Is the 2023 Banking Crisis Just Getting Started?
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- Опубліковано 18 жов 2024
- The US economy has been hit with a string of bank failures, and these bank failures have exposed some major problems at the core of the US financial system.
Emergency measures by the Federal Reserve and US Treasury were required to stop several ongoing bank runs that threatened the solvency of dozens of institutions.
These events have rattled consumer and investor confidence, leaving many wondering why these events happened, if more bank failures are on the way, and what the impact will be to the economy in 2023.
In this video, we’ll take a look at the root cause of the issues plaguing the US banking sector, explain why more institutions are likely to fail in the coming months and outline why these events will worsen the ongoing recessionary pressures in the economy.
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DISCLAIMER: This video does not provide investment or economic advice and is not professional advice (legal, accounting, tax). The owner of this content is not an investment advisor. Any securities, trading, or market discussion is incidental and solely for entertainment. Nothing herein shall constitute a recommendation, investment advice, or an opinion on suitability. The information in this video is provided as of its initial release date. The owner of this video expressly disclaims all representations or warranties of accuracy. The owner of this video claims all intellectual property rights, including copyrights, of and related to this video.
The current bank crisis has me deeply concerned. If a major bank like SVB can experience difficulties, it's reasonable to worry about the impact on other financial institutions. I'm aware of someone I know who operates a rapidly expanding startup, and they were severely impacted by the bank run. Consequently, I withdrew over $340k from my own account, recognizing that FDIC coverage is limited to $250,000 and a potential collapse could have far-reaching consequences. At this point, I'm considering investing in the stock market. I'm wondering if anyone has advice on how I might proceed with this plan.
Although the economy has so far held up, the SVB scenario serves as a warning that Fed rate hikes are still having an impact. At times like this, investors must be vigilant about the next inevitability. You don't have to act on every forecast, therefore I'll advise you to hire a financial counselor. This has been my fallback position for a while.
Margaret Johnson Arndt is my portfolio-coach, I found her on Bloomberg where she was featured, I looked up her name on the internet. Fortunately I came across her site and reached out to her, you can verify her yourself.
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!
In my opinion, some of these banks were attempting to restructure their bond portfolio, which involved selling their low-yielding bonds despite the potential loss, and compensating for it by buying higher-interest-rate bonds on the open market.
It is critical for everyone to prioritise investing in a variety of income streams that are independent of the government in light of the ongoing global economic crisis. Investigating stock, gold, silver, and digital currency opportunities is part of this. Despite the difficult economic climate, now is still a good time to think about making these investments.
The investment returns of various investors can vary even when they employ the right methods and have the appropriate assets. It is critical to recognise that experience is a key factor in a successful investment strategy. I personally understood how important this was and sought the advice of a market analyst, which allowed me to significantly increase my account's value to around a million. Just before the market correction, I strategically withdrew my profits, and now I am again taking advantage of the buying possibilities.
I think this is something I should do, but I've been stalling for a long time now. I don't really know which firm to work with; I feel they are all the same but it seems you’ve got it all worked out with the firm you work with so i surely wouldn’t mind a recommendation.
I definitely share your sentiment about these firms. When I was starting out, I checked out a couple of freelance investors online, so you could do the same. I personally work with “Colleen Janie Towe”, and she's is widely recognized for her proficiency and expertise in the financial market. With a comprehensive knowledge of portfolio diversification, she is acknowledged as an authority in this field. Most likely, her deets can be found on the net, so you can confirm yourself.
It turns out if you raise prices on essentials and don't raise wages people can't keep saving.
Meh, savings are 13% below all time highs. Don’t blame the macro
@@benchoflemons398 That would be near all time lows if that's raw numbers unadjusted for inflation
"BUT IF WE GIVE PEOPLE $15 AN HOUR, THE ECONOMY WILL COLLAPSE! JUST IGNORE THE POST WWII ERA WHICH PROVES OTHERWISE, AS WELL AS OUR COLLAPSING COUNTRY!"
It's the new "unintentional minimalist" lifestyle! haha
Just because people aren’t paid well and aren’t able to save doesn’t mean that the money is out of the banking system. It means that the money is concentrated in a handful of high value accounts. Which was the primary driver of this bank run - a concentration of wealth above FDIC limits in one bank. And the dominoes could still fall on the numerous other banks in this position.
As usual, clear content, clear graphics, message delivered with simple tone and without dumb memes, gifs and cut out scenes from movies like a lot of wanna be expert UA-camrs do. Please continue this way. Great job.
