Are You Ready For A Financial Collapse?

For those preppers who think that some SHTF scenarios will not be total Mad Max / caveman events and that rudimentary barter systems will continue, now is one of the last times to purchase silver. Silver got up to just under $30, but has settled back to $21 / one dollar face-value junk coins.

When the dollar tanks, silver will explode in value. Those holding precious metals will be able to use them to continue on until society really gets crazy -- that's when ammunition and tools will be the order of the day. The wife and I have put back big chunks of wax (chunks of wax weigh around 20+ pounds / 10 kilo) and wicks for candle-making. You can put back lead for your bullet molds; primers and gunpowder are also necessary. If one hasn't bought water filters, now's the time. Upper end water filters have silver-impregnated surfaces to kill bacteria.

Buy real things. The dollar is done. All unbacked currencies are finished. Tick, tick, tick, ...

https://duckduckgo.com/?q=photos+fr...on&atb=v140-1&iar=images&iax=images&ia=images
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"Debt Saturation: Off the Cliff We Go"

-- by Charles Hugh Smith

https://charleshughsmith.blogspot.com/2022/04/debt-saturation-off-cliff-we-go.html

"When the system can't borrow more and distribute the insolvency, it implodes

"I started writing about debt saturation back in 2011. The basic idea is we can continue to borrow and spend as long as one of two conditions hold: 1) real (inflation-adjusted) income is rising, so there's more income to service additional debt, or 2) the cost of borrowing declines so the same income can support more debt.

"After 13 long years of declining interest rates and stagnant incomes for the bottom 90%, we've finally reached debt saturation: after dropping to near-zero, interest rates are now rising, pushing the cost of debt service higher, while wages are losing purchasing power (a.k.a. inflation), so there's less disposable income left to service debt.

"The game plan for the past 13 years was to fund 'growth' today by borrowing vast sums from future incomes: the $1.6 trillion in student loan debt, for example, was supposed to be paid by the soaring wages of all those student-loan-serfs, and all the sovereign debt was supposed to be paid by the soaring tax revenues from rapidly expanding economies.

"These fantasies have now run aground on the unforgiving shoals of reality. There's no way to expand debt if income is losing ground and the cost of borrowing is soaring.

"Saturation is an interesting phenomenon. You keep adding more and more to a system that seems to absorb 'more' with no ill effects, and then suddenly the whole mountainside gives way and rumbles off the cliff.

"There's no tricks left to keep expanding debt: rates are rising, not falling, and wages are losing ground to the soaring costs of rent, adjustable mortgages, healthcare, childcare, food, energy, junk fees, property taxes, etc. As for the phantom wealth of bubbles: as rates rise and the Federal Reserve trims its stimulus, all the bubbles will pop.

"When the system can't borrow more and distribute the insolvency, it implodes. And so off the cliff we go."

 

https://oilprice.com/Latest-Energy-...To-Plunge-British-Pound-To-Historic-Lows.html

"'Huge swathes of the British public aren't going to be able to afford their bills this winter. Average families with two working parents will be in fuel poverty,' Gemma Berwick, Senior Consultant at BFY Group said, as carried by The Telegraph. "

By Charles Kennedy for Oilprice.com

 

Without saying “ I told you so”, what is happening now ,globally and here in the UK,was bound to happen. Too many people,total resources exhaustion,climate change etc etc.

A lot of folks here are going to struggle ,and one of the reasons is that they think living in a hot house,half naked in the middle of Winter is a human right! Now it’s costing .

Years ago we set our former farm cottage up to be as grid independent as possible; the main one being our wood - fired heating. I have to do some real work ( which modern ‘man’ is not used to), but I don’t have to be a Gym Bunny,and my fuel is free! For many years we spent our time and money paying the mortgage off,so whatever happens now will mean we can ride the rough road that is fast approaching.

We have neighbours who are constantly on holidays abroad,changing vehicles and such. They tell my wife that it’s all credit card debt. We have no debt. The whole system is on the verge of collapse .

