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Post by bancroft on Mar 13, 2023 20:40:06 GMT
There are claims the owner cashed-in his shares two weeks ago which is suggestive.
Surely this time some strong action needs to be taken if there is a case for negligence if not insider trading?
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Post by Baron von Lotsov on Mar 14, 2023 11:58:42 GMT
There are claims the owner cashed-in his shares two weeks ago which is suggestive. Surely this time some strong action needs to be taken if there is a case for negligence if not insider trading? I think it was just incompetence. These people are just kids and don't know nothing.
If they had cashed in their shares it might show they knew about the problems but failed to report them to whoever they should report to. At most they might have broken a reg or two, but it was the stupid decision to buy long-term bonds which tied the money up, so they could not pay depositors. A second bank has just crashed for similar reasons, betting interest rates would stay low like in the pandemic for 10 years! These banks would have been OK if the interest rates had not shot up, so really it is a case of interest rate rises exposing the idiots. They have not heard of hedging. More detail here:
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Post by bancroft on Mar 14, 2023 12:51:16 GMT
Found this on skynews: Saying it was well capitalised though still got caught out. Normal banking practice sees banks take money from depositors and lend it out to borrowers at a higher rate or deposit it in interest-bearing securities. However, in the case of SVB , it was taking deposits from its customers at a much faster rate than it could lend that money out.Accordingly, having taken in vast sums from its clients in the tech sector, it then reinvested most of those deposits in US Treasury bonds which, in theory, are among the safest financial investments in the world. This, in principle, is precisely the kind of prudent behaviour that financial regulators around the world would applaud and especially in the wake of the financial crisis. In practice, though, it was a strategy that blew up when the Fed began raising interest rates in response to inflation.US Treasuries have repriced during the last year more aggressively than they have done in decades. Take 2-year US Treasuries. The yield (which moves in the opposite direction to the price) r ocketed from 0.732% at the beginning of 2022 to 5.084% on Wednesday last week, a level not seen since 2007, spelling trouble for anyone - like SVB - with an investment portfolio heavily concentrated in such assets. So regulators are going to be under pressure to make sure this does not happen again. news.sky.com/story/the-social-media-driven-run-on-svb-has-repercussions-on-many-fronts-12832996 |
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Post by Baron von Lotsov on Mar 14, 2023 13:29:33 GMT
Found this on skynews: Saying it was well capitalised though still got caught out. Normal banking practice sees banks take money from depositors and lend it out to borrowers at a higher rate or deposit it in interest-bearing securities. However, in the case of SVB , it was taking deposits from its customers at a much faster rate than it could lend that money out.Accordingly, having taken in vast sums from its clients in the tech sector, it then reinvested most of those deposits in US Treasury bonds which, in theory, are among the safest financial investments in the world. This, in principle, is precisely the kind of prudent behaviour that financial regulators around the world would applaud and especially in the wake of the financial crisis. In practice, though, it was a strategy that blew up when the Fed began raising interest rates in response to inflation.US Treasuries have repriced during the last year more aggressively than they have done in decades. Take 2-year US Treasuries. The yield (which moves in the opposite direction to the price) r ocketed from 0.732% at the beginning of 2022 to 5.084% on Wednesday last week, a level not seen since 2007, spelling trouble for anyone - like SVB - with an investment portfolio heavily concentrated in such assets. So regulators are going to be under pressure to make sure this does not happen again. news.sky.com/story/the-social-media-driven-run-on-svb-has-repercussions-on-many-fronts-12832996Sky is mostly right but wrong on one crucial fact. You do not put all your money into bonds as it is a gamble on interest rates. You hedge it so you have investments that increase in value the opposite way of interest rate rises to your bonds. This is the problem - even the ones that should know are fuckwits. You should follow Sean Foo. He knows what he is doing and has an in-depth understanding of capital markets as an investor himself. It's our country plus the US who have become so dumb. Those out in the East like Sean are very smart. It's all i hear from the UK news these days - fuckups everywhere. This is why they aught to take a haircut and go and work in McDonald's. Unfortunately the stupidest solution has been sort, which involves the taxpayer bailing them out by stealth. |
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Post by bancroft on Mar 14, 2023 18:00:31 GMT
