When our banking system collapsed here in Iceland back in 2008, we threw those responsible in jail. Rich bankers shouldn't get bailed out while ordinary people lose their homes and life savings.
I'm a risk manager. In every organization i've consulted or worked with, risk management is treated as a check list. NO ONE in management cares about risk management. It's considered a exclusively fiduciary obligation. When you present existential risks and demand contingency plans, typically management tells you there's management reserve or other management funds to address the issue. I'm not privy to what happened at SVB but I'm confident that Moral Hazard allowed for risky decisions to be made and ignoring contingency and mitigative actions. In other words, they knew that the FDIC and its funds would rescue them.
Makes me laugh when I hear misleading abstract BS like "fiduciary obligation" used as if it was a binding contract. Its what somebody thought up to get people to believe that a bank/broker "risking" their reputation is equal to people risking their hard earned money.
The prolonged financial boom has primarily benefited the wealthy elite. Now, as the market corrects, they're poised to profit again through strategic short-selling. Meanwhile, inflation distracts the masses from systemic corruption. I'm torn about liquidating my $338,000 stock portfolio. What's the smartest strategy to capitalize on this bear market and protect my assets amid the impending wealth transfer?
I agree, I've been in constant touch with an Investment advisor for approximately 17 months. These days, it's really easy to buy into trending stocks, but the task is determining when to sell or hold. That's where my advisor comes in, to help me with entry and exit points , I've accrued over $337k from an initially stagnant reserve of $148K all within 18 months...
Our strategic partnership with an asset manager yielded remarkable results: mortgage-free in 24 months. Now, with over $3 million in net worth, my wife and I enjoy retirement, debt-free and financially secure - a testament to the power of informed investing.
That is so amazing, I’m trying to get onto the ladder at 40. I wish at 55 I will be testifying to similar success. How can I reach this manager of yours? because I'm seeking for a more effective approach on my savings
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with “Sonya Lee Mitchell” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
You damn well know that senior management at SVB knew that they were in trouble beforehand when they cashed out. Every one of those cash outs should be clawed back along with the employee bonuses.
I agree 100%! They damn well knew and they need to be clawed back! This was a freaking bank, and we are supposed to believe they didn't intimately know interest rate risk!? It's one of the most important things to know when investing in bonds, the only way they couldn't know is if they were criminally negligent!
This is modern American capitalism in a nutshell. Lobby the government so that gains are privatized and losses are socialized. There have become no consequences for failure for the rich.
@@griffin8062 The funny thing is, it keeps happening. This is nothing new, but we just keep putting up with it. I do feel like the elastic is at the end of the stretch limits however, and I can see something big coming.
I work in the tech sector. You wouldn’t believe the amount of cool tech companies that live for years with negative cash flows, while overpaying their employees and management. It’s going to be tough in the upcoming years, but this industry needs to learn that companies can’t survive on the promise of future returns alone.
@@rohansully584 Elizabeth Holmes, Adam Neumann, that guy who founded Uber... They're all grifters. Uber still has never posted a profit. All of it is founded on cheap VC capital.
I used to work as a higher up in Deutsche Bank. One of the problems with SVB is that most of their clients are classified as high risk. In the normal banking world, most high risk businesses are offset by a large pool of low risk businesses such as doctor's offices, markets, cafes, etc. Often times the dollar amount of low risk to high risk is $10 to $1 and high risk businesses are charged with a premium in order to operate. SVB skipped over this and ran mostly high risk businesses. Their answer to combat the high risk was "more funding". To be honest, it's an amazement they've been able to stay afloat for so long given their businesses practices. The best thing they could have done is not take shortcuts and just do banking the way it should be done. The entire structure of this bank is backwards, like an upside down pyramid.
high risk high reward (in the short term) seems a more profitable practice (than doing things competently :s) when none of the liability wil be held by those making the decisions? i expect almost everyone responsible for this walks away with bank balance & career largely intact... perhaps that's overly jaded of me but it seems that if a poor man steals a loaf of bread he gets jailtime, if the rich dump an entire economic sector they usually float off under golden parachutes.
@@sjs9698 It's especially pertinent given the current student loan debate. Bankers who continue to break the rules and will take all the risks they're allowed to take continue to get bailed out, but you can't even bail out the normal people once?? Bad look, but of course much of the country doesn't care about that.....
They literally couldn't pay because they had too much of one of the safest assets possible, treasuries. Unfortunately that asset takes a long time to mature and the bank run made it impossible to cash out. It was a liquidity problem I don't even know what point you are trying to make, this has nothing to do with their clients.
@@BauldyBoys You may like to watch the video again, while it is true they did screw up in asset management, it was due to the rising interest rates that the tech companies had to start withdrawing due to funds being hard to obtain, so when the poster referred to high risk compared to low risk, doctor's offices, cafes, markets are not constanty looking for investor funding. They simply exist as they are and likely would need to tap into cash reserves much less than start up tech companies. With their entire clientele being high risk start ups, when investors are low, they start withdrawing like crazy to fund their businesses, leading to a liquidity problem, OP was right, it makes perfect sense. If they had a good pool of low risk investors, they could have simply waited for their bonds to mature and it wouldn't cost them anything. To also quote the video, they had "short term deposits"
The bank crisis isn't over yet, and experienced individuals know credit crises don't end quickly. Some find it amusing that some think it's resolved, but in reality, we're headed for a major economic downturn due to this credit contraction.
After the '08 financial crisis, I've learned not to trust corporations. Since 2020, I've been investing with a financial advisor and have had no major losses, so I'm not going back to relying solely on banks.
Many overlook that banks are profit-driven businesses. I don't trust keeping a large sum in a bank, instead, I invest with guidance, enjoy the benefits, and save for retirement.
There's one big unsolved question though: the Federal Reserve can prevent a contraction by printing lots of money and causing lots of inflation instead.
If a regular employee makes a mistake and the company looses a 100k, he guest fired or thrown in jail. If an executive makes a "mistake" that makes millions of people collectively lose hundreds of billions, he gets to happily exit with a fat check. Yeah, justice is well leveled up in this country.
Nay the whole entire world nations would do the same thing and get away with it. The west just demonizes those Nations because they're not A "democracy"
Turns out that was fake news. The SVB the Lehman guy is affiliated with is not Silicon Valley Bank. Unfortunately the same acronym causing the viral rumor.
The current system is completely unsustainable. The only reason it continues 'as if' is lending and debt. Lending for healthcare, for homes, for education, and plain old credit cards. trouble is, when the bottom falls out, the lenders get bailed out and consolidated, and everyone else loses their shirt.
I can't feel it. Most people that get rich do so during a depression or recession. I've lived trough 2 of them. This is what happened. They took everyone's 401K's money. That's how they pay for it. People with 401K's are handcuffed to a sinking ship. Everyone else jumps ship.
My greatest worry is how do we recover from all these economic and global troubles? Especially with the political power tussle going on in the united states.
@@stephaniestella213There are several reasons I have been investing under the counsel of an Advisor which are someone who sets asset allocation that fits my tolerance and risk capacity, investment horizon, present and future goals. ‘'INGRID CECILIA RAAD'' has provided all that and I don’t want to go into ROI on a public space like RUclips..
@@kimyoung8414 There is this podcast i was listening to and it said something venturing within your tolerance and risk capacity, see you mention it again got to me. How can i reach this Financial Advisor you are working with?
Housing crisis, health crisis, financial crisis, cost of living crisis, debt crisis, inflation crisis, Middle East crisis. How many crises can we endure? As I approach retirement with a solid financial cushion, I'm anxious about a potential banking crisis. Is private equity a good option to grow my money securely? Any guidance in this regard would be much valued.
I would advise the counsel of a seasoned financial pro. It may be expensive, but as the old saying goes "You get what you pay for." "Expert solutions require Expert providers" - my mantra.
Reason i decided to work closely with a brokerage adviser ever since the market got really tense and the pressure became too much. I should be retiring in 17 months, so I've had a brokerage adviser guide me through the chaos. It's been 9 months now, and I've made approximately 750K net from all of my holdings.
Sure you can! Judith Lynn Staufer is the financial advisor I work with. Just search the name. You’ll find necessary details to work with to set up an appointment.
Really, banks require more regulation. The entire idea of banking as "let's gamble" is terrifying. Because they discovered in 2008 that the government will always bail them out, there are no repercussions. These bank crisis are so worrisome. This whole financial crisis and the Great Recession posed the most significant macroeconomic challenges for the United States in a half-century, leaving behind high unemployment and below-target inflation and calling for highly accommodative monetary policies. And this is only the beginning!
Since 2020, the banks have been over-leveraging their assets, which was one of the reasons for SVB's implosion. I have never been okay with keeping much money in the bank. I simply focus on diversified investments through a financial advisor, collect my profits, which I either spend or repeat the process. Never been this comfortable with my finances.
I have learnt not to trust corporations, especially these banks. I was badly hit by the '08 financial crisis. Since 2019, I've just been focused on investing through a financial advisor and it has been paying off. No major loss has ever been recorded since 2019 i started. I'm closer to having a million now than i ever was with the banks. I'm never going back to banks full time.
I've been thinking of going that route been holding on to a bunch of stocks that keeps tanking and I don't know if to keep holding or just dump them, do think your Inv-coach could guide me with portfolio-restructuring as i wouldn’t mind a recommendation.
Actually, I've shuffled through a few advisors in the past, and "Colleen Janie Towe” remains the most resourceful thus far. Her strategy proves profitable, and sustainable both in a bull & bear market. Most likely, her credentials can be found on the net, so you can confirm yourself.
Thank you for this tip , I must say Colleen, appears to be quite knowledgeable. After coming across her webpage, I thoroughly went through her resume, and I must say, it was quite impressive. I reached out to her, and I have booked a session with her.
My biggest problem with this kind of failout (because that's what it is, regardless of what it's called or who's being bailed out) is that it fails to hold people accountable for their failures (the SVB execs may be held accountable another way, but the businesses that turned a blind eye to it all and put their money into it anyway won't be). That only encourages repeats of this same mistake. Without consequences, people in power won't learn.
My biggest problem is how do these banks have all this money, yet our Govt. is 31 TRILLION dollars in debt - That tells me the wealthy class is not paying any taxes on their wealth because the lions share of the money in SVB was the wealthys money, their was very little average Joe money in that bank.
COMPANIES REDUCE REGULATORY OVERSIGHT BY BRIBES AND GENERAL CORRUPTION, THEREBY ENSURING THE EVENTUAL CRASH HAPPENS. Like in East Palestine, where the crash was quite literal
@@jonathanbatturs6359 Doesn't government debt operates very differently compared to say business or personal liabilities? The government has a lot of power regarding debt (i.e. printing money, military projection, taxation, etc.).
