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Most of us heard that the 2nd largest bank failure in US history - Silicon Valley Bank, behind only the Washington Mutual failure in 2008 - occurred this past Friday. SVB had assets valued at $211 billion, but a very large portion of those assets was in the form US Treasury bonds paying 2.0% or less, while inflation is more than double that - meaning those bonds are not an asset, they are a liability.
Right now, dozens - hundreds - of California startups will be unable to meet payroll in three days unless a buyer picks up SVB. Even if such a buyer comes forward, that is a process likely to take 3 months are more.
I previously wrote on this forum about the fact that California's tax base is teetering on the brink of collapse as the state relies on massive tax payments from a small number of tech industries and tech executives. California's gravy train has derailed.
The state projected an $8 billion (WITH A B!) deficit for 2022 but that figure is likely to be closer to $15 billion and much, much worse in 2023 with the SVB failure, resulting loss of tens of millions in business and income tax revenues, and the continued flight of the middle class and upper middle class (*cough* including someone you all know and love) out of the state.
"Who cares? California can @#$% itself" you say. Yeah, I get it - but when a massive part of the economy crashes, the rest of the nation suffers as well. So the brutal, undeniable truth is this: The United States economy has been propped up for the past three years by M-A-S-S-I-V-E, ludicrous unbacked government spending, the profligate spending has triggered exploding inflation which results in skyrocketing interest rates, which brings about much higher mortgage interest, killing a huge job source in home building, and ravaging bank assets since those 2% bonds are not worth the electronic "paper" they are printed on.
I said six months ago get your money out of the stock market. I hope you ladies paid attention.
Right now, dozens - hundreds - of California startups will be unable to meet payroll in three days unless a buyer picks up SVB. Even if such a buyer comes forward, that is a process likely to take 3 months are more.
I previously wrote on this forum about the fact that California's tax base is teetering on the brink of collapse as the state relies on massive tax payments from a small number of tech industries and tech executives. California's gravy train has derailed.
The state projected an $8 billion (WITH A B!) deficit for 2022 but that figure is likely to be closer to $15 billion and much, much worse in 2023 with the SVB failure, resulting loss of tens of millions in business and income tax revenues, and the continued flight of the middle class and upper middle class (*cough* including someone you all know and love) out of the state.
"Who cares? California can @#$% itself" you say. Yeah, I get it - but when a massive part of the economy crashes, the rest of the nation suffers as well. So the brutal, undeniable truth is this: The United States economy has been propped up for the past three years by M-A-S-S-I-V-E, ludicrous unbacked government spending, the profligate spending has triggered exploding inflation which results in skyrocketing interest rates, which brings about much higher mortgage interest, killing a huge job source in home building, and ravaging bank assets since those 2% bonds are not worth the electronic "paper" they are printed on.
I said six months ago get your money out of the stock market. I hope you ladies paid attention.