 

Debt free here also. No debt on home , property , vehicles or credit cards . As things financially fall apart for many , with rising fuel , rent and food prices they are getting into an ever increasing bind . The financial squeeze has just begun . To know why this financial squeeze is here and going to get worse go to my last two posts on the thread " teotwawki " .

 

American socialists panicking:

"The US may now be closer than ever to defaulting on its debts"

https://www.smh.com.au/world/north-...-defaulting-on-its-debts-20230109-p5cb6p.html

"With current federal government debt of just over $US30 trillion and a current ceiling of $US31.4 trillion the Biden administration will hit the ceiling by mid-year, if not before.

"Rising interest rates, the forgiving of student loans, the cost of military assistance to Ukraine and the potential for higher social welfare spending if the economy shifts towards recession could bring that moment forward.

"There has been brinkmanship over the debt ceiling in the past, generally brought on by Republicans who have seen it as leverage to force Democrat administrations into unpopular spending cuts rather than wear the political odium of making the cuts themselves. (The Trump administration increased government debt by far more – about $US7.8 trillion – in one term than the Biden administration’s $US3.5 trillion in its first two years).

"The most recent instance of the debt ceiling being used as leverage for cuts to spending was in 2021, when the Biden administration went within days of running out of funding.

"With the US Treasury already operating under “extraordinary” spending measures – suspending contributions to government pension plans, redeeming investments and deferring obligations – the government was on the brink of a default on its debts. Without a deal, the government would be unable to borrow or fund its agencies, pay its military or meet social welfare payments.

"The more telling precedent, however, was probably a similar stand-off in 2011 when the US got so close to a default that Standard & Poor’s downgraded its credit rating. Barack Obama was forced to agree to $US2.5 trillion of spending cuts over a decade to avert disaster. S&P hasn’t reinstated America’s AAA rating.

"The Democrats’ left wing will never agree to big cuts to social spending, regardless of the consequences.

"With the Biden administration adamant that it will resist what its spokesperson has described as “hostage taking” but McCarthy himself hostage to the minority of dissidents in his party that had blocked his elevation 14 times – he agreed to a provision that a single member of the House can force a vote to oust him, where previously the vote could only have been called by the party’s leadership – the potential for something catastrophic is probably greater than in previous debt ceiling confrontations.

"A failure to lift the ceiling and a default on US government debt would be catastrophic.

"Moody’s Analytics has estimated that a default would cause a 4 per cent cut to US GDP, an unemployment rate of 9 per cent (it’s currently about 3.5 per cent) and a $US15 trillion hit to household wealth.

"Those are the direct domestic impacts. With trillions of dollars of US government debt held by foreigners, mainly by Asian economies with surplus savings – Japan holds more than $US1 trillion and China just under $US1 trillion – a default would have global repercussions."
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Ready as I'll ever be for a financial collapse. Few years ago we set out to live in intentional poverty. Land and home and no debt. We get by quite well on a single small income now, but I've imagined a scenario much like the original post, Venezuelan style. We don't have money stockpiled, instead we have things. Old school tools and useable items. There's wild game, wood, established nut trees and berries. We set up our home to take advantage of passive solar and it's placed to miss a lot of the extreme weather, and an underground shelter for other weather extremes nearby. Will we be able to survive indefinitely this way? Nope. But we'd be facing collapse already living a life not requiring much money.

If the financial collapse comes we're more ready than most everyone I know in real life. If it doesn't come it just gives me time to get a small solar setup and gather more seeds.

 

We have assets and no debt so we’re slightly insulated from it but for others the UK is fast becoming a financial basket case. For so many other people with debt to service life is suddenly getting difficult really quickly. So many people see themselves as entitled to a certain standard of living and we have pandered to them…well newsflash, it’s no longer sustainable.

 

Got a question.