@@doctawordsorry, but no! We have a tiny company and even we care about srvuring our liquidity. If you have to store a few hundred million somewhere, you better have a plan. This is stupid beyond imagination.
its true. some rogue state could detonate a dirty bomb in the middle of a large metro area triggering ww3, and id be here enjoying my asmr narrative of the whole collapse of civilization as we know it on youtube.
No shit, it's like poverty, nobody's interested in helping the poor because they would loose the poor's votes, it's always more game to increase the number of poor people.
COMPANIES REDUCE REGULATORY OVERSIGHT BY BRIBES AND GENERAL CORRUPTION, THEREBY ENSURING THE EVENTUAL CRASH HAPPENS. Like in East Palestine, where the crash was quite literal
That Chief Risk Officer made the call of the century by getting out of there before this all blew up. Sounds like he probably knew how risky things were but the rest of management didn’t care
I always go back to your 2008 recession video every few months, and it's crazy how similar some of these events are. They say history repeats itself, but its only been around 15 years.. the taste of that recession is still there for a lot of people.
@SnoopyDoo The majority of SVB clients are start up tech companies, not individual account holders. $250K is sufficient for most individuals, but no where near enough for million dollar companies. According to Time Magazine, over 85% of the money at SVB is not covered by FDIC.
I work in IT for the risk dept at a bank in the UK. We hedged the IR risk when we bought the bonds. The 1st year associate even worked out these rates werent going to stay low until duration. In addition, the regulators want to see this too. How SBV and its regulator missed this is shocking.
Our economy struggling with uncertainties, housing issues, foreclosures, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth.
With the US dollar losing value to inflation and other currencies gaining traction, uncertainty looms. Yet, many still trust in the Dollar's perceived safety. Worried about my $420,000 retirement savings losing value, I seek alternative security for my money.
With my demanding job, I lack time for investment analysis. For seven years, a fiduciary has managed my portfolio, adapting to market conditions, enabling successful navigation and informed decisions. Consider a similar approach.
this is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Monica Shawn Marti is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
"A bunch of incompetence" is a brilliant title for the chapter that displays just how inept SVB management were. I believe this is rife in the industry.
Incompetence... I'm not so sure. As we've seen many times before there are no consequences for these failures, yet the money they "earn" whilst employed is a huge upside.
And it may be the most important bullet point of the presentation. This is not the beginning of a worldwide banking failure. This is a poorly run bank making their final fatal mistake and sinking their own ship. Repercussions affect other similar at-risk regional banks, but the shock wave won't topple the big banks. Unlike in 2008, the troublesome assets in question have value. They're government bonds, not bullshit CDOs.
The FED got it wrong about “transitory inflation”, but they also started signaling for months that interest rates were going up, so SVB should have been able to adjust their positions before, but I guess not 😐
What really gets me here is that it's not like they were even invested in anything bad. 30 year treasuries aren't NINJA MBS... They just bought too many at the wrong time and didn't have a plan to hedge. Like Bruh....
I am not a risk manager, however I find it incredulous that the management even without a risk officer would matching short cash needs (honoring deposits) against long term bonds. What it tells me is there were being greedy trying to drive as much revenue as possible and taking on the highest risk by this structure. I honestly see no way the management could not be seen as negligent and the matter not being litigous to those effected.
You see, they decided to hire someone from Lehman's Brothers. This was their first mistake. Hire the most penny pinching manager you can find as opposed to hiring a riskphilliac individual.
In certain countries, citizens may pay lifetime for unwanted service such as getting, rob, rape, and genocide. You may have to do some studies to find ways to avoid such services if you already live in those countries.
mismatch, and managing it, is how financial companies make their profits. The totally failed in their evaluation of potential shock withdrawal. Their biggest failure is lack of risk diversification. Since most of their liability was in One sector the possibility of shock was much higher
To add color since I work in the industry: Most of the recognizable billion $ companies (e.g. you mentioned Roblox) have their money spread out across multiple banks to avoid being dragged down by 1 bank failing. This affects mostly smaller tech companies/startups since they don't have large dedicated finance teams to manage these risks. Only rich people or funds would ever invest in those small startups (outsiders like us would only be able to buy public stock like Google), which is why this bailout is mainly helping rich people stay rich. Yes some of it is the impacted employees but they are a small % of the money.
It is helping the rich people stay rich but at the same time if the government does not step in and make it seem like everything is ok and the system as a whole is strong enough to weather the storm then it could trigger everyone running to the banks. In this situation you have to put on a strong face even if things are crappy or you are gonna freak out a whole lot of people and you will have more runs on more banks making it a cascading problem.
Is this really a bailout? The FDIC is funded by premiums paid by banks and savings associations. And the rest of the money is slowly paid back through liquidation of assets, no? I'm genuinely confused about the bailouts thing. Or are shareholders somehow getting refunded?
@@adventofnull it’s not a bailout really at all, it’s just deposits getting returned. There’s no taxpayer money being used for this. I understand OP’s point here, that it “helps the rich” in the sense that anything that maintains the status quo does so, but I’m also of the opinion that bank failure is not the way we ought to restore wage balance.
As a side note .. in the current “global economy “ if you make 20k a year or more ,you are in the wealthiest 10% of the world’s population.. so who are these rich you speak of ? … almost sounded smart tho… gg.
Thank you for putting this together Cold Fusion team. This is exactly what I was looking for on this subject. An explanation to go beyond the BS of half baked articles but simplify below esoteric insider explanations I can't understand. Well done.
SVB was very famous amongst Indian tech startups, too. Even I approached SVB for my startup as it was the 1st choice for Indian tech startups, but they required a certain level of initial deposit which (luckily for us) drove us away from them and we started our banking relationship with another bank.
I feel like crises have become a part of our everyday life now. - Wake up, make breakfast, send kids to school - Check what crisis we have today - Do the laundry...
@@msmpt4322 I don’t think that’s the point she was making. She was, if my inference is accurate, inferring that the “crises” are basically only such if we allow ourselves to engage with them through social media. But for most/many of us, our day to day hasn’t been effected in any noticeable way. I could be wrong tho
I love how no one is prepared to take the people responsible to task and then complain that no one is taking the people responsible to task. This always happens. That's why people do it because they believe they can get away with it.
Great video, man. Really helped to understand wtf has happened. However, I don't even register news like this anymore though. The government will always have the backs of the people lining their pockets. Meanwhile, we have to beg and plead for scraps as average people. So nothing changes and nothing will change and we will always lose. To end on a positive note, your videos are so interesting and insightful, so cheers man!
@@sifridbassoon Retirement? I'm betting a majority of US citizens are going to be working into their 70s, with wages not keeping up with inflation and rent costs. Nobody is able to save money. Companies keep hiring people as part-time to avoid offering benefits. Add that to the fact that politicians are continuously trying to attack medicaid, medicare, social security, and push back the retirement age - retirement is a legend of the past at this point.
@@sifridbassoon frankly....nobody born in the last few decades is likely to retire at all in the first place, 401K or not (unless their rich). their already raising the age limit and I doubt this will be the last time within the next half century (look at our demographics around the world; the young are outnumbered and its only going to get worse with fertility rates below 2).
you should know when events like this occur in the market or business, the first thing I look for is a Cold Fusuin breakdown. thank you for all the great work.
The banking situation is a reminder that Fed hikes are having an effect, even if the economy has held up so far,” It’s precisely at times like these that investors need to be on guard against the next certainty. First SVB, then signature bank and now first republic bank, these are all the signs of yet another 2008 market crash 2.0
Sincerely it's best to seek an advisor right now, unless you're canny yourself. As a business owner in both the service industry and eBay reseller of all product categories, I can tell you we’re in a deep recession and everyone is running out of money.
Very true, people downplay advisors role, until burnt by their mistakes. I remember just after my layoff early 2020 amidst covid outbreak, I needed to stay afloat, hence researched for license advisors. Thankfully, I came across someone of practical knowledge, and decades of experience, my stagnant reserve of $325K has yielded nearly $1m after subsequent investments so far.
I encountered Julie Anne Hoover through my wife, and I emailed her. She is guiding me. Since then, she has given me chances to buy and sell the stocks in which I'm interested in. You can hunt her up online if you require care supervision.
What an excellent video! As someone based in Bengaluru, India, I'm seeing my fellow professionals, especially those working at tech startups, sweat their body weight out everyday because of SVB's collapse. We have put the vilest, most craven parasites in charge of our banking system. The most important skill these people have is to siphon off other people's money in some pretext or the other. I had graduated in 2008, so I saw the full impact of the crash on the job market. Here's hoping all of us emerge from this crisis with our lives intact. Keep up the good work, folks.
Anyone with any brains always knew "the vilest, most craven parasites" were always in charge of banks. Banks don't DO anything. They attract the worst people.
@@pratpulsar I've been in the corporate sector for 15 years now. I've never, ever attended such a meeting. In most companies the core functionaries have too much work to do to have time to discuss pronouns. Allowing people to exist as they want to is not a terrible thing, really. Also, blaming everything on wokeness is just lazy. This is a result of banking deregulations: let's call it what it is.
Used to work in Treasury liquidity portfolio for one of the big banks. Other than rotating the duration of their portfolio they could've hedged them. One way are asset swaps. You could do a fixed to float interest rate swap for those long dated bonds. The biggest issue is that they have to be in tune with the rates market and should've planned to do all these way ahead of rate hikes. Powell even mentioned how many rate hikes he would do in 2022-2023 and even mentioned by how much. This is just pure incompetence
I'm a bit of a newbie when it comes to finance, just now studying CFA level 1, I come from engineering so no background in finance. Wouldn't hedging the portfolio create a loss elsewhere in the economy? Simply put, doesn't a hedge mean that another sector or entity have to incur a loss for the bank to make the profit necessary to save themselves? Wouldn't the net macroeconomic consequence still be the same? (i'm using chemical engineering concepts here, the economy is a system right? so any gain in the system means a loss in another part of the system? money, in the short term, just like cash cannot be created or destroyed)
@@ismaol1 im not an economist or finance guy(engineer here), but i did discuss this with my financial friends. I also thought that economy is one big giant zero sum game, but apperently that was wrong. The interest rate that you gain by deposit in bank, is the simplest example that money could be created out of thin air (within sets of rules of course) so maybe hedging the fund will give some benefit from cost and risk point of view, since hedge can help diversify the population by offering the bond to elsewhere. But please take my opinion with a grain of salt. At least the "economy not a zero sum game" part is true, i was debating for weeks with my friend. Lol
@Alison Bermingham just to clarify, it wasn't easy. It involves alot of strategic planning and you go up your chain all the way up to the top to get it approved, then you execute. As you execute there are tons of nuances. Ultimately what I'm saying is that these banks need credible, skilled and certified people to do these things, but just like most start ups, SVB though they knew what they were doing (overconfident) but they have no idea.