Granted, but the title of this video seems a bit too panicky when u think of the people who might just scroll by or watch just a bit. This type of messaging that can be feasibly interpreted as panic and uncertainty was at the core of the SVB meltdown
Nothing wrong with memes ; )
The people behind this UA-cam channel are valuable to society.
Understanding personal finances and investing will most likely lead to greater financial independence. By being knowledgeable about money and investing, individuals can make informed decisions about how to save, spend, and invest their money. A trader made over $350k in this recession influenced market.
Love your videos! Can’t wait for the day when you go over positive leading indicators and we are out of this mess!
Me too! I promise I’ll always call it like I see it.
Incredible stuff. Watching your videos has made me realize how TERRIBLE media outlets are in general at explaining economic realities.
The only problem I see is the gov bailouts. The small banks took an interest risk to create loan focused portfolio. They busted. That should be it. These bailouts put companies with responsible risk management at a disadvantage and it's simply not fair.
Yep. The government should only bailout indivisual deposits. Not protect the banks. This 2009 era Obama power should have only been temporarily. Shame
Same way when people who bought a house they could never afford got government help. Nothing for those who bought a small affordable house.
Yup Low Risk People have been getting punished for a decade.
Nothing about this economic system reinforces responsible finance management. Not at the macro level at least. If you want to see the small banks fail, just be aware that their failure is your socio-economic death-knell as well. You will suffer.
@@TheBanjoShowOfficial Yep this is something people overlook... understandably you'd like non-responsible financial institutions to fail but best be aware how letting them fail would affect you in this current system.
""When the tide goes out, you see who's been swimming naked"
-Warren Buffett"
-Mike P
Signing a signed quote, ha
One thing to note is that the main concern may not be that these RE loans will blow up or something. But the reality is that cap rates have moved and this real estate is not worth what we thought, so if forced to sell due to deposit declines, these RE loans will trade at a discount just like treasures and banks will take heavy losses and potentially become insolvent
Amazing work! Was patiently waiting for your take on this banking crisis. Thank you
love the research you put into these, yet you also break things down for everyday people. great job!
Your talent is underrated. Your tone of voice helps clear mind and keep attention on the topic, this easy to digest the knowledge or learn..
I have realized this, and subscribe to such channels on knowledge or learning, info, news..
"The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented."
-Sir Josiah Stamp, former Bank president
You can never get something out of nothing. These Keynesian MMT acolytes think they're geniuses for inventing this "economic" system, where we're from it's just called straight theft.
This is where the trick happens. Money out of nothing.
I enjoy your content and also enjoy your rise! Keep it up! And thank you for such powerful data/analytics!
Glad you enjoy it!
@@EPBResearch how do you create these videos? Any software? They are excellent btw
Your videos are just amazing. Information delivered with no BS and extra shenanigans. Keep going
Great content as always. I decided to take custody of a pension I had for an old job. This duration problem goes further than the banks.
Informative, clear, easy to follow. Thank you so much!
Thank you for watching! Glad it was helpful!
I watch a lot of UA-cam content on this topic, and I think this is the best visual, concise and detailed of them all. Subscribed!
Best macro explanations ever on the internet. Great job !
Thanks for educating us and make those complex macro mechanisms understandable ! 🙏
This channel clickbaits into great research every time, amazing content
Wow! this is probably an A+ level of research, the detail and explanation are astounding 👍
On the hand, prepare for the coming storm 🤦🏻♂️
Moving cash to T-bills is exactly what I am doing. My bank is a smaller regional with great customer service. I will be watching, yikes!
If the GOP and dems can't agree on paying the government then your Tbills will default and you will lose everything. I would not invest as my bet is the US goverment will default based on politics
@@timgibney5590 I’m waiting to shove more money into my ethereum holdings. Things are going to get worse before they get better
Great video. I am in CRE so I am at the center of this shitstorm. Keep in mind that these buildings are owned by pension funds and insurance companies. So while a bailout may not be well supported, it is going to happen because otherwise teachers, police and firefighters will not have a retirement.
If there is no bailout, then there is no backstop to the amount these properties can fall. Since so much state and local taxes depends on property tax assessment, this would mean MASSIVE, MASSIVE decreases to a regions tax base, areas who are already struggling with decreased tax revenue and increased demand for social services.
Bailout, Bailout Bailout. In 2024, an election year.
