What in the world just happened? On Friday, Silicon Valley Bank collapsed and was taken over by regulators, and then on Sunday regulators swooped in and shut down New York’s Signature Bank. In a desperate attempt to prop up faith in our rapidly failing banking system, the Federal Reserve unveiled an emergency plan late on Sunday that is absolutely staggering.
All of the depositors at Silicon Valley Bank and Signature Bank will be protected, and all of them will have access to their money right away. They aren’t calling this a “bail out”, but that is essentially what it is. But will it be enough to stop the bank runs that are already happening?
Late last week, huge lines at Silicon Valley Bank quickly made headlines all over the nation.
NEW: Massive line forms outside Silicon Valley Bank in California as customers panic.
Welcome to Biden’s America. It will only get worse.pic.twitter.com/MNCQuKIc9h
— Collin Rugg (@CollinRugg) March 10, 2023
The panic at Silicon Valley Bank quickly spread to other banks in California. In particular, First Republic Bank was hit really hard…
Dozens of customers lined up outside of a First Republic Bank in southern California on Saturday eager to withdraw their funds in the wake of the collapse of Silicon Valley Bank.
There had been fears following SVB’s demise for First Republic’s future when analysts pointed out the similarities between the estimated value of their assets versus the actual value.
As news of what was unfolding in California spread like wildfire on social media, soon there were lines at various banks all over the nation.
Shades of 1930’s. This is my bank in Wellesley this morning. Boston Private Bank, recently acquired by Silicon Valley Bank. Ruh, roh. pic.twitter.com/MAD46ozShx
— Lawrence Lepard, "fix the money, fix the world" (@LawrenceLepard) March 10, 2023
But most of those that have been pulling money out of U.S. banks over the past few days never stood in any line.
Coffee the Christian way: Promised Grounds
And that is because we now live in an era where most banking is done on phones and computers…
Question: How did $42 billion get withdrawn Friday alone without thousands in line?
Answer: your phone!
This is not the Bailey Savings and Loan anymore.
This should scare the hell of bankers and regulators worldwide.
We have never seen anything quite like what we witnessed on Friday.
When it became clear that Silicon Valley Bank was collapsing, unsecured depositors engaged in a mad scramble to get their money out while they still could.
Silicon Valley Bank was the main bank for two of our companies, my personal savings, and my mortgage. This is how things unfolded for us:
Between 2013 and 2023, all good.
Thursday, 9 AM: in one chat with 200+ tech founders (most in the Bay Area), questions about SVB start to…
— Alexander Torrenegra (@torrenegra) March 11, 2023
And this wasn’t just happening in the United States.
Silicon Valley Bank had branches all over the planet, and so the panic that we were watching was truly global…
Startup founders in California’s Bay Area are panicking about access to money and paying employees. Fears of contagion have reached Canada, India and China. In the UK, SVB’s unit is set to be declared insolvent, has already ceased trading and is no longer taking new customers. On Saturday, the leaders of roughly 180 tech companies sent a letter calling on UK Chancellor Jeremy Hunt to intervene.
“The loss of deposits has the potential to cripple the sector and set the ecosystem back 20 years,” they said in the letter seen by Bloomberg. “Many businesses will be sent into involuntary liquidation overnight.”
This is just the beginning. SVB had branches in China, Denmark, Germany, India, Israel and Sweden, too. Founders are warning that the bank’s failure could wipe out startups around the world without government intervention. SVB’s joint venture in China, SPD Silicon Valley Bank Co., was seeking to calm local clients overnight by reminding them that operations have been independent and stable.
Of course not everyone that had money in SVB got burned.
For example, Peter Thiel and his minions got their money out in time…
Peter Thiel’s Founders Fund had no money with Silicon Valley Bank as of Thursday morning as the bank descended into chaos, according to a person familiar with the matter.
Founders Fund withdrew millions from SVB, said the person, who asked not to be identified discussing private information. It joined other venture funds that took dramatic steps to limit exposure to the now-failed financial institution. Founders Fund also advised its portfolio companies that there was no downside to moving their money away from SVB, even if the risk was low.
And a number of key SVB executives conveniently sold off shares in the bank just last month…
Bill, this may interest you:
Before the collapse, executives sold shares.
Gregory Becker, CEO, sold 11% on Feb 27, 2023.
Michael Zucker, Counsel, 19% on Feb 5.
Daniel Beck, CFO, 32% on Feb 27.
Michelle Draper, CMO, 25% on Feb 1.
Read more: https://t.co/GI3EDmPOGU pic.twitter.com/5kXUr34Wf6
— unusual_whales (@unusual_whales) March 11, 2023
But countless others did not pull the plug in time.
Apparently, that even included Harry and Meghan.
BREAKING: HARRY AND MEGHAN STAND TO LOSE MILLIONS IN COLLAPSE OF SVB BANK
Sources tell iSN the couple set up accounts following the advice of friends in Silicon Valley.
"This is a major blow," said our source, "They had all of Harry's money there." pic.twitter.com/d5qrfYa2Qo
— iSource News (@isource_news) March 11, 2023
Oh the humanity!
There was no way that the Federal Reserve was going to allow Harry and Meghan to lose millions.
So now they have stepped in with mountains of fresh cash.
But is the Fed prepared to do this for all of the other banks that will soon be in trouble too?
According to CNN, U.S. banks “were sitting on $620 billion in unrealized losses” as of the end of last year…
Silicon Valley Bank’s collapse last week sent tingles of panic down investors’ spines as it highlighted a larger problem across the banking sector: The widening gap between the value large lenders place on the bonds they hold and what they’re actually worth on the market.
SVB’s downfall was tied, in part, to the plunge in the value of bonds it acquired during boom times, when it had a lot of customer deposits coming in and needed somewhere to park the cash.
But SVB isn’t the only institution with that issue. US banks were sitting on $620 billion in unrealized losses (assets that have decreased in price but haven’t been sold yet) at the end of 2022, according to the FDIC.
This crisis is far from over.
As I have been arguing for years, our deeply flawed system simply cannot survive without artificial support.
What has transpired over the past several days is clear evidence of this fact.
The Federal Reserve has decided to ride to the rescue once again, and the financial community is cheering.
But will it be enough to stop the wave of panic that has now been unleashed? We shall see.
***It is finally here! Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.***
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Article cross-posted from The Economic Collapse Blog.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