First, some background info on what vehicles we have: We bought a used car a couple of years ago and bought one with only a 2.0 liter engine to get better gas mileage. It is a "sport" model and has 6 forward speeds. The extra gears really allow high gas mileage if one keeps their foot off the firewall (I drive too fast when alone). Because our grandson in another state lives so far away, we wanted both a commuter car and something that one could fill-up and drive 500 miles before refilling which the 4 cylinder provides. The old SUV we have drinks gas, 6 cylinder (with inefficient engineering); but, it never gets driven very far. It's weight and 4x4 ability allows winter driving when Old Man Winter really kicks out the stops -- we drove it during Midwest snowstorms/icing conditions. We also have a 20 year old Mazda that continues to run; even has some zoom-zoom left in it (compression OK; valve oil seals going bad = smokes at startup, but not while driving). This is why we got another Mazda -- they last and are only traded-in by people who lease, not purchase, their cars. Our 4x4 is a Ford. We've gotten hit with some serious repair bills on that Ford, but it is 14 years old and keeps on truckin'. It will outrun the "sports" Mazda on a straight stretch. The Mazda's suspension makes driving a breeze even up on the massively twisty-curvy roads in the mountains. The Ford's suspension sucks.

What vehicles we have is VERY common in America. However, a lot of people commute using SUVs in perfectly fine weather over long distances. That behavior wastes a tremendous amount of gasoline. I see suburbanites buying BIG 4x4 trucks !!!! WTF! FARMERS don't buy trucks like that unless they often tow heavy trailers and horse trailers. When I worked the Forestry Service centuries ago, we only had maybe two or three 4x4.s in a motorpool of well over a dozen trucks. We traveled into the very worst of worse places up in the Cherokee National Forest in plain old two-wheelers. Need a 4x4? -- no, stay with the regular truck and just have some men jump in the back bed to hold down the rear wheels.

Now my question about England:

In the UK, is there a limit on the engine size of a passenger car? Or, are there higher taxes if the engine is large?

Years and years ago, I read something about the engine size being restricted to 1.5 liter or less, yet in photos from England I see cars that come with engines at least 2.0 or larger.

Oh by the way, Americans who've bought the SUVs for commuting cry crocodile tears as the gas prices go up.
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I bought my first car in Spain just before xmas, a Nissan X-Trail hybrid 4x4. Petrol engine up front, electric engine in the rear. Petrol engine charges the battery and when charged shuts off and your running electric mode so no need to plug it into a power socket for hours. Its a comfortable 5 seater and I'm getting around 55-60 mpg so I'm happy with that considering its a 1.5l turbo engine.

The 4x4 is handy because this time of the year up here in the hills we get a lot of rain/sleet/snow and the roads around here are not great at the best of times. I've still got the Iveco van here and the Mitsubishi Delica camper in the UK which I'd love to bring over but getting it registered and modified would cost more than its worth so really its my lads now.

I love this fella, well worth watching

 

"Firefighters Issue Warning: EV Fires Require 10x More Water to Put Out, Up to 10,000 Gallons of Water"

https://www.westernjournal.com/fire...es-require-10x-water-put-10000-gallons-water/

"According to News Nation firemen are warning that electric car fires are far more problematic than fires that engulf gas-powered vehicles.

"Lt. Tanner Morgan with the Grand Prairie Fire Department near Dallas told News Nation that fire departments are not exactly ready to deal with EVs.

“'We’re at that critical point where the consumer-driven world we live in is pushing these vehicles out and the fire department is playing catch up,' he said.

"Lt. Morgan went on to say that a gas-powered car typically takes less than 1,000 gallons of water to douse it when it catches on fire. But EVs are a bigger problem, he said. When an electric vehicle catches on fire, firemen are faced with a 'thermal runaway.'

"Morgan added that the lithium-ion batteries in an EV fuel a fire to a much higher degree than gasoline. And firefighters are having to learn that they need different tactics to fight an EV fire.

"Fremont Fire Department Battalion Chief Gary Ashley said, 'The protocol is to start using copious amounts of water, up to 3,000 gallons, so that’s what we started doing.'