@Google User there are always winners and losers in the economy. Market makers have to "make the market" regardless. Either it fits their portfolio and exposure targets or if not then they lay that off to another bank or dealer, etc. Not sure how this relates to the topic though.
SVB’s real problem was the homogeneity of their depositors. A liquidity crunch in the startup scene meant that pretty much all of their cash was gone. Had they had a more diversified pool of depositors, this wouldn’t have stung as badly. And banks should not be bailed out. They should take responsibility for terrible decision-making.
What? No. SVB's real problem was that their management _fucking lobbied to remove regulations_ and the removal of those regulations let them to do the exact nonsense that led to their collapse. Their "real problem" is that the problem was obviously foreseen by regulators who created regulations for a reason, but SVB ignored the problem because greed and shortsightedness were too tempting.
Great video. I watch several youtube videos on how to trade in the market but haven't made any headstart because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands
The best strategy to use in trading is to trade with a professional who understands the market quite well, that way maximum profit is guaranteed, I'll highly recommend Katrina susan, she is my current trader and her strategies are working
I'm amazed you mentioned katrina susan, she is the best and her strategies works like magic. I've been making over 80% of my investment weekly since I started investing with her trading service
This is not the first time i am hearing of Katrina susan and her exploits, how she handles investments and generates good profits, she has really made a good name for her self, but i have no idea how to reach her
About the current bank situation, I'm really concerned. I am worried about a lot more if a bank the size of SVB may fail. I have a friend who manages a fast-growing startup and was severely impacted by the bank run. I have taken more than $840k out of my bank. Since the FDIC only provides coverage up to $250K, an implosion could have negative consequences. presently want to invest in the stock market. Does anyone have any ideas on how I might proceed?
I've never felt secure keeping a large sum of money in a bank, so I invest through my financial advisor, reap the benefits, and then spend the money. We fail to realize that banks are commercial enterprises that are driven by greed as well. The over-leveraging of assets by banks starting in 2020 was one of the factors that led to SVB's collapse.
We were traveling in the same direction, my wife and I. I withdrew my money over the past two years and invested with her wealth manager. I won't be able to match her earnings over time, but at least I make more. Haha.
I've shuffled through investment coaches and yes, they can be positively impactful to an individual's portfolio, but do your due diligence to find a coach with grit, one that withstood the 08' crash. For me, Vivian Carol Gioia Fisk turned out to be better and smarter than all the advisors I ever worked with till date, I’ve never met anyone with as much conviction.
Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks.
Coldfusion is really my number one RUclips channel. I can't believe how fast you react with such an excellent researched video on the current situation 👍
Increasing interest rates are going to continue to increase bank failures because it puts their commercial paper and treasuries underwater. They need to freeze interest rates to prevent a deep recession in the economy. At the same time the White house needs to help industry to increase gas and oil output to reduce fuel prices. The war on oil only serves to increase energy prices which trickles out to the rest of the economy as inflation. Lowering interest rates, tightening the money supply, reducing government spending and increasing the cheap supply of fuel will result in reduced inflation and a booming economy. Presto, no inflation and no recession. Of course there are a lot of other agendas out there that will never let all of that happen, so hello recession and sticky inflation.
A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time.
The key to big returns is not big moving stocks. It's managing risk in relationship to reward. Having the correct size on and turning your edge as many times as necessary to reach your goal. That holds true from long term investing to day trading.
That's grand! I believe the high-value gains are backed by years of study/experience in knowing what makes what tick. the portfolio-advisor that guides you is who though?
The decision on when to pick an Adviser is a very personal one. I take guidance from ‘Carol Vivian Constable‘ to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
I was waiting eagerly for you to cover this topic and its truly remarkable how quickly you've managed to gather the data and create such a detailed video on this issue. Truly remarkable work. Keep it up Dagogo
Thank you for this comprehensive report. This is very relevant, updated, and a detailed explanation of today's hot financial news. I need this for my class material. Great work!
Plain INCOMPETENCE - starting with the top guy lobbying govt, then govt (all colours & levels) weakening the act which would have gone some way to stopping this (might need to follow the money for all these supporters?), bank mismanagement (including the lack of a Risk Mgr for so long), the FED not even sniffing or looking in the direction of the bank and then with the auditors putting the icing on the cake. Well done all you tools! Dagogo, fantastic video once again - you rock!
Never have I heard the word ‘yeet’ used in a business context, much less for a board of directors 😂 but jokes aside, thank you, that was an excellent explanation and analysis of the situation. I get the feeling this is the start of some trouble rather than the pinnacle, but let’s see what the Fed does with interest rates.
Legitimately laughed out loud from the sheer unexpectedness of the line "promptly yeeted from the board" in the middle of an otherwise serious analytical video.
I worked as a developer at a big german investment bank. My field was "Interest Rate Risk in the Banking Book", which meant: Simulations of high interest rate fluctuations of our financial products. BUT the software was only covering longer timespans of at least one month, mostly 6M/12M periods, simulating up to five years in the future. So if there's a high risk spanning over just a few days - OUCH. Fun fact: The simulator was blazing fast, it could simulate millions of products in just a few seconds, and yes I'm proud of it :D
What I fear more than anything is how the larger banks continue to swallow up all the smaller banks and become bigger than ever. And the govt continuing to rollback regulations on their chicanery leading to another real financial crisis that could be bigger than ever.
One add on to this excellent rundown. Many startups in Silicon Valley were forced by their investors to open an account at SVB as a part of a wider investor deal. You really have to wonder why that is.
I was listening to the news a few days ago about Silicon Valley Bank and I was tinking: I'll wait for a more detailed video by ColdFusion. And... here we are
The bank couldn’t just offload the long term bonds like that. They were on the books as “held to maturity”. If they’d moved them to “available for sale” they would have taken a massive write-down on the value of the bonds because they would have suddenly needed to mark the entire portfolio (not just the assets they were selling) to market. Their plan was to wait until the bonds matured (I saw a rate of about $6B per quarter maturation) and roll those funds mostly into available for sale bonds and cash while doing a modest capital raise to maintain liquidity, which all things considered was a reasonable solution to the problem. A few VCs got spooked by the capital raise and told their companies to withdraw funds though, and the massive concentration of SVBs customer base in startups meant that a giant proportion of their client base reacted to that signal.
Yes, but this is a rational analyses that doesn't really put the blame on any single person or entity, and that is not fun and doesn't rile up anyone's spirit, therefor, no one will listen to you.
About the holding to maturity of the LT bonds: did these bonds pay SVB $6B per quarter? And when on the books as “held to maturity”, can the company record those bonds as their value at maturity? So moving them to ‘available for sale’ would mean having to record them at their current, diminished value? Just checking if I understood your comment correctly.
@@Bung-o-Boi It’s not that they were paying them 6 billion a quarter but that about that value was actually maturing and able to be redeemed every quarter, at which point they get moved to cash on the balance sheet that can be deployed however the bank wants, and they were primarily moving that cash into “available for sale” assets. Yes if the bank records the assets at purchase time as “held to maturity” they are recorded at their redemption value, rather than current market value, since that is what they will ultimately be worth for the bank as assets. And that’s also correct that moving them to “available for sale” means they then need to be “marked to market” and so recorded at whatever the current liquidation price is. The twist here is that moving any portion of them to afs means the entire portfolio gets converted. Meaning that if they decided to take, for instance, the set that would mature this year and make them available for sale now since they can be sold for very nearly face value they would also have to then mark down the bonds not maturing for 10 years, and so trading at a significant discount to their redemption value(iirc something like 35-40%) even if they had no actual intention to sell those bonds. This is what they eventually did, but because of how fast rates increased there wasn’t really much of an opportunity for them to make this change in a way that didn’t cause them solvency concerns, and the window where they would have needed to seems far from obvious.
But most of their customers are companies raising funds by credit, surely the management knew the risks of cash liquidity with higher interest rates. The management could already begin the old bond sale off with the interest rate going up already in the beginning of the year
The financial system has been artificially pumped for over a decade to ensure big pockets were lined; and now those same hands will make a fortune in the largest transfer of wealth in human history by shorting it on the way down. Inflation does have a roll, but that's to keep everyone panicked, and focused on their bills and expenses, rather than focus on the capital crimes of politicians and corporations,I'm still at a crossroads deciding if to liquidate my $338k stock portfolio, what’s the best way to take advantage of this bear market??
Find stocks with yields that exceed the market and stocks that, at the very least, follow the long-term market trend. However, you should get guidance from a financial advisor if you want to create a successful long-term plan...
I agree, I've been in constant touch with an Investment advisor for approximately 17 months. These days, it's really easy to buy into trending stocks, but the task is determining when to sell or hold. That's where my advisor comes in, to help me with entry and exit points , I've accrued over $337k from an initially stagnant reserve of $148K all within 18 months.
@@HarrietBemish I need a guide so i can salvage my port-folio due to the massive dips and come up with better strategies. How can one reach this advisor??
@@DavidRiggs-dc7jk Having an advisor is essential for portfolio diversification. My advisor is CHRISTINE JANE MCLEAN who is easily searchable and has extensive knowledge of the financial markets...
Honestly i'm feeling bad for Dagogo, seems that everyday more and more chaos just keep piling up for him to having to make a video for, he finishes one and bam, another mess lmao I'm cheering for you brother
@@denversupermarket7484 it’s not though. These tech startups don’t make money, if money is being lost it has to come from somewhere. This is another shell game to redistribute money from the masses to the few.
Completely agree. As they can't make enough revenue they have to continue to borrow money/find investors and as dagogo said, they can't because of the higher interest rates. Therefore they have to run the banks to keep afloat. This would never be an issue if they were self sustaining businesses.
Brother Dagogo, you made a video on Adani based on hindenburg. But they didn't fire even a single employee and are back on track. Please ask Hindenburg on making documentaries on these kinda banks
Lobbying to disolve the laws that would've prevented this crash. I get so many flashbacks to 2008 from that and the laws that were loosened before that. Wasn't there even one from the UK during Thatchers days back then whose effects were also tracked to 2008? Karma is quite understatement to describe such events.
The law wouldn’t have prevented the bank failure. That’s a dumb partisans line that Polifact already debunked. There were sufficient regulations to stop this, but no one was going to stop them from buying government treasury bonds; not now and not in 2018. The only people claiming otherwise are hardcore partisans who want to excuse the rampant inflation that caused the failure.
They don't care if it all collapses. They want to rake in millions in profits whilst the deregulation works in their favour, then leave everyone in the dust when it collapses - but it doesn't matter for them because they have already cashed in by that point. It's corruption and the only solution is the noose.
yep, bankers wanted less regs, they always do. sadly too many politicians are keen to listen to their crap about self regulation & market pressures being all they need to run smoothly. thatcher & her gang were happy to provide them with what they wanted to replace the industrial sectors they were busy destroying (in fairness many sectors were in decline & were 'euthanised', but replacing them with something sustainable that leads to a lot of jobs might've been wiser, imo) with a new bank-led uk economy... that went... predictably.
