Jeffrey Tucker on SVB, Etc.

Tucker is a Libertarian-oriented kinda guy who essays a lot of common sense here.  Note well that he doesn't blame ESG or DEI or Biden.  It's a lot more complicated than that; only people who are Not Serious get into that mud-wrestle.

...The failure of the Silicon Valley Bank (SVB), $212 billion in assets until only recently, is a huge mess and a possible foreshadowing. Its fixed-rate bond holdings declined rapidly in market valuation due to changed market conditions. Its portfolio crashed further due to a depositor run. And it all happened in less than a few days.

It’s all an extension of Fed policy to curb inflation, reversing a 13-year zero-rate policy. This of course pushed up rates in the middle and right side of the yield curve, devaluing existing bond holdings locked into older rate patterns. Investors noticed and then depositors too. The high-flying institution that specialized in providing liquidity in industries that have lost their luster suddenly found itself very vulnerable.

In addition, the bank was exposed with a portfolio of collateralized mortgage obligations and mortgage-backed securities. But with rates rising, those are coming under stress too as high leverage in housing and real estate become untenable amidst falling valuations....

Jeffery does not say who caused the "deposit run."  But we know.  They're the same people who are pushing for a taxpayer-financed cushion for the banks.

 ...And where did SVB, and the entire banking industry, get the funds to bulk up their portfolios with such debt holdings? You guessed it: stimulus payments. Billions flooded in and it had to be parked somewhere making some return. At the time it seemed like a good deal, until Fed policy changed.

A house of cards comes to mind. But perhaps a better metaphor is a game of billiards in which every move introduces a cascade of new issues. Lockdowns prompted immense government spending which produced debt that was quickly monetized and eventually caused inflation, prompting the Fed to reverse course with the largest/fastest rate increases in history....

Yes.  You may like Trump, but 'stimulus payments' were Trump's (and a frightened-as-a-mouse-smelling-a-cat Congress showing its usual backbone.)

Tucker smells another rat:

...this entire mess traces first to lockdowns and second to Ben Bernanke’s preposterous policies as Fed Chair in 2008. He imagined that he would fix a financial crisis by abolishing a natural force like interest rates on bonds. Then he pulled a fancy trick of keeping his “quantitative easing” off the streets by having the Fed pay more for deposits than the same money could earn in markets....

Bernanke was the Dr. Fauci of 2008.  Just like in Fauci's case, there were winners and there were losers.  The losers in the Bernanke scam?

Look closely at a mirror.  

... Jerome Powell took over the Fed with the determination to put an end to the nonsense. He hoped for a soft landing. But then came the pandemic lockdowns. He was called upon to provide funding for the idiocy of a panicked Congress that spent many trillions as fast as possible, which only perpetuated lockdowns....

Jeffery is not an optimist.

 ...My concern here is that people will look at all these disasters in isolation. They are not isolated. They trace to the catastrophic decision in 2020 to lock down and fund those policies with money that did not exist until it was created.

That decision doomed the Fed’s plans to unravel its previous stupid policies and thus set us on the course toward calamity.

At this point, I’m sorry to report, no one is in a position to stop anything. Markets can be ferocious under these conditions. Markets are not all knowing but once they lose trust, there is no stopping the stampede of incredulity. There is no one at the Fed who can stop it and no wise managers at the top who can patch things up....

You mean Yellen and Buttplug, plus Dr. Jill and Kammy aren't up to the task?

Shocked.  Shocked, I say!!