"Unfortunately, 3,000 gallons wasn’t enough for a recent EV fire in Sacramento. News Nation reported that firefighters on that case didn’t start getting the fire under control until 4,500 gallons were sprayed onto the flames. Authorities said that even when firefighters sprayed water directly on the battery compartment, the fire kept reigniting.

"Even Tesla warned about the huge amount of water needed to douse an EV fire.

“'Tesla’s own emergency response guide for the Model S warns that battery fires can require between 3,000 to 8,000 gallons of water to fully extinguish the flames,' News Nations wrote. So, obviously, 10,000 gallons is not out of the question.

"Officials are also warning rural fire departments — in areas where fire hydrants are not available — could face very dangerous conditions with EV fires, especially when many fire trucks cannot hold that much water.

“'In rural areas, especially on interstates where there are no hydrants, this is going to create a logistical issue for emergency response agencies as they’re going to have to shuttle the water up that they need,' the National Volunteer Fire Council’s Tom Miller said."

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Excerpts from an article for firefighters on how to put out electric vehicle fires:

"Electric vehicle response: Fire attack and extrication basics"

https://www.firerescue1.com/electri...tack-and-extrication-basics-PwPBmx8uuMuMOR2G/

Quotations in color yellow-green:

When responding to an EV fire, crews will need to know what exactly is on fire.

If the vehicle is on fire and the high-voltage battery is not involved, it is a standard vehicle fire that should extinguish with a few hundred gallons of water. If the high-voltage battery is on fire, things become much more complicated.

There are many stories about fire departments being on scene for 6 to 8 hours using upwards of 40,000 gallons of water. The issue is that firefighters aren’t really equipped to put out the fire. For example, when an 18650 battery cell (about the size of an AA battery) fails, it releases approximately 6 liters of gas at 1,200 degrees F in tenths of a second. The failure is an exothermic chemical reaction that does not require oxygen from the atmosphere. The energy released from that individual cell is transferred to the neighboring cells, which causes them to fail. This reaction continues until one of two things happen. Either there are no more battery cells, or fire crews can cool the surrounding cells enough that they don’t fail.

So, in order to stop a thermal runaway event, firefighters have the impossible task of trying to cool battery cells inside a watertight, flameproof box. Note: DO NOT pry/cut/remove any part of the battery case to gain access to the fire! Assuming no exposures are present, the best solution is to allow the high-voltage battery to burn itself out. While this strategy is not ideal, it should only take an hour for the battery to burn itself out. The alternative will be to continually dump water on the vehicle for 6 to 8 hours.

EV extrication

Extrication is an area that is overlooked when considering EV response.

Depending on the severity of the crash, EVs can provide unique challenges to firefighters. The vehicle construction and weight distribution could change standard strategies for stabilization. Typically, the outer edges of the battery structure mate to, or are considered the rocker panel. If undamaged, this is typically a safe location for rescue struts or cribbing. Further, when faced with a vehicle on its side, DO NOT use any holes that may have been caused by the crash, or pierce, puncture, create any purchase point in the battery case for rescue struts. This could cause an electrocution and/or fire hazard.

Firefighters should lift an EV at the rocker panel. If the high-voltage battery is intact, an airbag lift could be acceptable on the bottom of the vehicle. Auto manufacturers have specific design criteria for customers that misuse jacks; however, be certain to complete any lifts over a large surface area.

While extricating a patient, it will be extremely important to have a hoseline charged and staffed with a firefighter in full PPE ready to fight fire, as there is a significant risk of a delayed fire.

While firefighters are performing the extrication, everyone involved needs to be aware of the battery. If it’s smoking, popping, sputtering, or if firefighters have eye, nose, throat irritation, there could be harmful/flammable gasses being released. Crews should pull back to don full SCBA.

Crews should also consider the health/safety of the patient(s). Using a vent fan may be appropriate to blow fresh air into the passenger compartment of the vehicle. Also, firefighters should remove trim to verify what they are cutting before the cut is made. DO NOT cut any high-voltage cabling (bright orange). Manufacturers are often routing high voltage cables in the center of the vehicle away from our typical cut points.

