Good financial report by Ric Bender.....talking about reality (finally) in the job market (crap, and probably was crap for a year or two). Worth watching (9-min). One obvious thing....if you were a gov't employee...hoping to leave and find new non-gov't work...2025 is not your year.
Wednesday, 5 February 2025
Bank Stability Discussion
First, I'd recommend the three video-reports to view:
https://www.cnbcafrica.com/2025/why-some-of-americas-banks-are-at-risk-of-failing-cnbc-marathon/
https://finance.yahoo.com/news/list-failed-banks-2009-2023-170005906.html
https://www.americanbanker.com/list/4-banks-that-will-be-in-regulators-hot-seat-in-2025
Second, one of the better podcast folks who daily does a piece, and discusses banking problems...is Dan over at:
https://www.youtube.com/@IAllegedly/videos
Third, the commercial property issue (malls, stores, restaurants)...where no one seems willing to take them on (or buy from the banks)....STILL exists. Banks hold the keys to the properties since owners gave up on leasing them out or selling (even if the pricing was half of the normal value).
Fourth, I noticed in the last day or two....Canadian banks are randomingly coming up and just telling folks....your account is to be closed. No mention of reasoning. Maybe there's too much debt? Unknown.
Fifth, first bank failure of 2025....little discussed....but it was Pulaski Savings Bank of Illinois. FDIC says they had to pay out around $28-million to cover individual accounts. Buyer for the bank? No problem.....after FDIC covered the accounts.
Sixth, what barely got mentioned in the news....FDIC is taking around 17 executives of the Silicon Valley Bank (remember the first BIG failure).....to court. They say the folks were fairly incompetent, and want to seizure funds that the folks have in their accounts. Wishing them luck, but I suspect all will claim they were being deceived by 'someone'.
Seventh, about a month ago....Franklin Street CEO Andrew Wright....did a talk and basically said....the big banks 'have no more runway to extend and delay the massive amount of real estate loan maturities'. He didn't say a month or quarter....but that bank real estate crisis has to come and be dealt with.
Eight, I noticed two weeks ago....ALL-TIME high level of people paying just-minimum level on credit-card debt. People are carrying around an enormous burden (car loans, credit card, insurance, home loan, student-loans, etc).
Ninth, I'll point this out....the 4th largest bank in the US in 2008...was Lehmen Brothers. At some point, the Bush folks made a decision that some banks could be saved....and Lehmens was too far gone to save.
I see this attitude likely to repeat....with at least one or two big banks (with connections in a large way to commercial real estate on their books)....being sliced up and sold to lesser banks. The commercial property situation? Wouldn't shock me if the US gov't takes possession and offers some public sale.
You might see mall with a 2020 value of $30-million....going to half-a-million. Course....you'd be stupid to buy something with huge property tax issues, and limited ways to lease out the property or maintain it.
In the end, my general advice to 'survive' this mess? Two things, remember the FDIC insurance is limited to $250,000 per bank. If you are exceeding that amount....go to some credit union, and move the excess to some savings or CD account.
Second thing...for the most part....credit unions seem relatively safe.
Finally, if your knowledge over the 1929 crash is marginal....one book I recommend is 'The Great Crash' by Selwyn Parker.....written in 2008. Prices at $2.99 on Kindle Amazon.
There's also a excellent book that talks over the Florida 'land-boom' of the 1920s....that led up to the banking collapse....entitled: Florida Land-Boom of the 1920s, by Gregg Turner. It is pricey on Kindle (around $20). If you weren't aware....a lot of individuals went out and speculated....OVER and OVER.....getting hyped up during the build-up.
The Thing About Bank-Runs
I spent a fair amount of time in 2019/2020....reading various books over the 1920s, the Wall Street collapse in Oct 1929, the bank-run, and the depression-era of the 1930s.
What I had zero knowledge over....was the bank-runs. It made no sense.
