he recommends (not investment advice, etc)
It is amazing that someone as dumb as Jim Cramer still makes a bunch of money being incorrect.
While I would hesitate to go full Zerohedge and declare this is a harbinger of imminent collapse, it does show us again that the financial system we operate under is a Jenga tower. You can pull a piece out here and there but one of these times a critical piece will come out and the whole thing will fall.
Arthur is correct in his hesitation, but it’s a matter not of statistical inevitability but of simple semantics. The collapse is indeed not imminent; it has already started, is ongoing. Things are going to get much, much worse before they get better, and that’s assuming they DO get better, which is by no means guaranteed. It’s unlikely in the extreme that they will within the lifetime of anyone reading this, that’s my belief.
Read the rest of it; Arthur moves on from the end of my excerpt to do some very astute, clear-eyed analysis of the REAL root causes of the ongoing disaster, which are not so much financial and/or political as they are cultural. He’s right about that, too.
Big trouble update! Not good.
Wall Street’s biggest banks took quite a thrashing in the stock market Thursday as investors spooked the turmoil at Silicon Valley Bank and Silvergate Capital dumped financial shares.
JPMorgan Chase, Bank of America, Wells Fargo and Morgan Stanley – the four most valued US lenders – saw $55 billion wiped off their combined market capitalization on Thursday, Refinitiv data show.
JPMorgan, the biggest US bank, alone saw a $22 billion tumble in its market value as its stock slid 5.41% to $130.34. Wall Street heavyweight Bank of America lost $16.16 billion as its share price fell 6.20% to $30.54. Wells Fargo and Morgan Stanley saw their market capitalization drop by $10.3 billion and $6.2 billion, respectively.
Among other major US banks, Goldman Sachs and Citi also witnessed significant declines in their share prices.
The selloff came amid heightened fears of contagion effects from financial distress at Silicon Valley Bank (SVB) and Silvergate Capital. SVB’s stock crashed 60% Thursday after the company said it would sell more shares to cover a $1.8 billion loss it incurred after completing a $21 billion fire sale of its bond portfolio.
It’s becoming something of a mantra for me, so maybe I should just go ahead and make it an acronym to save myself some typing from here on out: WBBIEB. That is, Worse Before Better, If EVER Better. Pro tip: You will see this material again. And again, and again, and again. Because, y’know, WBBIEB.
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