Notes for the tow operator

After the incident, notify your tow operator that they will be removing an EV. All hybrid and electric vehicles should be transported on a flatbed. If there’s damage, or suspected damage, there is a risk of a delayed fire. Ask the tow operator to store the vehicle outside at least 50 feet from a structure. Also request the tow operator contact the dealer/manufacturer. They may have different methods of rendering the vehicle safe.
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Firefighters please listen. Wear protection devices when putting-out lithium fires. These give off toxic fumes.

"Difficult to exhale, toxic fumes came out"

https://darik.news/nevada/difficult-to-exhale-toxic-fumes-came-out-2/791319.html

"Lithium ion batteries are made up of many cells, so not only do they burn at very high temperatures, the fire can last for several hours. They also pose other hazards, such as 400-volt electric shock, toxic fumes, and skin and respiratory tract irritation from lithium.

"He said the only way to put out an EV fire right now is to pour water on it continuously, sometimes for hours."
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When we moved here we were running a Toyota D4d pickup with a 3 litre auto. We found we didn’t really need it. We bought a year old Peugeot 308 station wagon and have run that ever since. It is a 1.4 common rail diesel engine with an annual road tax of £30 and really economical fuel/mileage…it’s not much to look at but it’s running fine and does what we want of it. We also run a small van for business.

 

Station wagons are great! They used to be THE vehicle for families. Kids, sports equipment, groceries, ... even lumber when you put the seats down.

I've heard that one of the factors that killed station wagon sales was that "soccer moms" didn't want to drive them because the station wagons made them feel as though people would perceive them as housewives. So, in came the vans and then the monster SUVs. In crashes, vans fold up like aluminum cans. The larger SUVs drink gasoline and these women can't drive them nor park them properly. What a total abomination!

Diesel engines give off soot and that simply precipitates. Due to the much greater compression, fuel is more efficiently burned by the diesel engine. Only the Wankel engine burns gasoline as efficiently as diesels burn kerosene/diesel, but the Wankel still uses a lot of gas. If global warming is happening, then we need to shoot sulfur up there high in the atmosphere to negate the CO2 effect. Currently, we are scrubbing sulfur out of industrial chimneys and refining sulfur out of diesel fuel. Some sulfur must go, else there can be acid rain damage in certain environments.

The only downside of diesel engines is that the glow plugs have to be hot to get the engine to fire-up / start. Some folk used to plug-in their Mercedes Benz cars' diesel engines -- this to heat the glow plugs.

Is the latter still true? Me, I don't know. Does the Peugeot diesel require the heating of the glow plugs before ignition? If so, does it have to be plugged-in to an electrical outlet, or can the car's own lead-acid battery heat the glow plugs? Some diesel ignition systems have a switch tied to the keylock mechanism that heats the glow plugs. Some light comes on when the plugs have heated-up telling the driver it's now ok to start the engine. Does the Peugeot work like that? Does its engine block have to be heated during particularly cold spells?

Diesel is the way to go. I've thought this for decades now. Kerosene is easier to distill and too, one can get diesel fuel from coal much easier. Per given volume, diesel has more energy than gasoline. Diesel engines have fewer parts. Diesel engines last longer. Me, I like the fact that kerosene burns so efficiently. I've been around kerosene since a little kid. My mom's parents had an oil heater for their home -- it was a big old monster sitting in their living room.

Gasoline engines give off lot's of carbon monoxide and a whole bunch of other toxins. Kerosene if spilt can cause a fire. Gasoline can cause an explosion. Gasoline fumes are a nightmare waiting to happen.
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My dad always said never buy a new car, buy one 12-18 months old when any inherent problems would have been sorted out and your saving typically 30+% on the retail price. My Nissan was a few months old and saved me around €7k on the new purchase price.

