Monday, March 13, 2023

Worrisome

 President Biden is, we are told, planning to address the nation on the 

situation with the Banking system. In the wake of the collapse of Silicon Valley Bank,

wants to re-assure one and all that the system as a whole is safe although he is

not planning on helping investors. (Crédit Suisse in Europe has been struggling

for a while, now).


The underlying drama that shook SVB is clear enough: they were holding a lot

of government bonds, now worth less than their paper value because interest 

rates have soared so much in the last year. Their clients were tech start-ups, a group 

first vulnerable to a tightening economy. Voilà for the elements of the situation.


Easy enough to presume that many other financial institurion are holding such bonds. 

Banks and Pension Funds. Not all may be looking to sell these off in the current unfavourable

context, so that things carry on. 


Bottom line: Banks as an investment are not looking good. And that is worrisome...


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