INFLATION--FED's cutting rates again...

Sacks' first tweet has merit as far as it goes. Having a Board of Directors full of politicians instead of people who had a history of working in banking and finance for a living and a State Banking Regulator who unexplainably was AWOL are the issues.

His second tweet is laughable. SVB's banking customers are getting a bailout funded by the US Government (who, we have to remind people at times) is a drain on the economic health of the country.
 
It is a bail out of rich depositors/investors who didn't pay attention to FDIC coverage limits. They chose foolishly to put way more money in one place than is insured, and now working class people are going to pay for rich peoples' foolish in the form of more price inflation. Whatever way you want to look at it, the rich are stealing from the working class. The working class are now justified in taking forceable action to protect their own property.
 
Perhaps a better way of handling depositor bailouts is to raise the legal $250,000 limit to $500,000 (or even more), then draw a line in the sand. Beyond that, no more. No bailouts of depositors above the federally insured amount.
 
Chop said:
Perhaps a better way of handling depositor bailouts is to raise the legal $250,000 limit to $500,000 (or even more), then draw a line in the sand. Beyond that, no more. No bailouts of depositors above the federally insured amount.
Click to expand...
Good idea Chop, but the line in the sand has gone from $50,000 to $100,000 to $250,000 now to non-existent. After SVB there might be a footnote amount, but Uncle Joe and Company have effectively done away with the FDIC and limits on "insured" bank accounts (but they will keep the FDIC open to keep from having to eliminate government jobs).
 
If the limit has already gone up multiple times the jig is up. It will be raised further when it becomes politically expedient.
 
Monahorns said:
The SVB bailout will further extend or increase inflation.

Once rich fat cats start whining that they are losing money the government jumps in and steals from the people. Nevermind that rich people are supposed to take on risk in order to facilitate innovation and growth in the economy. Now they get the upside with little downside. They can be good at investing. They can be bad at investing. It doesn't matter. The US government actively works to enrich them at the expense of us.

Yes, the Latest Bank Bailout Is Really a Bailout, and You Are Paying for It. | Ryan McMaken
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My $2 wager is on deflation. Already told my wife we're holding off on her new car, new carpet and hardwoods, kitchen redo until summer 2024. Credit crunch in place, glut of materials in the next 12 months.
 
Horn2RunAgain said:
My $2 wager is on deflation. Already told my wife we're holding off on her new car, new carpet and hardwoods, kitchen redo until summer 2024. Credit crunch in place, glut of materials in the next 12 months.
Click to expand...
Could be...?

I'd be watching inventories to check up on your projected glut of materials.
 
Chop said:
Inflation is the best thing that ever happened to food companies

"Inflation is the best thing that ever happened to food companies

Prices at the supermarket keep rising. So do corporate profits."
Click to expand...
"Who exactly is making money off your expensive food?"

Cargill: In fiscal year 2022, its revenue reached a record $165 billion. A record $6.68 billion of that was profit, double what its profits were in 2020. Its shareholders received $1.21 billion of those profits in dividends — yet another record.

Tyson: more than doubled its profits between the first quarter of 2021 and the first quarter of 2022.

General Mills: profits were up 97 percent

Conagra: 22 percent profit increase in its last quarterly earnings report.

Walmart: has seen its profits grow for the past several years, with a 7 percent jump between 2020 and 2021

The Mars family: Between 2020 and 2021, they added $21 billion to their fortunes.


Inflation is the best thing that ever happened to food companies
 
Argentines struggle to make ends meet amid 100% inflation

100% Inflation in Argentina

a8ec7f53b58a3bd4a12d751fa9f3dd0f-parque-nacional-nahuel-huapi.jpg

AdobeStock_31773093.jpeg

Lionel-Messi-Argentina-Netherlands-World-Cup-Qatar-2022.jpg

Junta_Militar_argentina_1976.png
 
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Chop said:
100% Inflation in Argentina

So how did that happen?

"Argentina’s longstanding practice of having the central bank print money to finance public spending is the main driver of inflation. More money chasing the same amount of goods bids up prices."

As inflation nears 100% in Argentina, the political class struggles to respond
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Argentina's President (presiding over 100% inflation):

Alberto Fernandez -- a left-wing Peronista (a quasi-Socialist type)

His "accomplishments"

- doubled compensation for employees dismissed without just cause for 6 months
- tax hikes on foreign currency purchases
- tax hikes on ag exports
- wealth tax hike
- tax hikes on car sales
- freeze on utlity rates
- bonuses for retirees
- bonuses for Universal Allocation per Child beneficiaries
- food cards (food stamps) to 2 million more people

Oh yeah, and Inflation rising to 100%

Mensaje_de_fin_de_a%C3%B1o_del_Presidente_Alberto_Fern%C3%A1ndez_%28cropped%29.jpg


Alberto Fernández - Wikipedia.
 
The usual script in world history is:

A dictator comes after a guy like this who brought the country hyper-inflation.
 
So, to prevent further devaluing of the Treasury Bonds on banks' balance sheets, and further bank failures, the FED must stop raising rates.

I guess we'll be seeing inflation around for quite some time...
 
https://www.washingtonpost.com/business/2023/03/19/inflation-interest-rates-bonds-svb/

"In recent years, banks — newly flush with extra deposits from pandemic-era savings and stimulus — bulked up on bonds and other fixed-rate investments like mortgage-backed securities. At SVB, fixed-rate securities made up nearly 60 percent of the bank’s assets at the end of 2022."

"But as the Fed raised interest rates, those bonds became less valuable.SVB’s $91 billion portfolio of long-term securities was worth just $76 billion at the end of 2022. That $15 billion gap was far wider than the $1 billion shortfall the company reported a year earlier."


Sounds like a poor investment strategy by the bank. Some investments do well; other investments do poorly. So who should bear the cost of their investing mistakes?
 
Chop said:
"Who exactly is making money off your expensive food?"

Cargill: In fiscal year 2022, its revenue reached a record $165 billion. A record $6.68 billion of that was profit, double what its profits were in 2020. Its shareholders received $1.21 billion of those profits in dividends — yet another record.

Tyson: more than doubled its profits between the first quarter of 2021 and the first quarter of 2022.

General Mills: profits were up 97 percent

Conagra: 22 percent profit increase in its last quarterly earnings report.

Walmart: has seen its profits grow for the past several years, with a 7 percent jump between 2020 and 2021

The Mars family: Between 2020 and 2021, they added $21 billion to their fortunes.


Inflation is the best thing that ever happened to food companies
Click to expand...

Increases over the pandemic year of 2020? Misleading
 
Ha, the bank needs interest rates to stop rising and there’s speculation it will. The national debt needs rates to stop rising and who gives a rats a**.
 
Inflation could be here to stay.

Next up—public indoctrination (Cough, I mean education…) campaigns to convince the masses that moderate inflation is actually a good thing; and arguments can be made that it is…

I think Journey expressed the reality of inflation best: “ some will win, some will lose, some were born to sing the blues. Oh the movie never ends, it goes on and on and on and on…”.

:trophy:
 
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