Always listen to your dad

 

The normal rattle of the diesel engine is primarily due its MUCH higher compression ratio than gasoline engines. That's what my dad told me when I was kid. They don't have spark plugs so as to exactly determine the moment of ignition. They have glow plugs that are there and always hot. I looked online and found the following which is a better explanation than mine:

"Diesels do work on spontaneous combustion. As the piston goes up, fuel is squirted into the combustion chamber. as the piston moves upwards and "squeezes" the fuel/air mixture it ignites. Some of it ignites prematurely as the piston is still on the move upwards, causing that characteristic diesel "clatter" at idle.

"The newer diesels use a high-pressure common-rail system that shoots a small amount of fuel into the chamber as the piston is moving up, shoots the rest in (at very high pressure) when the pistons towards the top of it's "up" cycle, giving a more complete burn and reducing the noise at idle."

Old Gzr: I didn't know about the "common-rail system" -- great idea, that.

The diesel's high compression, like 18:1 is much better than a gas engine at 10:1 (I'd have to go look-up these compression numbers, I don't know the exact numbers). This is the reason for the more complete burning of the diesel fuel. And like I said before, diesel fuel gives more bang for the buck than gasoline, energy-wise.

What I'd take with me in a bug-out situation would require an SUV. In a bug-out I'd load the SUV with guns, ammo (hundreds of rounds), food, camping gear, needed tools, night vision, fire-starters, candles, durable clothes, at least 15 gallon of clean water, wench & axes (chainsaw if room) to clear me a path (should anything get in my way), flares (to light-up an enemy) or to mark my own position when radioing forward to people I know as I got close to my own.

Behind the SUV would be one of our small cars carrying fuel. Once the SUV ran out of fuel. I would fill it up with what was in the small car. The second time the SUV ran out of fuel, I'd fill it a second time with the fuel in the small car and then abandon the small car if unable to fill it again. The small car can carry several 5-gallon gas cans. It is also good to have a second car as a six-o'clock. Someone open fire on one vehicle and that aggressor would catch a mountain of lead from two cars. We'd turn their car into a sieve in a matter of moments.
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Hi old geezer, the Peugeot 308SW is probably a lot smaller than the station wagons that America’s moms used to drive, as far as the glow plugs go there is a seven pin relay under the bonnet that turns the glow plugs on when you turn the ignition on and then turns them off again as soon as the engine turns over. If you turn it to on and wait for the little coil light on the dash to go off the engine fires up instantly first turn of the key whatever the weather. Old diesels had a lot less electrics to go wrong, these days there are all sorts of sensors and NOx re circulation devices (to burn it off, so reducing emissions) that can go wrong…that is before you start on all the plug in diagnostics, ABS, ESP and other gadgets. Lucky for me I’m a decent mechanic.

 

"Silicon Valley Bank is seized by US after historic failure"

https://www.baltimoresun.com/busine...0230310-ojzc2hqyqbcjlip2dnklzigpie-story.html

"NEW YORK — U.S. regulators rushed to seize the assets of Silicon Valley Bank on Friday after a run on the bank, marking the largest failure of a financial institution since Washington Mutual collapsed at the height of the financial crisis more than a decade ago.

"Silicon Valley Bank, the nation’s 16th largest bank failed after its depositors — mostly technology workers and venture capital-backed companies — hurried to withdraw money this week as anxiety over the bank’s health spread. It is the second biggest bank failure in U.S. history.

"The bank had deep ties to Silicon Valley industries and startups. Y Combinator, an incubator startup that has launched companies such as Airbnb, DoorDash and Dropbox, has referred hundreds of entrepreneurs to the bank.

“'This is an extinction-level event for startups,' Y Combinator CEO Garry Tan said. 'I literally have been hearing from hundreds of our founders asking for help on how they can get through this. They are asking, ‘Do I have to furlough my workers?’

"Tan estimated nearly one-third of Y Combinator’s startups won’t be able to make payroll at some point in the next month if they can’t access their money. He said he is asking regulators and lawmakers if the startups can be eligible for financial aid.

