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TIMESTAMPS
INTRO 0:00
SVB COLLAPSE EXPLAINED 1:12
POTENTIAL CONTAGION 5:26
GOVERNMENT BAILOUT 7:26
MORE BANKS FAIL 9:09
In 2008, the world experienced the worst financial crisis on record, with people losing confidence in the banking system and the institutions who held their money
And in the end a $700 Billion government bailout was needed to prevent a complete collapse of the financial system
The GFC was described as a once in a century event and likely the worst recession for decades
So why, just 15 years later, are we seeing banks start to fail again?
Is this the start of another financial crisis?
Over the weekend, the US experienced its second largest banking failure in history
With Silicon Valley Bank, the 16th largest US bank, collapsing over just 48 hours
So With over 95% of it’s customer deposits uninsured
Bill Ackman, and other prominent investors were concerned that there could be significant contagion to other banks and business sectors in the economy
This story is evolving quickly, including the government bailout announced just a few hours ago
so rather than sit here and speculate on what will happen
I’m going to share the facts of the situation and the different possible outcomes given what we know so far
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Disclaimer:
The information in this video is general information only and should not be taken as constituting professional advice from Hamish Hodder.
Hamish Hodder is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances.
Hamish Hodder is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this video….(read more)
LEARN MORE ABOUT: Bank Failures
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The banking sector is a critical part of a country’s economy. It is responsible for managing the money supply, facilitating transactions and providing loans for investment and consumption. However, the 2008 financial crisis highlighted the underlying risks of the banking sector, as many banks failed, leading to a widespread economic collapse. Nearly a decade later, there is growing concern about another banking failure that could trigger a financial crisis. This time it revolves around the collapse of Silicon Valley Bank (SVB).
SVB is one of the largest financial institutions in the US, with over $250 billion in assets. However, it is a bank that deals primarily with tech startups, with many of its loans being made to companies that are unprofitable and burning through cash. The bank’s business model is based on investing in companies that it believes will eventually become profitable, but this approach is not without risks. In recent years, many of the companies that SVB invested in have failed, and the bank has been left with a growing pile of bad loans.
If SVB were to fail, it could have a domino effect on the banking sector. First, SVB’s borrowers would default on their loans, which would cause the bank to suffer significant losses. These losses would then spread to other banks that have invested in SVB’s loans, leading to a systemic crisis. The Federal Reserve recognizes the potential risks associated with an SVB collapse and has already issued billions of dollars in loans to the bank to prevent this from happening. However, this approach has been criticized by some economists, who point out that it can be risky to bail out failing banks.
Furthermore, the issue with Silicon Valley Bank is not just a US problem as it deals with start-ups around the world. If a bank, regardless of country, is too dependent on a single sector, it is inherently vulnerable to sector-specific shocks or downturns. Some experts have argued that the global start-up ecosystem could be heading for a massive downturn, which would cause further problems for SVB and other tech-oriented banks. Many startups have enjoyed significant funding rounds in recent years, but many of these companies have little to no profitability, which makes them a risky bet for banks.
In conclusion, the collapse of Silicon Valley Bank could be the catalyst for another financial crisis, as it has the potential to spread throughout the banking sector. It is important for banks to diversify their portfolios and avoid being too reliant on any one sector. Furthermore, the Federal Reserve needs to be careful about how it deals with failing banks, as bailing them out can create moral hazard and incentivize risky behavior. Ultimately, the banking sector needs to be scrutinized closely to prevent another financial crisis.
A very well-produced video Hamish.
The cost of the insurance premiums will be passed on to tax payers anyway
The banking sector as middleman is ripe for technology destruction.
Excellent analysis and explanation. Thank you!!
Stop paying bills get your money out the bank. Default on loans. Eat your neighbors
More banks are going down. This will make crypto stronger
Best video I have seen on the subject so far
One currency going forward
ALL BY DESIGN.
"2008 was the worst financial crisis on record"
1929: "Am I a joke to you?"
I've liquidated for the time being. I'm completely out of all institutions.
