Is it contagious? US regulators scramble after Silicon Valley Bank failure • FRANCE 24 English
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- เผยแพร่เมื่อ 19 มิ.ย. 2024
- Are banks going bad again? Markets are scrambling to contain the shockwaves after Silicon Valley Bank, a California lending institution favored by tech startups, whose seemingly safe bet on government bonds proved a bust, triggering an old-fashioned run on the bank. Is it contagious? It's the first major default since rising interest rates signalled the end of decades of cheap money. 2008 triggered a return to regulation, forcing big banks to keep more reserves in the vault… but was it enough?
#SVB #Bailout #banking
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Someone told me years ago that treasury bonds have very low interest rates. I have never bought any. If I had the money, I still wouldn't buy US Treasury bonds. You don't get much from them in return and is literally a waste of time and your money.
Essentially the bank didn't diversify its assets, nor did it have sufficient liquid or more liquid assets for dealing with even minor systemic shocks.
What a fan I am of the Debate. Smart people talking together in real time-- what a change from the usual canned fear-mongering of most USA news. I am about 1000 percent more aware of the different aspects of the issues of the day because of this show. When my students talk about how terrified the news makes them feel, I blare out "Watch France24!" Thank you for giving me a place for them go.
It's not so much whether it's contagious but how big is the iceberg.
The bonds value decline should have surprised nobody who understood anything. It’s the most basic principle. People can get newer bonds that pay more interest. The older ones with less interest decline more in value. If a bank can hold onto them to maturity they won’t lose the principal value. But SVB had no cash in hand so had to sell bonds at a big loss.
The problem is much much bigger than bad decisions by SVB managers. The US has 31 trillion outstanding bonds. When the Fed pushed interest rates up, That 31 trillion was now worth 15 trillion. But for decades, buying US treasuries was conservative and safe. When the US dollar is no longer safe that's the end of dollar hegemony. This has implications more dire than the loss of US military hegemony. Not only have US treasuries been made almost worthless all G7 nation's bonds have followed the same policy. And this is made worse by the economic war against Russia and soon on China. Much worse.
SVB and everyone else
Fractional reserve banking is inherently risky, because your deposits aren’t yours, and they’re not at the bank. Even with government guarantees there can be a crisis of confidence, because governments have limits to what they can reimburse. At each stage, the financial system is an exercise in trust. But we live in an era of literally unpayable debt, low trust, and deep uncertainty. However, if the system does unwind, i’m not convinced money would be worth very much anyway.
And of course American republicans only solution is to say "BiDeNs AmERiCa" without offering any plan what so ever
One horrible condition after another in America on a daily bases.......
Outstanding show, very informative. It is shameful (at best) the way US media avoids similar presentations in exchange for gotcha game questions, 80% fluff.
france 24 is state owned that means they dont have to worry about profits because the government subsidies them, america media corporations need good ratings or they will go out of buissness
@@STEP107 French is still pissed with the AUKUS deal.
Just watch the price of gold rise
SVB executives fired and lose their stock equity, bank investors lose their SVB investment, and the depositors who were just parking their money at the bank (like we all do) get their deposits back…. Seems like a pretty solid outcome all things considered
Agreed. It stabilizes things and does not undercut the economy.
The bonds value decline should have surprised nobody who understood anything. It’s the most basic principle. People can get newer bonds that pay more interest. The older ones with less interest decline more in value. If a bank can hold onto them to maturity they won’t lose the principal value. But SVB had no cash in hand so had to sell bonds at a big loss. The executives at SVB were reckless.
Also, if you are depositing $10 million in Venture Capital financing, you might distribute it into several different banks.
Banks are good! 💰🏦 💸
- Gordon Gecko 🦎
Exactly, being saying that since day 1. Private Equity + VCs were bailed out. Public Investors weren't.
something is going horribly wrong in America, is it Americans that are doing this to themselves ? someone is making decisions with someone elses interests at heart. pull yourselfs together America and throw all the traitors out, focus on your domestic affairs.
U.S. is no longer a democracy; it hasn't been for a while. Plutocrats rule.
What did the bank investors do with the customers money in order for there to be a time lock? They must have made bad investments with other customers money and got no return and lost. Now they have to explain. They took risks.
The 'time lock' is bonds.
When you buy a bond, you recieve a small amount of money each year for several years, and then you get the principle back at the end.
The amount you get each year is locked-in when you purchase the bond, and it's related to interest rates. The higher rates are when you buy, the more you will be paid.
So, imagine you buy a 5-year bond when interest rates are 1%. You pay $100 to buy the bond. Each year you're given $1 return, and in the fifth year you get your full $100 back.
If you bought a 5-year bond when interest rates are 3%, you'd be paid $3 per year for 5 years and then get your $100 back at the end.
Bond are very safe so long as you can wait for them to mature - that is, so long as you can wait for the end and get your $100 back.