Jefferson never said this. Earliest known appearance in print: 1933. Quotation: "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.... I believe that banking institutions are more dangerous to our liberties than standing armies.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." Variations: "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered."
Imagine risk management trying to take a position in a low risk area but not diversifying the portfolio accross other areas. Then failing because of that. The mind bogggles. Their actions made everyone that mattered get scared and cause the run. This is a reputational risk. Part of risk management is a sure and careful transitioning between positions in a changing enviorment. Not having someone at the helm of risk management will be a major part of this. Falling asleep behind the wheel.
With all this scary news making the headlines, is this really a good time to buy stocks? I know everyone says the market is ripe enough for buying but will stocks tank further this year? How long until a full stock recovery?
It all depends on how long you're willing to hold for, stocks might likely tank further, but making serious gains in this downtrend wouldn't be a problem if you're a pro
@Finest Bear Hug we’re only just an information away from amassing wealth, I know a lot of folks that made fortunes from the Dotcom crash as well as the 08’ crash and I’ve been looking into similar opportunities in this present market, could this coach that guides yo help?
@Finest Bear Hug I'm literally holding onto straws right now, so your tip couldn't have come at a better moment! I plan to call her after doing a quick internet search for her.
@Finest Bear Hug Maria Juliana Ramirez appears to be a true authority in her profession. I looked her up online and found her website, which I browsed and went through to learn more about her credentials, academic background, and career. She owes me a fiduciary duty to act in my best interests. I set up an appointment to use her services.
How do you always come up with the most in-depth analysis of the details so fast, and mostly on your own. Love your accent too, shame we are losing the traditional Ausi inner city sound. Thanks as always.
Most clear and concise information to date. I'm a layman and found this very informative. Really curious as to how the interest hikes affected all of this and why they had to do so many hikes to begin with.
Interest rate hikes are used to slow down the economy and control inflation. How it works: The price of a product is determined by it's demand and supply. One way of lowering the price of anything (or control inflation) is to lower it's demand. Now, when the Fed increases the interest rate, it means that banks now have to borrow money from the Fed at higher interest rates. To maintain their profit, banks will now have to increase the interest rate at which they lend to people/businesses. This means that the EMIs of common people will increase, hence lowering their savings. To adjust for that, a common man will cut down on luxuries like watching movies, going out to eat, vacations, etc. This directly or indirectly causes the demand of various products to go down, thus lowering their price and controlling inflation
@@gaurangmohta168 is mostly correct. Except banks don’t borrow money from the federal reserve and then loan it out at a higher interest rate. Banks borrow from the federal reserve to meet their reserve require or address a temporary funding problem. And they get it at a discount below the fed rate. They use the money that you, I and, others have deposited with them to make loans. Or they can park at it the fed and receive interest on it. Loans come with more risk than parking at the fed. This is why it makes sense for banks to make loans at or near the fed interest rate.
With some recent experience in Liquidity Risk Management I think a broader application and embracement of regulatory LCR and NSFR ratios would have helped to signal a problematic liquidity position. These concepts aim to estimate how liquid a bank can be in stressful periods of time from two different perspectives. Of course nothing can save off a 42bn bank run if signaling are done incorrectly, I think stressing liquidity estimates can help see the cracks in the asset portfolio and imply to competent management to seek additional funding. Unfortunately in the US, to my knowledge thanks to Bank lobbying banks with less than roughly 250bn in deposits are not required to follow these guidelines. Great video by the way really good detail on the process of changing bond yields driving prices down leading to losses!
I love how every level of management failed and they still felt like they deserved a bonus.
a publicly traded company is supposed to exist to return value to the shareholders. they failed in their duty
Bonus payments are just one problem among many; all are related to greed. Period.
@@vanesslifeygo Yes, but just try and get that money back.
As far as "those" people are concerned, if you don't get the guillotine when you fucked up, you did a good job, and obviously deserve a bonus...
Just like our current establishment lol
When our banking system collapsed here in Iceland back in 2008, we threw those responsible in jail. Rich bankers shouldn't get bailed out while ordinary people lose their homes and life savings.
Right, but America keeps beating their chest claiming they're the best country in the world. It's sad over here
@@deSeriosa Where do you hear that?!...in the media?!...pfff what a 🤡
@@stevepierre182 ask the average American
It's rare to see what Iceland did, because Iceland seems to think citizens own the country.
@@rustomkanishka Weird, right? 😀
I'm a risk manager. In every organization i've consulted or worked with, risk management is treated as a check list. NO ONE in management cares about risk management. It's considered a exclusively fiduciary obligation. When you present existential risks and demand contingency plans, typically management tells you there's management reserve or other management funds to address the issue. I'm not privy to what happened at SVB but I'm confident that Moral Hazard allowed for risky decisions to be made and ignoring contingency and mitigative actions. In other words, they knew that the FDIC and its funds would rescue them.
I wonder what the ratio of risk management employees was to social justice and diversity employees?
Only they didn't have a risk manager for almost a year...
@@lanaj1107
Infinity because you are trying to divide by zero
We have morons running things, at every level, in every industry. Profit over Logic is what must be fixed if this species is to ever move on...
Makes me laugh when I hear misleading abstract BS like "fiduciary obligation" used as if it was a binding contract. Its what somebody thought up to get people to believe that a bank/broker "risking" their reputation is equal to people risking their hard earned money.
The prolonged financial boom has primarily benefited the wealthy elite. Now, as the market corrects, they're poised to profit again through strategic short-selling. Meanwhile, inflation distracts the masses from systemic corruption. I'm torn about liquidating my $338,000 stock portfolio. What's the smartest strategy to capitalize on this bear market and protect my assets amid the impending wealth transfer?
I agree, I've been in constant touch with an Investment advisor for approximately 17 months. These days, it's really easy to buy into trending stocks, but the task is determining when to sell or hold. That's where my advisor comes in, to help me with entry and exit points , I've accrued over $337k from an initially stagnant reserve of $148K all within 18 months...
Our strategic partnership with an asset manager yielded remarkable results: mortgage-free in 24 months. Now, with over $3 million in net worth, my wife and I enjoy retirement, debt-free and financially secure - a testament to the power of informed investing.
That is so amazing, I’m trying to get onto the ladder at 40. I wish at 55 I will be testifying to similar success. How can I reach this manager of yours? because I'm seeking for a more effective approach on my savings
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with “Sonya Lee Mitchell” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
Thanks for sharing, i did a quick web search and found her, she has a good profile and i hope to get a response soon
You damn well know that senior management at SVB knew that they were in trouble beforehand when they cashed out. Every one of those cash outs should be clawed back along with the employee bonuses.
I agree 100%! They damn well knew and they need to be clawed back! This was a freaking bank, and we are supposed to believe they didn't intimately know interest rate risk!? It's one of the most important things to know when investing in bonds, the only way they couldn't know is if they were criminally negligent!
If they ain’t locked up yet, they won’t be. Has the msm blamed russia yet?
This is modern American capitalism in a nutshell. Lobby the government so that gains are privatized and losses are socialized. There have become no consequences for failure for the rich.
@@bobbygetsbanned6049 🤷🏼♀
@@griffin8062 The funny thing is, it keeps happening. This is nothing new, but we just keep putting up with it. I do feel like the elastic is at the end of the stretch limits however, and I can see something big coming.
Whenever I see cold fusion video, I get feeling that rich people are stupid at the same time I am poor.
You're not wrong
somehow you are right, was your message a joke?
Poor people are more stupid. Rich are just smarter than poor and have desire to get rich. But yeah they're human too.
Some people are rich and dumb. You are poor and dumb.
Not really. No one knew exactly how the fed would balance the economy and inflation.
I work in the tech sector. You wouldn’t believe the amount of cool tech companies that live for years with negative cash flows, while overpaying their employees and management. It’s going to be tough in the upcoming years, but this industry needs to learn that companies can’t survive on the promise of future returns alone.
Thank you for your comment. It's the only sector where promise and hope are more important than actual returns.
The sector needs a louder wake up call. Obviously the saga of Elizabeth Holmes wasn't loud enough
@@rohansully584 Elizabeth Holmes, Adam Neumann, that guy who founded Uber... They're all grifters. Uber still has never posted a profit. All of it is founded on cheap VC capital.
Well said
Well stated
"Greg was promptly yeeted from the board"
Spoken in the calm, professional manner that Dagogo is known for made me laugh out loud 😂
Yeah, I noticed that too. xD
I'm old, I had to look up that word...hilarious!
Brother said the word 'yeet' in Times New Roman.
I thought I was the only one who caught that hahaha
I used to work as a higher up in Deutsche Bank. One of the problems with SVB is that most of their clients are classified as high risk. In the normal banking world, most high risk businesses are offset by a large pool of low risk businesses such as doctor's offices, markets, cafes, etc. Often times the dollar amount of low risk to high risk is $10 to $1 and high risk businesses are charged with a premium in order to operate. SVB skipped over this and ran mostly high risk businesses. Their answer to combat the high risk was "more funding". To be honest, it's an amazement they've been able to stay afloat for so long given their businesses practices. The best thing they could have done is not take shortcuts and just do banking the way it should be done. The entire structure of this bank is backwards, like an upside down pyramid.
high risk high reward (in the short term) seems a more profitable practice (than doing things competently :s) when none of the liability wil be held by those making the decisions?
i expect almost everyone responsible for this walks away with bank balance & career largely intact... perhaps that's overly jaded of me but it seems that if a poor man steals a loaf of bread he gets jailtime, if the rich dump an entire economic sector they usually float off under golden parachutes.
Very interesting. Thank you for sharing!
@@sjs9698 It's especially pertinent given the current student loan debate. Bankers who continue to break the rules and will take all the risks they're allowed to take continue to get bailed out, but you can't even bail out the normal people once?? Bad look, but of course much of the country doesn't care about that.....
They literally couldn't pay because they had too much of one of the safest assets possible, treasuries. Unfortunately that asset takes a long time to mature and the bank run made it impossible to cash out. It was a liquidity problem I don't even know what point you are trying to make, this has nothing to do with their clients.
@@BauldyBoys You may like to watch the video again, while it is true they did screw up in asset management, it was due to the rising interest rates that the tech companies had to start withdrawing due to funds being hard to obtain, so when the poster referred to high risk compared to low risk, doctor's offices, cafes, markets are not constanty looking for investor funding. They simply exist as they are and likely would need to tap into cash reserves much less than start up tech companies.
With their entire clientele being high risk start ups, when investors are low, they start withdrawing like crazy to fund their businesses, leading to a liquidity problem, OP was right, it makes perfect sense. If they had a good pool of low risk investors, they could have simply waited for their bonds to mature and it wouldn't cost them anything.