Juden
We're are in the midst of the biggest US bond dump in history. The fed is trying to collect as much cash as they can( bank closures) to find the IMF US bond responsibilities. Foreign countries cannot exchange their currency for dollars ( anointed a while ago) so these countries are trying to cash in US bonds for dollars to buy food. This didn't go so well for china, they made them into the bad guy ( Chinese spy balloons) and threatening ww3. The world's US bond holders are panicking because there's so many US bonds out there that if they cash them all in it would be an inflationary period that would render everything pegged to the dollar as unaffordable. This is the end of the race to the bottom and Americas is on top of this pole of… American corporations exchanged US bonds for slave labor since the 80's and know US bonds are worthless. Once the FDIC is belly up, the IMF is belly up
Only those holding American cash in america are going to be able to barter until cash is worn out.
Time to giddy tf up and start buying on dips
The CEO of SVB told depositors to stay calm, guess he knew the bailout was coming. I wish to get information regarding insider trading? is this possible or must every other person stick with the rat race?
Is it not true that FDIC reps admitted about a month ago that they only have enough assets to cover about 1.5-2 percent on their total obligations? I have a feeling if bank runs happen and even if FDIC covers most of it by the time people get their money a dozen eggs will cost hundreds of dollars because the fed would be bailing out the FDIC by simply inflating the currency even more.
So sad as the main people who will suffer in the end are regular Joes. Maybe I am stupid but allowing a bank to only have to hold 10% of assets sounds very low, especially if its main customers are dealing in large sums of money, meaning they would likely withdrawal quite a lot at once. Also, can mediators of some sort not step in and limit the amount people can withdrawal at once? I mean if consumers didnt panic withdrawal wouldn't the bank still be in business???
Federal Reserve Banking is a hoax, as we can see here.
Relax more billion dollars for Ukraine Slava Cocaina
Well they are insured by the FDIC program that all the banks pay into so it’s not even really a story anymore
A Bill Ackerman total SVB bailout = Bill Ackerman is losing his SVB investments and can't do anything about it
Bail in will come in if bail out fails
You provide quite a good coverage of financial news, thank you.
I just don't understand how can you not consider these bankruns as part of the initial stages of a financial crisis. Even in the first part of your video, you basically described the present banking system as a hardly sustainable one in the long term, and which can see institutions facing crisis just because of market sentiment starting a spiral of selloffs and assets depreciation.
One thing is focusing on long-term, another is ignoring signals and indicators of the risks behind a system in the long-term.
Aside from this, good job and thank you for your work.
Taxpayers money bail out banks again
Contagion = People finding out the truth
News is very quiet on the Swiss National Bank recording a $132 Billion dollar loss..its worst in more than 100 years
Not tax payer funded. The government has zero $ other than tax revenue, so yes, tax payer funded. Printer press means higher inflation, means higher cost to customers at register OR, higher fed rates, causing lost jobs and MORE impact on banks..
Banking is all private no bank is run by countries bankers run countries ie they control everything our lives politics who control money control the world just like WEF /UN /WHO / EU/ are all run by bankers of evil .
This is criminal. I’m so sick of government bailing out millionaires at the expense of the average working man in the name of financial stability. The moral hazard from this just ensures further crises and that inflation will get worse!
SVB will remain in service as usual, SVB hadn't any problem! The SVB collapse was a fake out designed by the traditional banking system in order to test various issues of financial markets stability and choke the shorting monkeys! Lets hope they succeeded and now the market is healthier than the last week!
Check First Republic: -66% premarket.
Ackman just wants his money back. He cares not for everyone else
Banks certain amount of funds to hold since 2020= 0%
To late
I have heard an interesting story from a friend of mine, "Mary" who works a low level position at the commonwealth bank of Australia. Just for context cba is one of the 'big 4' banks here in Australia. I feel this story will give good insight into how this will affect our local economy.