You are right on with your analysis but we're faced with 2 choices here:
1. Deflation caused by price discovery and pensions are wiped out or
2. Bail everybody out in the economy and create hyperinflation which will ultimately wipe out pensions and the economic system with it.
No free lunch with our choices but:
with Inflation it buys us time but the system will have to be reset and everyone loses.
with Deflation allows us to rebuild from the ground up and learn from our bad choices.
Your choice? short term pension or long term pain with no hope of any system recovery.
Keep up the videos. We need more of this.
Thx, for simple and clear way of explaining complex processes!
If you listened to this guy, you would have missed out on the 23% YTD rally in Nasdaq :)
Comprhenesive and very clear. Thank you.
This video appears to wrongly explains how bank credit works, even if it is a brief mention. Please look up the "credit creation process".
Really good presentation. Concise and well articulated.
The unfortunate part of this video is that it's 95% opinion, 5% cherry picked data. Very little compelling evidence to indicate much further carnage than the standard quantity of banks failing in a given year. Most regional banks are reducing their commercial holding and ending lending to those sectors. As the commercial loans amortize or balloon in many cases, their commercial sector loans will considerably decline. This creates a classic buying opportunity for niche institutions which can lend to commercial at phenomenal rates and turn significant profits since work in the office is coming back.
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 ongoing bank crisis.
This guy is the man!
We have a banking crisis each decade. Savings & Loan, Long Term Capital Management, Sub-prime mortgages, and now, the everything bubble.
Thank you that was a fantastic explanation. Much appreciated.
INCREDIBLE research.
I’m sure no matter what happens the banks will be bailed out and the normal people will suffer.
Yep. The average American bailing out the super rich once again. Just a matter of time before the bottom falls out.
Thats why bitcoin was created. To opt out of this corrupt system.
Great video! Thank you so much for explaining this so clearly!
thank you for explaining in a basic manner
I don’t understand: when a bank writes a loan, they DO NOT have that money, it just pops into existence, so how can a loan go bad once the borrower has paid back the reserve requirement on the loan?
My job was killed during the pandemic, where is my federal reserve bailout? I was left almost homeless! Where was my federal reserve bailout? Many people, not just me, are being underpaid and overworked. Where are our federal reserve bailouts? Or being overcharged with radically extreme interest rates on everything? Where are our bailouts? Price gouging (inflation) is at a record high leaving the majority of Americans jobless, homeless and in extreme poverty. Where are our federal reserve bailouts? Government needs to stop catering to banks, the rich and other destroyers of societies and economies. Bailouts should be reserved for the people struggling...not the rich who steal all the money out of a country and still fail anyway.
Great in-depth video. Visual were to the point! Thanks mate.
i love the contents in general but design/animation for your videos are exceptional.
Wow! That was amazing. Last week I looked at the financials for a regional bank that I have a savings account at, and I noticed a lot of commercial real estate loans. I thought that was good. But apparently not! Thanks for the knowledge!
No its a good thing. Silicon Valley Bank was largely venture capital based and didnt have traditional banking assets like home or car loans.
In a liquidity issue (When large amounts get pulled out) they couldnt recall any of the floating loans at the moments notice forcing them to sell at a losses on the longer bonds.
@@freezingcicada6852 you're kidding right? they HEAVILY relied on typical home loans due to insane deposits during 2021 which have depreciated in value significantly, hence the bank run forcing the selling of mostly those shit value loans compared to loans now.
@@freezingcicada6852 stop spewing bullshit, that's not all they had and they "catered" to certain sectors sure, but were reliant on mortgage backed securities like everyone else in this shit swamp.
@@mykeprior3436 I'm not kidding. SVB was heavy in venture capitalist start ups. Even the news mentioned nothing but venture capital start ups going under if it wasnt bailed out. Nothing about potential people being homeless, etc.
The other bank, maybe it was more in housing loans. Even then, banks in general have a fine print where they can call back housing loans at a moments notice for these liquidity issues.
@@freezingcicada6852 I mean, source or you're just bullshiting. And you clearly don't understand how collateral for deposits work. Every single bank is sitting on ENORMOUS losses, any one of them will fail if a bank run occurs at this stage because they'd be forced to liquidate their bond holdings at a huge loss.
Venture capital "money/deposits" doesn't fucking matter it's what they bought with that money during the pandemic which was hugely just plain ol' mortgage backed securities/bonds which due to much much higher yields are worth LITERALLY dogshit now. Even though they should know better the risks associated with holding those kinds of assets in a rising interest rate environment.