If you need to get the money back sooner, there's a risk. If interest rates have increased since you bought the bond, then your bond isn't giving as big a return as a brand new bond would.
So, if you buy a 1% bond and you want to sell it, but interest rates are now 3% .. the buyer would be better off buying a new bond that yields $3 a year instead of buying your $1 per year bond - forcing you to sell it at a discount/loss.
this bank bought bonds while interest rates were lowered (to drive economic recovery from covid), and had to sell when interest rates were raised (to fight inflation from the Ukraine war / energy shortages)
They had to sell some shares to cover withdrawals, and they lost a small amount of money.
Customers panicked and withdrew huge amounts of money - forcing the bank to sell at a huge loss, and driving it to bankruptcy
They put them in long term government bonds..... not redeemable before maturity without paying a penalty, that was discussed.
The answer is banks to hold gold. Silver, platinum rather than bonds
SVB was bailed out under the 'Systemic Risk Exemption'. That means the FED was worried about contagion. The problem is banks are paying depositors very little interest on their savings while the FED is offering 4.5% for 6-month t-bills. So you take excess savings OUT of the banks and buy treasuries. US banks do not have to have ANY cash reserves since 2000. So it wont take much for small banks to implode.
Only in America where this kind of criminal act is happening
If a smail as a give, even the westerling smail
The TECH sector employees will find jobs across the PACIFIC in highly advanced economies.
Great panel discussion. Well explained topic from lots of perspectives.
Imagine if Bow and Arrow are stike to the middle object who couse the values on money changer
Economic investigator Frank G Melbourne Australia is still watching this very informative content cheers Frank 🇦🇺
"Contagious" LOL good grief
What is the impact when the dollar denominated off balance sheet as stated in the BIS 3rd quarter 2022 comes into play???
The question is how much money the bank put in bund?
1st steep, 2nd steeps, 3rd one, 4th ether
What bank is next bank of America?
Hey someone is bothering my posts. Trying to block them from being posted
Spare a thought and prayers 🙏🏾 to Credit Suisse.
Swiss citizens should mentally prepare to open their wallets and eventually become bankers….
it was powell
Thing about probably, propably didnt thing me.. are you have a good feedback from probably busy
Need experience, expert, advisor, advertiser, enginering to adopted
The bank did exactly what the Fed still does.
Nobody tells you they the Fed loses a lot of money!
These are smart people but they are industry insiders and they know the forbidden subjects like "how can a lender who can almost create free money not be vulnerable to this kind of thing. They don't just buy bonds, they make loans ... 10 to 1 (or more) but the don't talk about that. That's pretty dishonest.
Some gamble and loose
Cease the assets of the oligarchs before they make a run on the bank's.
Wow so they get huge money but are trying to take the people's money
Don't forget the Saudi Arabia - Iran deal negotiated by China. Capital flying??
In English, please.
What is comment post failed?
I don'y trust them I have already lost confidence
It is nonsense to hedge Treasury bonds. The crash of government bonds surprised anybody
The bonds didn’t crash and it surprised nobody who understood anything. It’s the most basic principle. People can get newer bonds that pay more interest. The older ones with less interest decline more.
And I blame this inflation squarely on this energy transition. How else do the manufacturers and supply chains spread the high cost of fuel on every delivery?
These Europeans are taking great pleasure in the USA bank disaster , touting how much better Europe’s regulations are
Not at all.
They just highlighted how Basel are differently implemented, something most of us wasn’t aware I think, and they were clear USA big banks (JP Morgan, Fanny Mae, Goldman, …) have higher regulatory requirements higher even than from European.
they will be the first bank to roll out digital currency. the plan all along.. Digital replacement to save the day.
CBDC's are coming down the track.
Finance 101, diversify. It's safer to invest in many risky investments with high yield than a single "safe" investment.
Btw, im human have a home..
To slow for the races.. to late for relize.. to trush for the responsibles, who cares..
Banking regulations were deceased in 2018, enabling this .. 🤔 who was in then?
Bidens been president for 2 years
Why hasn’t he replaced them yet
Trump.
Great we gotta wear masks again.
Woke is an overused word recently.
fall of hegemony
One of your country's favorite words
@@gloriarangott8803 hmm my and all other countries that has sovereignty .
But Iqbal, you’re such a mediocre person. And you gladly use the internet, which was created by this sector. You at least get your small voice now.
@@SeeLasSee whole it sector are depends on mediocre like me you know that? those indian chinese IT guys in silicon valley -did you ever check? print more money till printing is cheaper than dollar
Trump did this in 2018
So your mom left you when you were 20 years old, and then you still blame your mom because of your faults…stop blaming others…except yourself…learn to accept it…He left for two years ago…And the CEO just sold 3.5 millions stock two weeks ago…he knew it is going to collapse…
Biden been president for 2 years
Time to change things
Why didn’t he