Found this on skynews: Saying it was well capitalised though still got caught out. Normal banking practice sees banks take money from depositors and lend it out to borrowers at a higher rate or deposit it in interest-bearing securities. However, in the case of SVB , it was taking deposits from its customers at a much faster rate than it could lend that money out.Accordingly, having taken in vast sums from its clients in the tech sector, it then reinvested most of those deposits in US Treasury bonds which, in theory, are among the safest financial investments in the world. This, in principle, is precisely the kind of prudent behaviour that financial regulators around the world would applaud and especially in the wake of the financial crisis. In practice, though, it was a strategy that blew up when the Fed began raising interest rates in response to inflation.US Treasuries have repriced during the last year more aggressively than they have done in decades. Take 2-year US Treasuries. The yield (which moves in the opposite direction to the price) r ocketed from 0.732% at the beginning of 2022 to 5.084% on Wednesday last week, a level not seen since 2007, spelling trouble for anyone - like SVB - with an investment portfolio heavily concentrated in such assets. So regulators are going to be under pressure to make sure this does not happen again. news.sky.com/story/the-social-media-driven-run-on-svb-has-repercussions-on-many-fronts-12832996Sky is mostly right but wrong on one crucial fact. You do not put all your money into bonds as it is a gamble on interest rates. You hedge it so you have investments that increase in value the opposite way of interest rate rises to your bonds. This is the problem - even the ones that should know are fuckwits. You should follow Sean Foo. He knows what he is doing and has an in-depth understanding of capital markets as an investor himself. It's our country plus the US who have become so dumb. Those out in the East like Sean are very smart. It's all i hear from the UK news these days - fuckups everywhere. This is why they aught to take a haircut and go and work in McDonald's. Unfortunately the stupidest solution has been sort, which involves the taxpayer bailing them out by stealth. I take your point about investing so much in US treasury bonds yet in the markets they are seen as a safe haven. I wonder what caused their price to rocket like that? I remember a website called the international forecaster and belonging to a financial guy called Bob Chapman, he was saying a decade ago that unnaturally low interest rates were causing major distortion of the financial markets and when rates finally rose their would be massive corrections and headaches. |
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Post by Baron von Lotsov on Mar 14, 2023 18:56:33 GMT
Sky is mostly right but wrong on one crucial fact. You do not put all your money into bonds as it is a gamble on interest rates. You hedge it so you have investments that increase in value the opposite way of interest rate rises to your bonds. This is the problem - even the ones that should know are fuckwits. You should follow Sean Foo. He knows what he is doing and has an in-depth understanding of capital markets as an investor himself. It's our country plus the US who have become so dumb. Those out in the East like Sean are very smart. It's all i hear from the UK news these days - fuckups everywhere. This is why they aught to take a haircut and go and work in McDonald's. Unfortunately the stupidest solution has been sort, which involves the taxpayer bailing them out by stealth. I take your point about investing so much in US treasury bonds yet in the markets they are seen as a safe haven. I wonder what caused their price to rocket like that? I remember a website called the international forecaster and belonging to a financial guy called Bob Chapman, he was saying a decade ago that unnaturally low interest rates were causing major distortion of the financial markets and when rates finally rose their would be massive corrections and headaches. The bond interest was 1% on short-term bonds and 1.6% on 10 years plus bonds during covid. Because these kids don't know the fist thing about finance they simply saw that 1.6% was a fair bit more than 1%.
What caused it was mainly because of this. They had their money tied up in bonds that were earning them far less an if the investors went and bought some in today's market conditions.
Anyway, it was the rising interest rates which triggered the devaluation in their holdings. It seems everyone else knew interest rates would rise from a record low. Actually in itself it is a good thing because rising interest rates is exterminating idiots in control of capital, or at least it would do that if the market were left to function properly, but now they are being saved, so it provides incentives for others to default and be bailed out. This is why the dollar is going to die. Other countries can see this horrendous mismatchment. It will be replaced by a better currency, one that represents a basket of currencies so will be far more stable.
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Post by Orac on Mar 14, 2023 19:18:37 GMT
Baron, for once I substantially agree with you.
I would add - that because we have engaged in avoidant economic policy for two decades or so, our system has allowed unprecedented levels of incompetence to build up.
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Post by Vinny on Mar 14, 2023 19:20:41 GMT
If all you've done is store money in a savings account (not a share account), why should you have to suffer if the bank folds? It's not your fault.
