All Forum Posts by: Michael Wooldridge

@Scott Trench @Sean Kelly-Rand Has the fed just set a precedent with SVB of bailing out all depositors if other banks go under? If so, does 250K FDIC threshold even mean anything? Treasury yields have plummeted today and ever since the SVB news we're seeing cracks now forming the economy. We might not be too far away from even lower interest rates should more signs of a recession/economic problems start to show face. Lower rates mean upward pressure on home prices.

 been telling to @James Hamling that he uses 1930 economic book to rule 2023 economy, it just would not work as there're just too many factor involved and market is too efficient.

 I'm shorting banks as we speak. 

One good thing about this SVB collapse --> FDIC take over is that TLT is now run high !!!

And I immediately lock in new rate so my new ARM from 5.8 move down to 5% overnight LOL

 Thiel should be commended for what he did. Moved his founders and his money. The problem with Silicon Valley is that for every Peter Thiel there are 10 Elizabeth Holmes and Jesse Draper types!

"In addition to the moral hazard, bailing out banks can also be costly
for taxpayers. The funds used to bail out a failing bank are typically
drawn from the public coffers, meaning that taxpayers foot the bill.
"

Concepts like this come up a lot that taxpayers lose.  The data shows that in the banking crisis (08+ era), taxpayers netted billions in profits from Citi and others who obtained true bailout investments. Overall, taxpayers lost nothing and quickly earned billion and billion in net gains.

Tangent: FDIC Insurance, being non-bailout funds, is paid for by the premiums charged directly to banks. As many know, taxpayers funds do not cover any of the bank failures we see each year.

When the FDIC funds took a large than normal hit in 08-10 region, ALL Banks (those that had no losses) footed the bill via super high premiums and special assessments. CUs too, in NCUA Insurance. They made all of them pay for the transgressions of a few. The taxpayers did not pay.

It will be short but brutal for some. Silicon Valley though needs a deep cleansing after Theranos and even WeWork and Uber not withstanding they forced out their CEO/Founders. 

Peter Thiel should be commended for getting his founders out. We got to see David Sacks and Jesse Draper grovel for taxpayer money. Remember there is no Theranos with Jesse Draper and her Dad propping up Elizabeth Holmes from the getgo. 

I am a supporter and fan of Peter Thiel. If he has invested his firms funds he does have the right IMO to ask his founders to pull and/or move their money. 

 all these VC guys are just bunch of FOMO guy as well, they would invest to one product/company at a time and withdraw as FOMO as well, there's no diversification for those VC although they seems smart from outside, this is also why you see so many "unicorn" list during cheap money era and those list evaporated during high rate lol

So the problem with SVB is not SVB specific, all banks do the same, they would buy MBS in last 10 years as those are the only gov. backed up asset that has little bit of interest. 

Now ask Mr Powell why they print 40% more dollar into the circulation  in April 2000 (Fauci effect) and when he realized the mistake for too long, everyone (bank,private sector,individual) has unrealized loss (from MBS,investment,etc). Gov. can still survive the unrealized loss because they can play with the accounting books and ability to print money , while private sector can't do the same, they would just bite the losses.... 

The moral dilemma is with Mr. Powell not with SVB CEO.