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| Silicon Valley Bank Collapses |
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| james_s:
--- Quote from: coppice on March 14, 2023, 10:07:11 pm ---Low interest rates have persisted for so long a generation has grown up that doesn't realise what the world is like when money is expensive. I wonder how they will adapt. Its really annoying to hear young people complain how easy it was for their parent's generation to buy houses with the lower prices of the past, ignoring how interest rates made a mortgage on even those low prices crippling. --- End quote --- Yeah my parents house was a lot cheaper than mine, but their mortgage was around 18% interest while my is 2.75%, adjusted for inflation the total cost of mine is probably lower. |
| Gyro:
Credit Suisse, seems to be a bit iffy at the moment. Probably not an ideal week to choose to 'disclose "material weakness" in its accounting controls'. https://www.bbc.co.uk/news/business-64964881 |
| coppice:
--- Quote from: Gyro on March 15, 2023, 06:39:38 pm ---Credit Suisse, seems to be a bit iffy at the moment. Probably not an ideal week to choose to 'disclose "material weakness" in its accounting controls'. https://www.bbc.co.uk/news/business-64964881 --- End quote --- Credit Suisse and Deutsche Bank have been teetering on the brink for years. It seems unlikely that either could survive significant turbulence in the market. |
| Gyro:
I didn't know about Deutsche Bank. I thought the EU, like the UK, had put strict liquidity rules and 'financial challenge tests' in place [Edit: following 2008]. Credit Suisse on the other hand have had a somewhat chequered history, scandal wise, lost money for the past two years and aren't predicting profitability until 2024 (that's probably a maybe now). Saudi Bank have said that they won't inject any more money. |
| Stray Electron:
--- Quote from: james_s on March 14, 2023, 10:46:32 pm ---The thing that annoys me about this whole thing is that it reflects a fundamental part of irrational human behavior that has always irritated me. If everyone pulls all their money out, a bank will fail, any bank. If people continue on as usual it's unlikely to fail, and it is insured by the government up to a value that no individual with any sense should have sitting in their account. People get worried about a bank collapsing, fear spreads and then these same people cause the bank to collapse in the rush to get their money out. --- End quote --- I don't see what's irrational about that fear. Everyone is afraid that with everyone else taking money from the bank that if they delay getting their money that it will all be gone and they'll lose their savings. Yes, I know FDIC insures most individual accounts to $250,000 but many people (1) don't trust the government, (2) are afraid it will take months or years to be repaid (3) don't trust the government, (4) afraid that the US Gov or the FDIC will go broke and not everyone will be paid or (6) don't trust the government. In the US, we've all grown up with stories of the bank crash of 1929 and 1930 and how many people lost EVERYTHING so it drives our thinking. OTOH if the banks actually kept a significant portion of their deposits in the bank and on hand instead of playing financial Russian Roulette with it then people would be a little more inclined to trust the US banking system. But realistically, not a single day goes by that you don't hear of another bank, credit union, investment fund, Saving and Loan or other US financial institution that was been caught with their hand in somebody else's cookie jar. Until the banks and other institutions and their directors, managers, etc etc etc are all held truely accountable, no one is going to trust the current system. |
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