To also quote the video, they had "short term deposits"
The bank crisis isn't over yet, and experienced individuals know credit crises don't end quickly. Some find it amusing that some think it's resolved, but in reality, we're headed for a major economic downturn due to this credit contraction.
After the '08 financial crisis, I've learned not to trust corporations. Since 2020, I've been investing with a financial advisor and have had no major losses, so I'm not going back to relying solely on banks.
Many overlook that banks are profit-driven businesses. I don't trust keeping a large sum in a bank, instead, I invest with guidance, enjoy the benefits, and save for retirement.
There's one big unsolved question though: the Federal Reserve can prevent a contraction by printing lots of money and causing lots of inflation instead.
Jesus this dude needs to hire people to remove these bots from the comments section.
If a regular employee makes a mistake and the company looses a 100k, he guest fired or thrown in jail. If an executive makes a "mistake" that makes millions of people collectively lose hundreds of billions, he gets to happily exit with a fat check. Yeah, justice is well leveled up in this country.
White collar crime is astonishingly well paid and consequence free.
Imo it needs to meet somewhere in the middle - less unreasonable punishments for working class, more material downside for the rich& powerful.
Unfortunately it is the same in every country
A very valid comment, but what I don’t understand is why the average American accepts this.
Yep, it's's always the little guy that gets the punishment
Can you imagine putting two major banks under and never go to prison?
Only in the USA!!
Nay the whole entire world nations would do the same thing and get away with it. The west just demonizes those Nations because they're not A "democracy"
Turns out that was fake news. The SVB the Lehman guy is affiliated with is not Silicon Valley Bank. Unfortunately the same acronym causing the viral rumor.
How did they even get a job!!!
@@lifewith9cats153 iirc a big part of lehman going down was a brit who worked in east asia ^^
our economy is heavily banking based :s
The current system is completely unsustainable. The only reason it continues 'as if' is lending and debt. Lending for healthcare, for homes, for education, and plain old credit cards. trouble is, when the bottom falls out, the lenders get bailed out and consolidated, and everyone else loses their shirt.
I can't feel it. Most people that get rich do so during a depression or recession. I've lived trough 2 of them. This is what happened. They took everyone's 401K's money. That's how they pay for it. People with 401K's are handcuffed to a sinking ship. Everyone else jumps ship.
My greatest worry is how do we recover from all these economic and global troubles? Especially with the political power tussle going on in the united states.
@@stephaniestella213There are several reasons I have been investing under the counsel of an Advisor which are someone who sets asset allocation that fits my tolerance and risk capacity, investment horizon, present and future goals. ‘'INGRID CECILIA RAAD'' has provided all that and I don’t want to go into ROI on a public space like RUclips..
@@kimyoung8414 There is this podcast i was listening to and it said something venturing within your tolerance and risk capacity, see you mention it again got to me. How can i reach this Financial Advisor you are working with?
@@bobbymainz1160 Just look her name up on a browser, she's quite popular so it shouldn't be a hassle finding her.
Housing crisis, health crisis, financial crisis, cost of living crisis, debt crisis, inflation crisis, Middle East crisis. How many crises can we endure? As I approach retirement with a solid financial cushion, I'm anxious about a potential banking crisis. Is private equity a good option to grow my money securely? Any guidance in this regard would be much valued.
I would advise the counsel of a seasoned financial pro. It may be expensive, but as the old saying goes "You get what you pay for." "Expert solutions require Expert providers" - my mantra.
Reason i decided to work closely with a brokerage adviser ever since the market got really tense and the pressure became too much. I should be retiring in 17 months, so I've had a brokerage adviser guide me through the chaos. It's been 9 months now, and I've made approximately 750K net from all of my holdings.
Impressive gains! how can I get your advisor please, if you don't mind me asking? I could really use a help as of now with my portfolio allocation.
Sure you can! Judith Lynn Staufer is the financial advisor I work with. Just search the name. You’ll find necessary details to work with to set up an appointment.
excellent share, Just looked up her name and spotted her consulting page ranked top. after reviewing her credentials i reached out to her.
Really, banks require more regulation. The entire idea of banking as "let's gamble" is terrifying. Because they discovered in 2008 that the government will always bail them out, there are no repercussions. These bank crisis are so worrisome. This whole financial crisis and the Great Recession posed the most significant macroeconomic challenges for the United States in a half-century, leaving behind high unemployment and below-target inflation and calling for highly accommodative monetary policies. And this is only the beginning!
Since 2020, the banks have been over-leveraging their assets, which was one of the reasons for SVB's implosion. I have never been okay with keeping much money in the bank. I simply focus on diversified investments through a financial advisor, collect my profits, which I either spend or repeat the process. Never been this comfortable with my finances.
I have learnt not to trust corporations, especially these banks. I was badly hit by the '08 financial crisis. Since 2019, I've just been focused on investing through a financial advisor and it has been paying off. No major loss has ever been recorded since 2019 i started. I'm closer to having a million now than i ever was with the banks. I'm never going back to banks full time.
I've been thinking of going that route been holding on to a bunch of stocks that keeps tanking and I don't know if to keep holding or just dump them, do think your Inv-coach could guide me with portfolio-restructuring as i wouldn’t mind a recommendation.
Actually, I've shuffled through a few advisors in the past, and "Colleen Janie Towe” remains the most resourceful thus far. Her strategy proves profitable, and sustainable both in a bull & bear market. Most likely, her credentials can be found on the net, so you can confirm yourself.
Thank you for this tip , I must say Colleen, appears to be quite knowledgeable. After coming across her webpage, I thoroughly went through her resume, and I must say, it was quite impressive. I reached out to her, and I have booked a session with her.
My biggest problem with this kind of failout (because that's what it is, regardless of what it's called or who's being bailed out) is that it fails to hold people accountable for their failures (the SVB execs may be held accountable another way, but the businesses that turned a blind eye to it all and put their money into it anyway won't be). That only encourages repeats of this same mistake. Without consequences, people in power won't learn.
Power means, being free of consequences to a degree
That's why everyone wants it
My biggest problem is how do these banks have all this money, yet our Govt. is 31 TRILLION dollars in debt - That tells me the wealthy class is not paying any taxes on their wealth because the lions share of the money in SVB was the wealthys money, their was very little average Joe money in that bank.
COMPANIES REDUCE REGULATORY OVERSIGHT BY BRIBES AND GENERAL CORRUPTION, THEREBY ENSURING THE EVENTUAL CRASH HAPPENS.
Like in East Palestine, where the crash was quite literal
@@jonathanbatturs6359 Doesn't government debt operates very differently compared to say business or personal liabilities? The government has a lot of power regarding debt (i.e. printing money, military projection, taxation, etc.).
@@doctawordsorry, but no! We have a tiny company and even we care about srvuring our liquidity. If you have to store a few hundred million somewhere, you better have a plan. This is stupid beyond imagination.
Cold Fusion does the best break down and is so soothing to listen to no matter how dire the situation is.
its true. some rogue state could detonate a dirty bomb in the middle of a large metro area triggering ww3, and id be here enjoying my asmr narrative of the whole collapse of civilization as we know it on youtube.
Agree
Perfectly sums up how I feel too.
As long as people like SVB management keep getting the golden parachutes instead of life in prison (or worse), there will be more stories like that.
No shit, it's like poverty, nobody's interested in helping the poor because they would loose the poor's votes, it's always more game to increase the number of poor people.
This is the story of the entire XXI century. Rich people privatizing profits and socializing losses.
Albert Einstein said that "Insanity Is Doing the Same Thing Over and Over Again and Expecting Different Results"
COMPANIES REDUCE REGULATORY OVERSIGHT BY BRIBES AND GENERAL CORRUPTION, THEREBY ENSURING THE EVENTUAL CRASH HAPPENS.
Like in East Palestine, where the crash was quite literal
@@SiriProject exactly this.
But why 21 in Roman numerals? 😆
That Chief Risk Officer made the call of the century by getting out of there before this all blew up. Sounds like he probably knew how risky things were but the rest of management didn’t care
wasn't he fired?
Exactly! That is the only reason for him or her to run away
when top management don't listen, better to get out.
I witnessed the CEO screaming at a bunch of toddlers outside of a school two days before the event happened
@@nuqwestr If he was, I wonder what for
I always go back to your 2008 recession video every few months, and it's crazy how similar some of these events are. They say history repeats itself, but its only been around 15 years.. the taste of that recession is still there for a lot of people.
some say it never really went away, and it's doomed to happen again. i just hope the golden parachutes get burned down this time
We never stopped the easy money. Too much liquidity pumped into the economy
We learned nothing from 2008 because nothing was fixed and nobody responsible for punished. Now we start to see the consequences.
Almost...as if ....this is, idk...a business model maybe? 😂
Mixed with the champagne taste of free money.
I love how pure your reporting is, hardly a bias to be found, and no twitter polls begging for likes before you cover a topic
@SnoopyDoo he did mention the potential for that to happen
@The Good Millionaire I'm gonna raise my hand. New kid on the way and we're already struggling. 😅
Meanwhile in some anti China, Russian channel : China will collapse in exactly 34 days (10th times in just 2023) 🤣🤣🤣🤣🤣🤣
@SnoopyDoo The majority of SVB clients are start up tech companies, not individual account holders. $250K is sufficient for most individuals, but no where near enough for million dollar companies. According to Time Magazine, over 85% of the money at SVB is not covered by FDIC.
@The Good Millionaire i really could use it to fix my teeth
I work in IT for the risk dept at a bank in the UK. We hedged the IR risk when we bought the bonds. The 1st year associate even worked out these rates werent going to stay low until duration. In addition, the regulators want to see this too. How SBV and its regulator missed this is shocking.
or intentional
Trump legislation deregulated this bank. They lobbied the GQP and got what they wanted. They did not have a risk analyst for 6 months last year.
They didn't have a risk director but like 5 DEI and ESG heads
Yeah, I agree. It's not like these interest rate hikes were secret. It was public knowledge they were going to be high and frequent.
@pegcity4eva diversity hires are the current impetus for the real downfall of the system. I can't wait.
Our economy struggling with uncertainties, housing issues, foreclosures, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth.
With the US dollar losing value to inflation and other currencies gaining traction, uncertainty looms. Yet, many still trust in the Dollar's perceived safety. Worried about my $420,000 retirement savings losing value, I seek alternative security for my money.
With my demanding job, I lack time for investment analysis. For seven years, a fiduciary has managed my portfolio, adapting to market conditions, enabling successful navigation and informed decisions. Consider a similar approach.
this is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Monica Shawn Marti is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
I looked up her name online and found her page. I emailed and made an appointment to talk with her. Thanks for the tip
Literally just told a friend "I can't wait for ColdFusion to cover the SVB story" and here it is. Excited to watch.