Commercial real estate is even worse, EVERY SINGLE bank below the big 5 are at HUGE risk. Not priced in whatsoever.
great information as always...
When you say the larger banks are more heavily regulated, what are those separate regulations you are referring to?
Anyone here after first national bank?
This was good analysis that I hadn’t heard elsewhere (yet). Kudos
Thanks for the video
Learned a lot, you've earned a sub!
Hey if possible, please provide links to any research papers discussed in the videos. Great work!
lol
Very good explanation of a complex set of issues.
Another amazing video! Thank you!
Now that's why my company is forcing me to return back to the office
Thanks for explaining it clearly.
I can find a hundred experts saying the complete opposite. No one knows what the future will bring with this stuff. But it makes for good videos to make money off of.
The fed and treasury have visibility on deposits and investments. How did they not anticipate a problem? Also how come banks don’t hedge interest rate risk? Is the cost to hedge a expense item that they didn’t want to pay? If true shame on them. Would love your prospective. Thank you for your videos and twitter feed. Always great content.
Some banks do hedge interest rate increases. In fact, most banks automatically hedge interest rate increases, because the loans they hand out go up faster when there are interest rate hikes. Unfortunately, we're seeing a very specific type of failure happen in the banking sector, where the overall amount of deposits they have is going down, due to outside economic pressures. Silicone Valley Bank didn't hedge their interest rate risks properly. But everyone else is just going to get hit with the systemic problems with fractional reserve banking. Even with large banks only having 20% of their assets in commercial real estate, when the commercial real estate bubble pops, property prices could drop by 40% (or more). If that happens, then even with only 20% exposure, they're looking at a loss of 8% of their total assets. Banks are only required to have 10% in liquid assets, so a 8% loss in one area will certain kill many banks, because it combines with the rest of the economic meltdown caused by the real estate crash.
tl;dr: The problem isn't with taking too many risks. The problem is with how the system is designed. Fractional reserve banking with a 10% ratio will always be vulnerable to these kinds of crashes, no matter how much you try to protect yourself.
The bar charts could do with a bit bigger font size, but otnerwise very nice presentation!
As a punishment for being overly leveraged, too big to fail banks should get broken up so that they are no longer too big to fail. The ones that are big and managed well can stay
sounds like a good idea but probably won’t happen
Who would break it up when they’re all in bed together? The Fed is nothing without the banks. The Fed literally came to black rock for advice in 2008 during the crisis. You need to understand the revolving door of bureaucracy that we live in, you work in the government a few years, and then go work at an investment firm afterwards, definitely no conflict of interest there. They’ll never sign off on something like that because that directly threatens the corporate state that we live in. You want to understand evil? Watch where the money goes.
Small banks can borrow from the Federal Home Loan Bank by pledging commercial and residential real estate loans as collateral. The rates are relatively inexpensive for intermediate term borrowing given the inverted yield curve.
US Govt has set a debt trap on the Treasury Bond buyers. These bonds in fact are very risky due to unaccounted interest rate risk, the latter of which is completely at the discretion of Fed Reserve.
probably why gold went ballistic.
Good stuff as always
damn it, its 1:38 and we havent started in earnest yet? im bangin out
Great breakdown and bank runs at smaller institutions is inevitable especially when they have to disclose the losses they are taking on commercial property lending.
Where do you get some of this information? I want to study up
So, maybe a stupid question, but does greed by owners/shareholders refusing to up interest rates for deposits play into this? Is this a case of playing chicken to squeeze every cent of "profit" from their bank before the scales tipped?
Because what this video tells me is that the banking industry is largely a house of cards of shuffled paper. And it only remains viable so long as there are places to shuffle the paper to or, we the taxpayer, bail them out with soshulizm to cover their privatized losses.
I heard that the federal government actually encouraged banks to hold US Treasury bonds and mortgage backed securities while they held interest rates at near 0 levels for so long
Why wouldn't the government encourage giving themselves more money
Great episode!
At 4:30 Eric says the banks will "re-coup their losses" if they arent forced to sell early. Ive heard other people say the same thing. While its possible that the value of the bonds will receover, its not really re-couping losses. These banks will simply be amortizing their unrealized losses over the remaining life of the debt instrument. Every quarter the bank will get less interest than the current market rate, and the difference is the "loss".
It technically isn’t a loss because they aren’t using mark to market accounting on these assets. What he means is the bonds will eventually mature and the banks will be paid back. That said they are sitting on some dead assets for a very long time
They will receive par in time, plus the face coupon along the way. Sure, there is an opportunity cost, but... oh well. They don't book a loss unless they sell a good deal of time before maturity (closer to maturity, closer to 100).