So after reviewing a fair amount of data....I came to three observations.
1. Banks up to this point (say 1929) had zero oversight, So if the bank books said $400,000 existed in the vault.....they assumed the books were correct.
Over the years (decades)....various people (from the clerks to the bank Presidents)....took liberties to 'grab' a twenty, or perhaps even a thousand....to pay a personal debt, or engage in the land speculation business of the early 1920s.
So you might have a bank with only 80-percent of the book amount existing. Some banks were exceptionally bad.....some were marginally bad.
Once the 'wave' started in 1929....banks saw the bank-run business as a problem....they couldn't square things up with both private members and business members.
2. So we come to the limit business.
Banks figured that if you told them new rules....folks would feel happy that you denied them their life savings (say $2,000)....if you agreed they could take out $40 a month.
The problem is....if you were a bicycle manufacturing plant, or a brewery....you needed to meet your payroll once a month....say in the range of $5,000.
It only took one or two months....for the banks to realize that no one was bringing fresh new cash flow into the bank. It was strictly out-going.
3. The Fed coming to save the banks? No. There are various reasons given to why the Fed was marginally helpful....but in the end, they were assuming that the banks weren't in that bad of shape.
The bank-run laying out the path to the entire 1930s? Once you established the fact that the banks could not be trusted....you prioritized things to acquire a safe for your company/business, and cash-flow to banks dwindled.
Why I say all of this? Well....at some point this year....you will see a bank-run in Russia. Trust will dissolve over a couple of weeks, and people will put themselves into a cash-only situation....refusing to deposit any cash-flow. You being a Russian company and trying to pay workers? Things will rapidly dissolve into a mess.
Putin's value to commerce or working-class people? If a grocery store won't accept anything but cash...trust will dissolve pretty quick.
The Intellectual Deficient Comment
Is intellectually deficient....the same thing as retarded?
I sat and listened to a Trump Q-and-A, and he said the intellectually deficient comment....avoiding 'retard'.
Typically, intellectually deficient means you have a serious learning issue, lack of problem solving ability and marginal ability to conduct judgement.
Based off all my years in school, and my military period....I can readily say that if you are intellectually deficient....it's not fixable or curable. If you are lucky....people around you will help along the way, and sometimes guide you make better judgement calls, or improve your results on problem solving.
Your identifiable IQ? Typically LESS than 80.
My general issues in terms of dealing with such people? It's hard to get these types into a focused vision. They also make for the worst planners....always waiting till the damage is severe....before stepping in to resolve and plan your way out of a mess.
Putting such people into a job where decision-making is important? No....you have to draw the line and just say that we need you....but we don't need you to be a manager or 'boss'.
It's just funny....after four years of President Biden....this topic now comes up.
Humble Views
1. I spent about 90 minutes yesterday....trying to watch MSNBC, CNN, Fox, and an assortment of news coverage over Elon and the Democrats shaking in fear.
It feels like some National Lampoon comedy movie.
At the end of this Elon-adventure....I expect two things to occur. First, a bunch of lobbyists will begin telling Senators and House members....that the campaign-bucket is empty for 2026.....Elon 'swiped' the cash-flow. Second, a bunch of people will appear on CNN and admit they were duped....some kind of attempt to say while they were robbing the gov't.....someone was robbing them.
2. Google came out yesterday and offered up an 'exit-bonus'....for those who aren't committed.
In a nice way....they are saying if you just showing up and marginally contributing....you might want to take the bonus and find real work.
The question is....are you smart enough to grasp that for the past three years while you worked at Google....there's less than 100 man-hours that you really put into honest-work?
Then the last question is....once you take the bonus, and actually exit....then what?
3. Finally, you remember the TV show.....'Buffy, The Vampire Slayer' (1997-2001, 140-odd episodes)?
Well....there's talk....it'll be coming back.
Somewhere out there.....there's probably even plans to bring Gunsmoke and Rockford Files back.
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