@Don't Read My Profile Picture shut your bot ass up
"A bunch of incompetence" is a brilliant title for the chapter that displays just how inept SVB management were. I believe this is rife in the industry.
Incompetence... I'm not so sure. As we've seen many times before there are no consequences for these failures, yet the money they "earn" whilst employed is a huge upside.
Pretty much every big organization is ran by incompetent people. This is what happens when you let people fail up for 40 years.
And it may be the most important bullet point of the presentation. This is not the beginning of a worldwide banking failure. This is a poorly run bank making their final fatal mistake and sinking their own ship. Repercussions affect other similar at-risk regional banks, but the shock wave won't topple the big banks. Unlike in 2008, the troublesome assets in question have value. They're government bonds, not bullshit CDOs.
Deregulation too
Same BS different day ?
ruclips.net/video/mySAoPgj-pg/видео.html
The FED got it wrong about “transitory inflation”, but they also started signaling for months that interest rates were going up, so SVB should have been able to adjust their positions before, but I guess not 😐
Every "Expert" since the invasion of Iraq in 2003 has a) been catastrophically wrong, and b) never faced any consequences for it.
@@HPSmugscraft Here's the problem. Too many dumb wanna-be rich people ENABLING corruption
no matter what.
@@HPSmugscraft exactly like how virtually no one saw ftx explosion. All we see are talking heads who are getting paid by unknown people.
What really gets me here is that it's not like they were even invested in anything bad. 30 year treasuries aren't NINJA MBS... They just bought too many at the wrong time and didn't have a plan to hedge. Like Bruh....
Read the WSJ much? :)
Thanks!
Amazing coverage on the topic. I’m loving the speed in which you have been putting these high quality videos out with recent events happening. 10/10
I am not a risk manager, however I find it incredulous that the management even without a risk officer would matching short cash needs (honoring deposits) against long term bonds. What it tells me is there were being greedy trying to drive as much revenue as possible and taking on the highest risk by this structure. I honestly see no way the management could not be seen as negligent and the matter not being litigous to those effected.
You see, they decided to hire someone from Lehman's Brothers. This was their first mistake. Hire the most penny pinching manager you can find as opposed to hiring a riskphilliac individual.
In certain countries, citizens may pay lifetime for unwanted service such as getting, rob, rape, and genocide. You may have to do some studies to find ways to avoid such services if you already live in those countries.
@@AnhNguyen-hn9vj what are you on about?
I can't drive without insurance because I may not have the capital to right my wrong. Why is any bank allowed to still be open?
mismatch, and managing it, is how financial companies make their profits. The totally failed in their evaluation of potential shock withdrawal. Their biggest failure is lack of risk diversification. Since most of their liability was in One sector the possibility of shock was much higher
To add color since I work in the industry:
Most of the recognizable billion $ companies (e.g. you mentioned Roblox) have their money spread out across multiple banks to avoid being dragged down by 1 bank failing. This affects mostly smaller tech companies/startups since they don't have large dedicated finance teams to manage these risks.
Only rich people or funds would ever invest in those small startups (outsiders like us would only be able to buy public stock like Google), which is why this bailout is mainly helping rich people stay rich. Yes some of it is the impacted employees but they are a small % of the money.
It is helping the rich people stay rich but at the same time if the government does not step in and make it seem like everything is ok and the system as a whole is strong enough to weather the storm then it could trigger everyone running to the banks. In this situation you have to put on a strong face even if things are crappy or you are gonna freak out a whole lot of people and you will have more runs on more banks making it a cascading problem.
@@joshualieberman2265 Agreed this protects everyday people, but protect rich people more. So in relative terms, poor people become poorer.
Is this really a bailout? The FDIC is funded by premiums paid by banks and savings associations. And the rest of the money is slowly paid back through liquidation of assets, no? I'm genuinely confused about the bailouts thing. Or are shareholders somehow getting refunded?
@@adventofnull it’s not a bailout really at all, it’s just deposits getting returned. There’s no taxpayer money being used for this. I understand OP’s point here, that it “helps the rich” in the sense that anything that maintains the status quo does so, but I’m also of the opinion that bank failure is not the way we ought to restore wage balance.
As a side note .. in the current “global economy “ if you make 20k a year or more ,you are in the wealthiest 10% of the world’s population.. so who are these rich you speak of ? … almost sounded smart tho… gg.
You know when ColdFusion uploads videos on modern issues, it's gonna be good🙏🏽
Thank you for putting this together Cold Fusion team. This is exactly what I was looking for on this subject. An explanation to go beyond the BS of half baked articles but simplify below esoteric insider explanations I can't understand. Well done.
Coldfusion saying ‘yeeted’ was the most unexpected and hilarious part of any video he has ever made.
Yo. I was scanning the comments like a detective to find somebody who caught this.
I had to rewind cos I thought I dreamt it. He made it sound so normal haha
I was about to say this! And he said it so nonchalantly it made it even more funny! 🤣🤣🤣🤣🤣🤣
I never knew how to use it in a sentence before I watched this vid 😅
SVB was very famous amongst Indian tech startups, too. Even I approached SVB for my startup as it was the 1st choice for Indian tech startups, but they required a certain level of initial deposit which (luckily for us) drove us away from them and we started our banking relationship with another bank.
Dodged a bullet there. Which bank did you guys end up using?
bhai india me hi ho kya abhi?
@@The-Opium-Den probably a related bank that will also fall like the rest of the dominos
@@Matanumi this! There's contagion spreading
Its also popular amongst British royals go figure... 😒
I feel like crises have become a part of our everyday life now.
- Wake up, make breakfast, send kids to school
- Check what crisis we have today
- Do the laundry...
exactly, I literally say to myself " what fresh hell are we subjected to today"😂😂😂😂
@@msmpt4322 I don’t think that’s the point she was making.
She was, if my inference is accurate, inferring that the “crises” are basically only such if we allow ourselves to engage with them through social media. But for most/many of us, our day to day hasn’t been effected in any noticeable way.
I could be wrong tho
@@JudasMaccabeus1 I think you're right, didn't look at it that way
of course..
You are so right
I love how no one is prepared to take the people responsible to task and then complain that no one is taking the people responsible to task. This always happens. That's why people do it because they believe they can get away with it.
I'm prepared but the government threw me in jail for murder!
8, Maharashtrato
Dodd Frank is not enforced.
Thank you TRUMP and republican deregulation.
this ceos are robbing people
Great video, man. Really helped to understand wtf has happened. However, I don't even register news like this anymore though. The government will always have the backs of the people lining their pockets. Meanwhile, we have to beg and plead for scraps as average people. So nothing changes and nothing will change and we will always lose. To end on a positive note, your videos are so interesting and insightful, so cheers man!
you would register this type of information if you were retired and living off your 401K.
@@sifridbassoon Retirement? I'm betting a majority of US citizens are going to be working into their 70s, with wages not keeping up with inflation and rent costs. Nobody is able to save money. Companies keep hiring people as part-time to avoid offering benefits. Add that to the fact that politicians are continuously trying to attack medicaid, medicare, social security, and push back the retirement age - retirement is a legend of the past at this point.
@@sifridbassoon frankly....nobody born in the last few decades is likely to retire at all in the first place, 401K or not (unless their rich).
their already raising the age limit and I doubt this will be the last time within the next half century (look at our demographics around the world; the young are outnumbered and its only going to get worse with fertility rates below 2).
@@TomJerry12933 yeah, anyone over the age of 40 shouldn't be allowed to hold any public office. The dinosaurs are just too out of touch.
@@sifridbassoon Tf is a 401K lmao? My gen's retirement plans is offing themselves so spare me.
you should know when events like this occur in the market or business, the first thing I look for is a Cold Fusuin breakdown. thank you for all the great work.
The banking situation is a reminder that Fed hikes are having an effect, even if the economy has held up so far,” It’s precisely at times like these that investors need to be on guard against the next certainty. First SVB, then signature bank and now first republic bank, these are all the signs of yet another 2008 market crash 2.0
My main concern now is how can we generate more revenue during quantitative times? I can't afford to see my savings crumble to dust.
Sincerely it's best to seek an advisor right now, unless you're canny yourself. As a business owner in both the service industry and eBay reseller of all product categories, I can tell you we’re in a deep recession and everyone is running out of money.
Very true, people downplay advisors role, until burnt by their mistakes. I remember just after my layoff early 2020 amidst covid outbreak, I needed to stay afloat, hence researched for license advisors. Thankfully, I came across someone of practical knowledge, and decades of experience, my stagnant reserve of $325K has yielded nearly $1m after subsequent investments so far.
@@jeffery_Automotive I appreciate your nice words and would like to get in touch with your account management consultant.
I encountered Julie Anne Hoover through my wife, and I emailed her. She is guiding me. Since then, she has given me chances to buy and sell the stocks in which I'm interested in. You can hunt her up online if you require care supervision.
What an excellent video! As someone based in Bengaluru, India, I'm seeing my fellow professionals, especially those working at tech startups, sweat their body weight out everyday because of SVB's collapse. We have put the vilest, most craven parasites in charge of our banking system. The most important skill these people have is to siphon off other people's money in some pretext or the other. I had graduated in 2008, so I saw the full impact of the crash on the job market. Here's hoping all of us emerge from this crisis with our lives intact. Keep up the good work, folks.
Anyone with any brains always knew "the vilest, most craven parasites" were always in charge of banks. Banks don't DO anything. They attract the worst people.
@@aluisious Agreed.
buy gold and bitcoin
if people gonna spend meeting discussing pronouns. this is bound to happen.
@@pratpulsar I've been in the corporate sector for 15 years now. I've never, ever attended such a meeting. In most companies the core functionaries have too much work to do to have time to discuss pronouns. Allowing people to exist as they want to is not a terrible thing, really. Also, blaming everything on wokeness is just lazy. This is a result of banking deregulations: let's call it what it is.
Used to work in Treasury liquidity portfolio for one of the big banks. Other than rotating the duration of their portfolio they could've hedged them. One way are asset swaps. You could do a fixed to float interest rate swap for those long dated bonds. The biggest issue is that they have to be in tune with the rates market and should've planned to do all these way ahead of rate hikes. Powell even mentioned how many rate hikes he would do in 2022-2023 and even mentioned by how much. This is just pure incompetence
I'm a bit of a newbie when it comes to finance, just now studying CFA level 1, I come from engineering so no background in finance.
Wouldn't hedging the portfolio create a loss elsewhere in the economy?
Simply put, doesn't a hedge mean that another sector or entity have to incur a loss for the bank to make the profit necessary to save themselves?
Wouldn't the net macroeconomic consequence still be the same?