“When in fear
or in doubt, run in circles
scream and shout.”
Chicken Little
Nice video! Thanks!
love your work!
Top shelf stuff 👍
Well ... I think we won't have to worry about inflation anymore
Kill one dragon to stare face to face with a bigger one
great analysis!
very good analysis. thanks.
How do you make these wonderful video?.Which tool are you using?
It's really good and simple, but that does create a small issue. That ⅔ residential loan at large banks isn't just loans initiated by that bank but also loans bought up from smaller institutions. Sound a little familiar? Those high-quality mortgages will only be like so long as borrowers have the money to pay. But given the insane market and the fact that companies and property management were buying up huge swaths of homes. The big banks can find themselves in just as much trouble if the crash is bad. It has already begun as well. We have a friend who works in repossessions, and work has already begun to climb. Foreclosures are already starting to happen on those lower interest rate loans.
Excellent video.
I'd like to know how credit unions factor in to all of this
Great question! The National Credit Union Administration (NCUA) is the government agency that protects credit union members, like the FDIC, with the same deposit insurance max. But unlike both regional (small) and Large ("Cash Center") banks, credit unions are NOT publicly traded corporations. They typically run more like so-operatives, where any profit is either plowed back into the CU as cash reserves, or/and shared with the members. Effectively all members are the co-owners/shareholders of the CU.
CU's do fail from time-to-time. But CU's usually ONLY offer Personally guaranteed loans like home loans, HELOCs, building loans, car loans, etc. They can't offer subprime loans or high risk loans, or loans that exceed their assets. Check this out: Alliant Credit Union pays 5.00% APY, $1,000 minimum deposit and Pentagon Federal Credit Union and 4.60% APY, $1,000 minimum deposit.
Right..
I don't love describing banking profits via interest as "earned" more like "taken".
So your bank account is a loan you give to the bank and the APR is the interest rate
I'm buying physical gold and silver like crazy. I hope this works.
If u have a long horizon you'll do good.
Can’t emphasize how much loans are coming due in the next 1-3 years in CRE. Forced discovery may not only be caused by deposit outflows, but also loan maturity. CRE and small banks are really in a tight situation.
Great analysis. Not a lot of people are talking about this issue.
Authorities have a great deal of administrative tools to prevent bank failures.
In a few months, we'll know if your analysis contains any truth.
Yeah right. Turn the money printer on… wow you and the FeD are genius. Other than hyperinflation or recession there is not much choice
@EPB Research Where do you get your banking data? Trying to do some analysis, but it's hard to find a comprehensive list of US banks that includes assets. If you could point me toward where you got the data for this video, that would be wonderful.
Im.pretty certain this is an ai channel
TARP in 2008 worked too.
Very small editing thing. Give the start of your video 3-5 seconds of either silence or a light audio intro. The talking starts right away and the first words are cut either by you codec or the YT upload. Don't be afraid of a little dead space at the start and end.
Good video and informative
So what is the best investment strategy on this? Long XLF/Short KRE? Or short both?
TLT....and short the TNA.
FRC is the next bank to fail. And another will follow FRC, and so on until systematic confidence is shaken and it runs away from them. The Fed won’t be able to stop the panic.
How do you make the video visuals?
There's a bkg deposit grab going on with all my local banks and credit unions offering nearly 5% interest for short (9-15) months CDs. That's how it should always have been (banks competing for our business) instead of a near decade of zero interest penalties to savers.
Then why didn't SVB get a loan against their bonds?
Nailed it 💯
You are crushing it man! Always look forward to your videos.
I read somewhere that some of the depositors could be other banks, instead of individuals. Especially if large banks deposit into smaller banks, the system would be a little more stable because the larger banks could be convinced to not withdraw in panic, in contrast to individuals looking at their Twitter feed. Also, to say that commercial real estate is "permanently impaired" might be an overstatement, given that many companies are requiring workers to return to the office. But the return to office will never be 100% and will take several years. For sure, if price discovery of commercial real estate is forced upon small banks in the next few years, major problems will ensue as you describe.
the top 10 holdings were in the millions/billions, doubtful that's a bank, those are cali investors.
When the gov bails out banks, they should get that much stock in the bank to equal the bailout money, and payout dividends to citizens as UBI
The people who are sick of government and corporations owning us should collectively take all our money out of big banks, put them in small banks, and stop paying credit cards.