"Shortly before noon eastern, the Federal Deposit Insurance Corporation moved to shutter the bank. Notably, the FDIC did not wait until the close of business to seize the bank, as is typical in an orderly wind down of a financial institution. The FDIC could not immediately find a buyer for the bank’s assets, signaling how fast depositors had cashed out.

"Silicon Valley Bank had $209 billion in total assets at the time of failure, the FDIC said. It was unclear how much of its deposits were above the $250,000 insurance limit, but previous regulatory reports showed that much of Silicon Valley Bank’s deposits exceeded that limit. The FDIC that deposits below the $250,000 limit would be available Monday morning.

"The bank still appeared stable this year, but on Thursday it announced plans to raise up to $1.75 billion in order to strengthen its capital position. That sent investors scurrying and shares plunged 60%. They rocketed lower again Friday before the open of the Nasdaq, where it is traded."
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Update on the Silicon Valley Bank collapse --

SVB International Fallout: UK and EU Lenders Lose £30 Billion Overnight as ‘Panic’ Spreads

https://www.breitbart.com/europe/20...s-lose-30-billion-overnight-as-panic-spreads/

"The fallout from the run on the Silicon Valley Bank in California went international overnight, with British and European Union lenders seeing nearly £30 billion wiped off their portfolios and the Bank of England stepping in to take over the insolvency process for the British arm of SVB to protect the deposits of British firms tied to the bank.

"Since Friday, the Stoxx Europe 600 banks index, which also includes leading British lenders, saw a mass sell-off in the wake of the collapse of the Silicon Valley Bank, the largest American bank failure since the 2008 financial crisis. In total, the European-UK banking index saw a one-day decline of 3.8 per cent, with €33.5 billion (£29.6/$35.6 billion) being wiped off their balance sheets.

"Some of the United Kingdom’s largest banks saw their shares fall significantly, with HSBC declining by 4.6 per cent, Lloyds Banking Group falling by 3.3 per cent, and shares in NatWest going down by 2.5 per cent, The Times of London reports.

"The California Department of Financial Protection and Innovation had described SVB as being in 'sound financial condition' before the run on the bank, which saw customers withdraw some $42 billion, resulting in the bank having a negative cash balance of $958 million.

"While the Federal Deposit Insurance Corporation (FDIC) in the United States pledged that all insured deposits in the bank will be honoured, this may not be a huge comfort to many of the bank’s customers, given that reportedly only seven per cent of SVB deposits are insured.

"There has been some pushback, however, against the idea of bailing out the California-based bank, including from Congressman Matt Gaetz, who said: 'If there is an effort to use taxpayer money to bail out Silicon Valley Bank, the American people can count on the fact that I will be there leading the fight against such a bailout,' adding: 'The financial arm of Silicon Valley has just been severed before our very eyes.'

"Republicans pointed to the disastrous economic policies of the Biden administration and the ensuing ‘Bidenflation’ for triggering the bank’s failures, while other conservatives noted that the Silicon Valley Bank likely deployed the use of woke Environmental, Social, and Governance (ESG) scores in its operations, meaning that the bank may have prioritised left-wing causes instead of focusing on financial viability."
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Clowns imagining that they can run the circus:

"Hedge Fund CIO: In Times Like These, Markets Push Prices To The Point Of Maximum Policymaker Pain"

By Eric Peters, CIO of One River Asset Management

https://www.zerohedge.com/markets/h...ets-push-prices-point-maxmum-policymaker-pain

“'I have not considered or discussed anything having to do with blanket insurance or guarantees of all deposits,' answered Janet Yellen, when asked on Wednesday whether Treasury would circumvent Congress to insure all deposits.

"Naturally, this accelerated the bank run, as rational economic actors moved their money.

“'Certainly, we would be prepared to take additional actions if warranted,' said Yellen on Thursday, attempting to reverse Wednesday’s damage.

"And this made it more likely that additional action will become warranted. Because in times like these, markets sniff out weakness, and push prices to the point of maximum pain. Policymaker panic.