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Post by bancroft on Mar 14, 2023 19:21:39 GMT
The bond interest was 1% on short-term bonds and 1.6% on 10 years plus bonds during covid. Because these kids don't know the fist thing about finance they simply saw that 1.6% was a fair bit more than 1%.
What caused it was mainly because of this. They had their money tied up in bonds that were earning them far less an if the investors went and bought some in today's market conditions.
Anyway, it was the rising interest rates which triggered the devaluation in their holdings. It seems everyone else knew interest rates would rise from a record low. Actually in itself it is a good thing because rising interest rates is exterminating idiots in control of capital, or at least it would do that if the market were left to function properly, but now they are being saved, so it provides incentives for others to default and be bailed out. This is why the dollar is going to die. Other countries can see this horrendous mismatchment. It will be replaced by a better currency, one that represents a basket of currencies so will be far more stable.
This to me shows how distorted the market is, with long term bonds at 1.6% who in their right mind buys short term bonds? Better going to the discount market and buying 10 year treasuries. |
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Post by Baron von Lotsov on Mar 14, 2023 19:54:22 GMT
The bond interest was 1% on short-term bonds and 1.6% on 10 years plus bonds during covid. Because these kids don't know the fist thing about finance they simply saw that 1.6% was a fair bit more than 1%.
What caused it was mainly because of this. They had their money tied up in bonds that were earning them far less an if the investors went and bought some in today's market conditions.
Anyway, it was the rising interest rates which triggered the devaluation in their holdings. It seems everyone else knew interest rates would rise from a record low. Actually in itself it is a good thing because rising interest rates is exterminating idiots in control of capital, or at least it would do that if the market were left to function properly, but now they are being saved, so it provides incentives for others to default and be bailed out. This is why the dollar is going to die. Other countries can see this horrendous mismatchment. It will be replaced by a better currency, one that represents a basket of currencies so will be far more stable.
This to me shows how distorted the market is, with long term bonds at 1.6% who in their right mind buys short term bonds? Better going to the discount market and buying 10 year treasuries. You never buy all of one thing as a bank. You have many diverse investments so whatever happened you survive and you keep adjusting this to stay optimal as conditions change. You see they have had to sell these bonds at a loss because the customers wanted their money back. |
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Post by bancroft on Mar 14, 2023 19:56:17 GMT
This to me shows how distorted the market is, with long term bonds at 1.6% who in their right mind buys short term bonds? Better going to the discount market and buying 10 year treasuries. You never buy all of one thing as a bank. You have many diverse investments so whatever happened you survive and you keep adjusting this to stay optimal as conditions change. You see they have had to sell these bonds at a loss because the customers wanted their money back. Of course yet with mark to market there are vey few home bankers today which is why there are rumours of some running to gold. |
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Post by Baron von Lotsov on Mar 14, 2023 19:56:25 GMT
If all you've done is store money in a savings account (not a share account), why should you have to suffer if the bank folds? It's not your fault. It damn well is your fault. You as supposed to do due diligence research. |
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Post by Baron von Lotsov on Mar 14, 2023 20:00:19 GMT
You never buy all of one thing as a bank. You have many diverse investments so whatever happened you survive and you keep adjusting this to stay optimal as conditions change. You see they have had to sell these bonds at a loss because the customers wanted their money back. Of course yet with mark to market there are vey few home bankers today which is why there are rumours of some running to gold. If commodities are your best investment then it means your industry is screwed. Gold does not earn money. Industries take a small amount of money and make it into a bigger amount by making stuff where gold just sits there. |
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Post by bancroft on Mar 14, 2023 20:03:11 GMT
Of course yet with mark to market there are vey few home bankers today which is why there are rumours of some running to gold. If commodities are your best investment then it means your industry is screwed. Gold does not earn money. Industries take a small amount of money and make it into a bigger amount by making stuff where gold just sits there. For sure gold is a hedge and at time US treasury bonds could be too. I made 40% on buying gold in the window when Lehmans went under in the UK morning and before 2.00am when the US markets woke up. |
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Post by bancroft on Mar 14, 2023 20:06:02 GMT
The old way of earning money was for an accountant to go through the financial statement of a company they were thinking of investing in or building societies making money on the difference between lending and deposit rates.
Some where after '97 it all chnaged along with mass immigration and ultra-low interest rates.
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