(i'm using chemical engineering concepts here, the economy is a system right? so any gain in the system means a loss in another part of the system? money, in the short term, just like cash cannot be created or destroyed)
@@ismaol1 im not an economist or finance guy(engineer here), but i did discuss this with my financial friends. I also thought that economy is one big giant zero sum game, but apperently that was wrong. The interest rate that you gain by deposit in bank, is the simplest example that money could be created out of thin air (within sets of rules of course) so maybe hedging the fund will give some benefit from cost and risk point of view, since hedge can help diversify the population by offering the bond to elsewhere. But please take my opinion with a grain of salt. At least the "economy not a zero sum game" part is true, i was debating for weeks with my friend. Lol
yes agreed, simple when you actually do your job properly in risk, but obviously nobody there was
@Alison Bermingham just to clarify, it wasn't easy. It involves alot of strategic planning and you go up your chain all the way up to the top to get it approved, then you execute. As you execute there are tons of nuances. Ultimately what I'm saying is that these banks need credible, skilled and certified people to do these things, but just like most start ups, SVB though they knew what they were doing (overconfident) but they have no idea.
@Google User there are always winners and losers in the economy. Market makers have to "make the market" regardless. Either it fits their portfolio and exposure targets or if not then they lay that off to another bank or dealer, etc. Not sure how this relates to the topic though.
SVB’s real problem was the homogeneity of their depositors. A liquidity crunch in the startup scene meant that pretty much all of their cash was gone. Had they had a more diversified pool of depositors, this wouldn’t have stung as badly. And banks should not be bailed out. They should take responsibility for terrible decision-making.
True
Yeah the power of diversity.
The real problem with SVB is they had zero managerial skill at the upper level
Spot on.
What? No. SVB's real problem was that their management _fucking lobbied to remove regulations_ and the removal of those regulations let them to do the exact nonsense that led to their collapse.
Their "real problem" is that the problem was obviously foreseen by regulators who created regulations for a reason, but SVB ignored the problem because greed and shortsightedness were too tempting.
Great video. I watch several youtube videos on how to trade in the market but haven't made any headstart because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands
The best strategy to use in trading is to trade with a professional who understands the market quite well, that way maximum profit is guaranteed, I'll highly recommend Katrina susan, she is my current trader and her strategies are working
I'm amazed you mentioned katrina susan, she is the best and her strategies works like magic. I've been making over 80% of my investment weekly since I started investing with her trading service
This is not the first time i am hearing of Katrina susan and her exploits, how she handles investments and generates good profits, she has really made a good name for her self, but i have no idea how to reach her
You can reach her through TELE
GRAM
It is astounding how you manage to produce so high quality videos in this small time
By never seriously editing anything...saves time.
ColdFusion as always delivers the most comprehensive take. When I saw the news I was like let’s wait for the ColdFusion episode. Cheers mate!
4:26 "What happens when everyone wants to withdraw their money all at once?"
"Silicon valley bank was about to find out"
lmaoo, i laughed quite good.😂
About the current bank situation, I'm really concerned. I am worried about a lot more if a bank the size of SVB may fail. I have a friend who manages a fast-growing startup and was severely impacted by the bank run. I have taken more than $840k out of my bank. Since the FDIC only provides coverage up to $250K, an implosion could have negative consequences. presently want to invest in the stock market. Does anyone have any ideas on how I might proceed?
I've never felt secure keeping a large sum of money in a bank, so I invest through my financial advisor, reap the benefits, and then spend the money. We fail to realize that banks are commercial enterprises that are driven by greed as well. The over-leveraging of assets by banks starting in 2020 was one of the factors that led to SVB's collapse.
We were traveling in the same direction, my wife and I. I withdrew my money over the past two years and invested with her wealth manager. I won't be able to match her earnings over time, but at least I make more. Haha.
Would you mind telling me how to contact this specific coach using their service? You seem to have the solution, as opposed to the rest of us.
I've shuffled through investment coaches and yes, they can be positively impactful to an individual's portfolio, but do your due diligence to find a coach with grit, one that withstood the 08' crash. For me, Vivian Carol Gioia Fisk turned out to be better and smarter than all the advisors I ever worked with till date, I’ve never met anyone with as much conviction.
Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks.
Its crazy how heads dont literally roll when this happens. The people at the top just keeps going on with their lives while everyone else suffers
I imagine they’re big political donors
@@Meowface. I imagine this was what ww2 was about.
Whats nuts is that the senior exec at lehman brothers was given a c-suite role at SVB. They should have never been allowed near a bank again
There is absolutely zero accountability in this country and it's exactly why everything is falling apart.
That is a big one, along with all of SVB's board being diversity hires with little to no experience other than social justice.
1776 is accountibility
Sic semper tyrannis
Where is hindenberg research now🤣🤣🤣... Fraudberg idiots
Coldfusion is really my number one RUclips channel. I can't believe how fast you react with such an excellent researched video on the current situation 👍
Your videos, explanations and comments are excellent. It is just so sad that they tell stories of total incompetence, horror and greed.
“Greg was promptly yeeted from the board after the crash” 😂😂 that got me. I love your work man!!
It's incredible just how spot-on you were Dagogo - Fifteen Years Ago!
Thank you for your contributions, hard work and smooth tunes.
Dagogo, you’re my go to guy to explain all these confusing phenomenas thats happening around us.
Increasing interest rates are going to continue to increase bank failures because it puts their commercial paper and treasuries underwater. They need to freeze interest rates to prevent a deep recession in the economy. At the same time the White house needs to help industry to increase gas and oil output to reduce fuel prices. The war on oil only serves to increase energy prices which trickles out to the rest of the economy as inflation. Lowering interest rates, tightening the money supply, reducing government spending and increasing the cheap supply of fuel will result in reduced inflation and a booming economy. Presto, no inflation and no recession. Of course there are a lot of other agendas out there that will never let all of that happen, so hello recession and sticky inflation.
A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time.
The key to big returns is not big moving stocks. It's managing risk in relationship to reward. Having the correct size on and turning your edge as many times as necessary to reach your goal. That holds true from long term investing to day trading.
That's grand! I believe the high-value gains are backed by years of study/experience in knowing what makes what tick. the portfolio-advisor that guides you is who though?
The decision on when to pick an Adviser is a very personal one. I take guidance from ‘Carol Vivian Constable‘ to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
I was waiting eagerly for you to cover this topic and its truly remarkable how quickly you've managed to gather the data and create such a detailed video on this issue. Truly remarkable work.
Keep it up Dagogo
Been waiting on my favorite channels to break down this whole thing for me. Thank you Dagogo
“I propose lobbying against seatbelts in cars that drive under 120 miles per hour “
100 km/h ?
Nice. That got by me on the first read.
@@weltsiebenhundert “120 mph. If you don’t trust me, then listen to the independent experts that I hired.“
Thank you for this comprehensive report. This is very relevant, updated, and a detailed explanation of today's hot financial news. I need this for my class material. Great work!
The level of detail and clarity in you videos is always amazing. Keep them coming.
I literally have been waiting for your video. Been checking your channel since the news about SVB came out. Trust you not to disappoint 👏🏾.
i was the same, great format and conciseinformation with zero fluff, rare on youtube these days
What a time to be a Finance major. I was a rookie in 2008, and it was so interesting back then
This is like a Theranos or Wework kinda situation. I always love how detailed your videos are and very informative.
Hands down the best part of this video is when Dagogo so calmly states "Greg was promptly yeeted from the board".
Dagogo - you are the best.
Yes, bonus points for correct and precise use of 'yeet.' 🤣
ColdFusion you guys have been killing it with the uploads lately, looking forward to watching this!
Plain INCOMPETENCE - starting with the top guy lobbying govt, then govt (all colours & levels) weakening the act which would have gone some way to stopping this (might need to follow the money for all these supporters?), bank mismanagement (including the lack of a Risk Mgr for so long), the FED not even sniffing or looking in the direction of the bank and then with the auditors putting the icing on the cake. Well done all you tools! Dagogo, fantastic video once again - you rock!
Dagogo! Love your journalism! There is still hope the truth will prevail!
Never have I heard the word ‘yeet’ used in a business context, much less for a board of directors 😂 but jokes aside, thank you, that was an excellent explanation and analysis of the situation. I get the feeling this is the start of some trouble rather than the pinnacle, but let’s see what the Fed does with interest rates.
Legitimately laughed out loud from the sheer unexpectedness of the line "promptly yeeted from the board" in the middle of an otherwise serious analytical video.
I thought I misheard it until rewatching that bit a few times. Only Dagogo can make it sound so professional.
Such a great moment haha
That made me laugh 😂
I LOLed
All of those CEOs and shareholders who had "insider knowledge" and pulled out before the big hit should all be held accountable.
With how much greed, irresponsibility and mediocrity is there in the US financial system, it is a miracle it works at all.
I worked as a developer at a big german investment bank. My field was "Interest Rate Risk in the Banking Book", which meant: Simulations of high interest rate fluctuations of our financial products. BUT the software was only covering longer timespans of at least one month, mostly 6M/12M periods, simulating up to five years in the future. So if there's a high risk spanning over just a few days - OUCH. Fun fact: The simulator was blazing fast, it could simulate millions of products in just a few seconds, and yes I'm proud of it :D
You cannot swipe away from a ColdFusion video!!!! Always A1 production and information
What I fear more than anything is how the larger banks continue to swallow up all the smaller banks and become bigger than ever. And the govt continuing to rollback regulations on their chicanery leading to another real financial crisis that could be bigger than ever.
One add on to this excellent rundown.
Many startups in Silicon Valley were forced by their investors to open an account at SVB as a part of a wider investor deal. You really have to wonder why that is.
Collusion?
I was listening to the news a few days ago about Silicon Valley Bank and I was tinking: I'll wait for a more detailed video by ColdFusion. And... here we are
Great, easy to follow context and analyis. And equally informative comments. Thanks, Dagogo and CF family.
The bank couldn’t just offload the long term bonds like that. They were on the books as “held to maturity”. If they’d moved them to “available for sale” they would have taken a massive write-down on the value of the bonds because they would have suddenly needed to mark the entire portfolio (not just the assets they were selling) to market. Their plan was to wait until the bonds matured (I saw a rate of about $6B per quarter maturation) and roll those funds mostly into available for sale bonds and cash while doing a modest capital raise to maintain liquidity, which all things considered was a reasonable solution to the problem. A few VCs got spooked by the capital raise and told their companies to withdraw funds though, and the massive concentration of SVBs customer base in startups meant that a giant proportion of their client base reacted to that signal.
Thank you scared People made this issue bigger than it was and these are the same folks which were fighting for toilet paper 🗞️ during the pandemic
Yes, but this is a rational analyses that doesn't really put the blame on any single person or entity, and that is not fun and doesn't rile up anyone's spirit, therefor, no one will listen to you.
About the holding to maturity of the LT bonds: did these bonds pay SVB $6B per quarter? And when on the books as “held to maturity”, can the company record those bonds as their value at maturity? So moving them to ‘available for sale’ would mean having to record them at their current, diminished value? Just checking if I understood your comment correctly.