She now works mostly inside at a desk job at our local branch but she used to be quite the outdoorsy hippy type. I guess that's what growing up forces you to do. Anyway she would still choose to take her lunch break outside most days, walking across the car park behind the bank to the park nearby. One day she notice a horrible rotting smell coming from the dumpster, didn't take too much notice of it, but definitely gave the bin a wide berth. The smell hung around all week just intensifying.
On Friday, Sam, the 13 year old son of the bank manager burst into the office crying. While he often is around the office after school while his mother is still working he normally just watched videos on his iPad and goes by unnoticed.
"Mummy they killed all the kitties!" he was yelling through his tears. The child was unconscionable, and in hindsight, understandably so. For as a dare from another kid Sam had peered inside the dumpster holding the putrid smells, and found the half decomposed corpses of 8 or so tortured street cats; some decapitated or torn apart, some defiled with sex toys, some folded inside out.
The banks upper management was very concerned with the incident but kept it very quiet. There was zero tolerance for any employee who would discuss or spread knowledge of the incident.
About 14 months later Mary was chosen to go to a conference and skills building seminar with other CBA employees from all over the country, and one evening while out at dinner with other attendees, after a few drinks and perhaps not in the best judgement she told the story of the dead cat dumpster. Another CBA employee from Wagga Wagga (a middle of nowhere town in NSW) joking said he always wondered why his branch "never had any cats around when the rest of the town is infested".
It was the next day Mary was invited to a telegram channel via an anonymous source. It was in this channel Mary learned she had stumbled upon the gruesome aftermath of an age old CBA tradition among upper management. Her anonymous counterpart confided in her that he was an IT engineer who had stumbled upon a collection of what he called "cat snuff films", ritualistic sexual murdering of stray cats all done by upper CBA managers and executives. The anonymous man had showed a friend of his, another IT engineer. But after declaring he was going to spill the beans, the friend was found dead in his apartment from an 'unexpected heart attack'.
As I'm sure none of this is real news to you, it's pretty obvious they're up to something along those lines whenever you talk to a banker. And while its hard to know the financial advantage cat snuff gives CBA over other banks, or if cat snuff is even exclusive to CBA or just a common Australian banking practice used by all our banks. The financial advantages are minimal. I however still think its an important piece of economic information that all Australian investors should know.
This is not financial advice, although it is 100% true.
I had family members who lost money from bank closures in the depression era My grandparents and aunts and uncles that lost money never trusted banks again it only took one time for them to learn DO NOT TRUST BANKS, my grandmother died with over $750K hidden around her house, they beat it into my head over and over to not trust banks and I don't
$42 billion was attempted to be withdrawn from SVB in one day!? Thats insane. Thats our indicator of the levels of panic present right now and how over leveraged banks have become. I feel like we have the potential here to destory our entire financial system within days if things get worse. We've built our entire system on the shakiest of foundations and watched the cracks slowly form. I'm afraid the system just isnt capable of handling anything like this.
What I can't understand is why is there so much commentary .. As always USD can be printed as much as needed and bailout.. its just a number on the printer…
i expected this to happen way before i found out who michael burry was, during 2013 as social politics got worse from far left to the far right ramped up its propaganda on youtube i saw eg a irish guy in the states on youtube ranting at a conservative rally and harping on about this and that, and all this good stuff, blah blah, look what happened in europe and its collapse, unlike the success from the great "experiment" and when asked "what's the great experiment?" the idiot proudly stated "AMERICA". Its funny western propaganda makes you forget so quick 1) europes collapse was due to the GFC created in the US and why greece went down the toilet, people even killed themselves 2) dude you're irish you brainwashed twit. So i'm not surprised this 2nd crash is a huge possibility, people forget america owes trillions to china and the US won't stop spending and printing cash
4:24 correction – FDIC is an acronym for Federal Deposit Insurance Corporation
multiple times you call it the 16th largest bank even after posting the ranking that clearly shows it in the 18th position. –__–
fire your editor.
ALECTA (pension fund) in sweden have lost billions in the silicon valley bank struggle and first republic. This could be the start of some hard times.
first