"Tip o' the Iceberg!"

[Teach]

I ask: "Is this banking 'crisis' (my words) just the 'tip o’ the iceberg' or is it 'much ado about nothing'”? Frankly, I see banking interests as quite interrelated. A "House of Cards," possibly? Just this morning I find out that Saudi Arabia will not further back Credit Suisse. Credit Suisse, that’s a huge banking enterprise! Oh, I realize we’re being reassured: “Your money’s safe.” From my perspective, I don’t believe everything I hear, from touts at the race track to government officials. After all, people have “vested interests” that can range from money to power to every stop in-between.

Philosophically, I tend to adhere to Hobbesian philosophy. In a nutshell, people are basically “selfish.” Many will do or say whatever it takes to enhance themselves. They’ll use what social scientists call “glittering generalities,” e.g., freedom, democracy, patriotism, prosperity, brotherhood, loyalty, etc. High-sounding phraseology that engender deep-seated values. As my Latin teacher would say, “Facta, non verba!” "Deeds, not words."

As we look at this current bank insolvency, i.e., SVB, one could possibly label it as an initial shock in a financial "earthquake." But as many know, there can be a series of "aftershocks." It’s still too early to know if those "aftershocks," financial, in nature, will occur.

Moreover, I don’t want to sound like an alarmist, but I would encourage people to be alert. For example, I remember reading that at the outset of the Great Depression there were some who were calling the economic downturn, caused by the stock market crash, Black Tuesday, to be a “temporary” dip. Not so fast.

Further, when the Fed kept "tightening the screws," there had to be some creaking in the "brick and mortar" banking enterprises. That piece of wood analogously was beginning to split. In that event, the overextended “weak hands” would feel its impact, first, i.e., SVB. Yet I have believe there are others out there "teetering."

As cited in an earlier post, the Fed is meeting next week. What will they do? What can they do? If they do nothing, will that allow inflation to get out of hand? If they do something, will that put in jeopardy those marginal banking interests and thus push them over the top, or should I say "the bottom."

Finally, we’re told that FDIC will cover all deposits in individual accounts up to 250k. But what, in the worst-case scenario, there is a crescendo of bank failures? Furthermore. I’ve lived long enough to know that nothing, I mean nothing is "etched in stone.”

In concluding, I’m not trying to foment a rebellion, this isn’t what the Romans called facio coniurationem.” I’m just trying, objectively, to put forth possible, plausible scenarios. I hope they do not come to pass, but to say they can’t or won’t is, in my opinion, foolhardy. In that light, I firmly believe (it is my own opinion) that one should have some gold in their portfolio. Frankly, some may label my possible prognostication as heresy, that the value of the dollar is in jeopardy. Personally, I’ll take my chances with a gram of gold as part of my "insurance policy," a store of value, just in case…

Yes, the question remains: “Is this just a temporary, short-lived event, soon to be forgotten, or the start of something, just the "tip o’ the iceberg"?

[lamboguy]

https://www.unz.com/mhudson/why-the-...s-breaking-up/

[Bustin Stones]

I wish to point out that every financial swing is considered a crisis. Every generation believes theirs is the final end of the world as we know it. Why? It's ego driven. This makes us believe our presence is somehow more important than other times in history. But, really the last time the world hung in the balance was in the 1940's. A thousand years from now, no one will be studying any event our time period except for WWII.
As for over leveraged investors and institutions, as Warren Buffett likes to indicate that you don't know who is swimming without a suit until the tide goes out. People refuse to learn the lessons of leveraging. There's proper leveraging and then there's greed.

[lamboguy]

Originally Posted by Bustin Stones

I wish to point out that every financial swing is considered a crisis. Every generation believes theirs is the final end of the world as we know it. Why? It's ego driven. This makes us believe our presence is somehow more important than other times in history. But, really the last time the world hung in the balance was in the 1940's. A thousand years from now, no one will be studying any event our time period except for WWII.
As for over leveraged investors and institutions, as Warren Buffett likes to indicate that you don't know who is swimming without a suit until the tide goes out. People refuse to learn the lessons of leveraging. There's proper leveraging and then there's greed.

i think you hit the nail on the head. the whole financial system today is based on derivatives and futures contracts, all leveraged to the hilt. these banks took the depositor's money, borrowed at a 10-1 fractional banking leverage rate, and now the assets they have depreciated in value by 20% or more fully leveraged by a ten-time number. i would guess that most of these banks are worse than broke right now.

instead of putting the short-term bandaid on the system, they should have just let it die and try to start over again. but as i write this, the yields today have come way down. but so hasn't the price of oil simultaneously, which i know is not to cool.

i know i could be wrong, i am just trying to put the pieces together from my perspective of things.