@@Bung-o-Boi
It’s not that they were paying them 6 billion a quarter but that about that value was actually maturing and able to be redeemed every quarter, at which point they get moved to cash on the balance sheet that can be deployed however the bank wants, and they were primarily moving that cash into “available for sale” assets.
Yes if the bank records the assets at purchase time as “held to maturity” they are recorded at their redemption value, rather than current market value, since that is what they will ultimately be worth for the bank as assets.
And that’s also correct that moving them to “available for sale” means they then need to be “marked to market” and so recorded at whatever the current liquidation price is. The twist here is that moving any portion of them to afs means the entire portfolio gets converted. Meaning that if they decided to take, for instance, the set that would mature this year and make them available for sale now since they can be sold for very nearly face value they would also have to then mark down the bonds not maturing for 10 years, and so trading at a significant discount to their redemption value(iirc something like 35-40%) even if they had no actual intention to sell those bonds. This is what they eventually did, but because of how fast rates increased there wasn’t really much of an opportunity for them to make this change in a way that didn’t cause them solvency concerns, and the window where they would have needed to seems far from obvious.
But most of their customers are companies raising funds by credit, surely the management knew the risks of cash liquidity with higher interest rates.
The management could already begin the old bond sale off with the interest rate going up already in the beginning of the year
The financial system has been artificially pumped for over a decade to ensure big pockets were lined; and now those same hands will make a fortune in the largest transfer of wealth in human history by shorting it on the way down. Inflation does have a roll, but that's to keep everyone panicked, and focused on their bills and expenses, rather than focus on the capital crimes of politicians and corporations,I'm still at a crossroads deciding if to liquidate my $338k stock portfolio, what’s the best way to take advantage of this bear market??
Find stocks with yields that exceed the market and stocks that, at the very least, follow the long-term market trend. However, you should get guidance from a financial advisor if you want to create a successful long-term plan...
I agree, I've been in constant touch with an Investment advisor for approximately 17 months. These days, it's really easy to buy into trending stocks, but the task is determining when to sell or hold. That's where my advisor comes in, to help me with entry and exit points , I've accrued over $337k from an initially stagnant reserve of $148K all within 18 months.
@@HarrietBemish I need a guide so i can salvage my port-folio due to the massive dips and come up with better strategies. How can one reach this advisor??
@@DavidRiggs-dc7jk Having an advisor is essential for portfolio diversification. My advisor is CHRISTINE JANE MCLEAN who is easily searchable and has extensive knowledge of the financial markets...
@@HarrietBemish Thank you for this amazing tip. I just looked the name up, wrote her and scheduled a call...
Honestly i'm feeling bad for Dagogo, seems that everyday more and more chaos just keep piling up for him to having to make a video for, he finishes one and bam, another mess lmao
I'm cheering for you brother
I’m pretty sure he hears a very loud “CHA CHING”
Don't forget these topics are hot and as such Dagogo makes good views & money for following the situation 👌
Let’s not forget Coldfusion( I guess his name is dagogo) makes the banger music in all his videos! 🎶 🎵😎
You have to remember, the companies that SVB was banking with were making no profit. Silicon Valley tech companies are mostly a house of cards.
This is completely unrelated to what happened
@@denversupermarket7484 it’s not though. These tech startups don’t make money, if money is being lost it has to come from somewhere. This is another shell game to redistribute money from the masses to the few.
Completely agree. As they can't make enough revenue they have to continue to borrow money/find investors and as dagogo said, they can't because of the higher interest rates. Therefore they have to run the banks to keep afloat. This would never be an issue if they were self sustaining businesses.
@@charliegerike-roberts7352 exactly.
Correct, they were over invested in one sector. Think of it, most other banks their size have 1000 branches. They had 16.
Thank you sooooo much for this comprehensive explanation of the situation!!! I was so confused. Now I have a better understanding 🎉✨🙏
Brother Dagogo, you made a video on Adani based on hindenburg. But they didn't fire even a single employee and are back on track. Please ask Hindenburg on making documentaries on these kinda banks
Can't say I'm surprised to hear that mismanagement and greed caused this...
The same thing that causes you to make mistakes as well.... you're just as human as anyone else....
@@AnneALiasthis isnt some small mistake it's a catastrophe and whats worse is that it get really messy
@@AnneALias bankers causing billions of dollars worth of losses and disrupting countless financial operations like "I'm only huuuumaan after aalllll"
@Anne A. Lias I fully agree. I mean, me dropping a wine glass and sbv mismanagement of a 100s of billions of dollars isn't any different.
Greed brings down many people. Madoff's clients were looking for more money and a big reason they were scammed!
Lobbying to disolve the laws that would've prevented this crash. I get so many flashbacks to 2008 from that and the laws that were loosened before that. Wasn't there even one from the UK during Thatchers days back then whose effects were also tracked to 2008? Karma is quite understatement to describe such events.
The law wouldn’t have prevented the bank failure. That’s a dumb partisans line that Polifact already debunked. There were sufficient regulations to stop this, but no one was going to stop them from buying government treasury bonds; not now and not in 2018. The only people claiming otherwise are hardcore partisans who want to excuse the rampant inflation that caused the failure.
Barney frank
They don't care if it all collapses. They want to rake in millions in profits whilst the deregulation works in their favour, then leave everyone in the dust when it collapses - but it doesn't matter for them because they have already cashed in by that point.
It's corruption and the only solution is the noose.
Nothing changes in this fake ass "too big to fail fraud" economy
yep, bankers wanted less regs, they always do. sadly too many politicians are keen to listen to their crap about self regulation & market pressures being all they need to run smoothly. thatcher & her gang were happy to provide them with what they wanted to replace the industrial sectors they were busy destroying (in fairness many sectors were in decline & were 'euthanised', but replacing them with something sustainable that leads to a lot of jobs might've been wiser, imo) with a new bank-led uk economy...
that went... predictably.
“Promptly yeeted from the board” *chefs kiss* this is what I come here for lmao
Agreed. It worked so well in this statement.
Peak quality, thank you :)
I clicked super fast 😂. I trust this more than the news.
Yessir I searched this yesterday and top video was jim cramer soooo.... I figured I'd wait 😄
"I believe that banking institutions are more dangerous to our liberties than standing armies"
- Thomas Jefferson
Jefferson did not say this dude!!
but they send all those military weapons to Ukraine, not to the banks
Jefferson never said this. Earliest known appearance in print: 1933. Quotation: "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.... I believe that banking institutions are more dangerous to our liberties than standing armies.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Variations:
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered."
@@electronresonator8882 Banks started the war on ukraine and fund both sides.
So basically banks own both russian and ukrainian weapons.
Imagine risk management trying to take a position in a low risk area but not diversifying the portfolio accross other areas. Then failing because of that. The mind bogggles.
Their actions made everyone that mattered get scared and cause the run. This is a reputational risk. Part of risk management is a sure and careful transitioning between positions in a changing enviorment. Not having someone at the helm of risk management will be a major part of this. Falling asleep behind the wheel.
Excellent, as always.
No one explains it better than Cold Fusion! 👍🏻
Brah.. he posted this 1 min ago.. watch the video first
@@saifullahrahman that’s stupid. We’ve seen his other videos enough to know that no one explains it better. Go somewhere.
@@saifullahrahman No one explains it better than Cold Fusion! 👍🏻
Another great video. We can always depend on you to present a well researched and accurate view of the truth. Keep up the amazing work
Damn man your production speed is admirable.
Its Cold Fusion powered !
With all this scary news making the headlines, is this really a good time to buy stocks? I know everyone says the market is ripe enough for buying but will stocks tank further this year? How long until a full stock recovery?
It all depends on how long you're willing to hold for, stocks might likely tank further, but making serious gains in this downtrend wouldn't be a problem if you're a pro
@Finest Bear Hug we’re only just an information away from amassing wealth, I know a lot of folks that made fortunes from the Dotcom crash as well as the 08’ crash and I’ve been looking into similar opportunities in this present market, could this coach that guides yo help?
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@Finest Bear Hug Maria Juliana Ramirez appears to be a true authority in her profession. I looked her up online and found her website, which I browsed and went through to learn more about her credentials, academic background, and career. She owes me a fiduciary duty to act in my best interests. I set up an appointment to use her services.
HAHAHAHAA BOTS BE TALKING TO EACH OTHER AGAIN
How do you always come up with the most in-depth analysis of the details so fast, and mostly on your own. Love your accent too, shame we are losing the traditional Ausi inner city sound. Thanks as always.
Being a Chief Risk Officer right now for a bank sounds like such a stressful job.
And one banks don’t properly look for
Not if you know what you are doing. The problem is higher management that will do anything for quick profit disregarding the risk officer
"42 Billion isn't a lot...if you say it real fast" ~ Greg Becker, CEO Silicon Valley Bank
Your videos are very well structured. Good job!
Most clear and concise information to date. I'm a layman and found this very informative. Really curious as to how the interest hikes affected all of this and why they had to do so many hikes to begin with.
Interest rate hikes are used to slow down the economy and control inflation. How it works:
The price of a product is determined by it's demand and supply. One way of lowering the price of anything (or control inflation) is to lower it's demand. Now, when the Fed increases the interest rate, it means that banks now have to borrow money from the Fed at higher interest rates. To maintain their profit, banks will now have to increase the interest rate at which they lend to people/businesses. This means that the EMIs of common people will increase, hence lowering their savings. To adjust for that, a common man will cut down on luxuries like watching movies, going out to eat, vacations, etc. This directly or indirectly causes the demand of various products to go down, thus lowering their price and controlling inflation
@@gaurangmohta168 omgsh extremely well done. Clear and concise. Thank you for helping me understand!
@Jack Smith irresponsibility?
@@gaurangmohta168 is mostly correct. Except banks don’t borrow money from the federal reserve and then loan it out at a higher interest rate. Banks borrow from the federal reserve to meet their reserve require or address a temporary funding problem. And they get it at a discount below the fed rate. They use the money that you, I and, others have deposited with them to make loans. Or they can park at it the fed and receive interest on it. Loans come with more risk than parking at the fed. This is why it makes sense for banks to make loans at or near the fed interest rate.
With some recent experience in Liquidity Risk Management I think a broader application and embracement of regulatory LCR and NSFR ratios would have helped to signal a problematic liquidity position. These concepts aim to estimate how liquid a bank can be in stressful periods of time from two different perspectives. Of course nothing can save off a 42bn bank run if signaling are done incorrectly, I think stressing liquidity estimates can help see the cracks in the asset portfolio and imply to competent management to seek additional funding. Unfortunately in the US, to my knowledge thanks to Bank lobbying banks with less than roughly 250bn in deposits are not required to follow these guidelines. Great video by the way really good detail on the process of changing bond yields driving prices down leading to losses!
trump rolled that back