“'In such an environment, our ultimate goal is clear: we must – and we will – bring down inflation to our medium-term target in a timely manner,' declared Christine Lagarde, determined, schooled in the importance of conveying confidence during times of crisis.

“'In current conditions, a robust strategy calls for a data-dependent approach to making policy and a clear reaction function so that the public understands the sources of information that will be important to us,' continued the ECB President.

“'To that end, our future policy path will be determined by three factors; (1) our assessment of the inflation outlook in light of the incoming economic and financial data, (2) the dynamics of underlying inflation, and (3) the strength of monetary policy transmission,' explained Lagarde.

"It all sounded great to just about everyone, except investors, and especially traders.

"Because (1) a central bank’s inflation outlook in times of great economic uncertainty is profoundly unreliable, (2) the dynamics of underlying inflation are wildly unstable when inflation is this high, and (3) monetary policy transmission in a highly indebted hyper-financialized global economy can appear too weak one day and precipitate a bank run the next.

“'At the same time, I have made clear that there is no trade-off between price stability and financial stability. We have plenty of tools to provide liquidity support to the financial system if needed and to preserve the smooth transmission of monetary policy,' said Lagarde, presumably hoping that if she said it with great certainty, we would all forget the lessons of decades of trading and a century of financial history.

"You see, central banks do not have the power to determine how monetary policy is transmitted. Markets decide. And there is always a trade-off that central banks must make between price stability and financial stability. To deny this is to invite markets to press our policy makers to the point where they must choose one or the other."

 

"The Sword of Damocles"

https://mtmalinen.substack.com/p/the-sword-of-damocles

Begin quote:

On Tuesday, I published a post on X (Twitter), which summarized an economic worst-case scenario for the Israeli-Palestine war. It included 10 points:

1. The conflict escalates into a regional war with the U.S. becoming directly involved.
   
2. OPEC responds with an oil embargo.
   
3. Iran closes the strait of Hormuz.
   
4. The price of oil reaches $300/barrel.
   
5. Europe succumbs into a full-blown energy crisis due to LNG shortage.
   
6. Massive spike in energy prices reinvigorates inflation with central banks responding accordingly.
   
7. Financial markets and the global banking sector collapse.
   
8. Debt crisis engulfs the U.S. forcing the Federal Reserve to enact yet another financial market bailout.
   
9. Petrodollar trade collapses.
   
10. Hyperinflation emerges.

End quote

The full article can be read here if you don't have a Substack membership:

https://www.zerohedge.com/geopoliti...mic-worst-case-scenario-israeli-palestine-war
===============

 

"We Could Be Looking At A War Economy That Nobody Today Has Ever Experienced Before"

By Benjamin Picton, Senior Macro Strategist at Rabobank

https://www.zerohedge.com/markets/we-could-be-looking-war-economy-nobody-today-has-ever-experienced

Begin quote

We have been suggesting for some time that the world security order is collapsing. Practitioners of idealist foreign policy will have to update their favourite bromides of the “rules based order”, because such a system no longer exists (if it ever did). Recent events suggest that we are back to the Hobbesian order that prevailed before the long peace, and potentially on a path to something worse than Great Power tension and regional proxy wars.

As popular historian Niall Ferguson alarmingly describes in The Times over the weekend, “a cascade of conflict... has the potential to escalate to a Third World War.” That is a worst case scenario, and one that we can still avoid, but it is a risk. With events moving as fast as they are, nobody can anticipate what might light the fuse on the geopolitical powder-keg. The Kaiser certainly never anticipated the actions of Gavrilo Princip in 1914.

Indeed, US national security advisor Jake Sullivan’s now infamous statement just two weeks ago that “the Middle East region is quieter today than it has been in two decades...” is starting to look a bit like Neville Chamberlain walking off a plane declaring “peace in our time!”

What are the implications for financial markets of this worst case scenario? Well, that’s not really the right question, but if we have to answer it it’s probably a combination of inflation, financial repression, scarcity and a long-overdue reversal of multiple expansion. We would be looking at a war economy that nobody in the markets today has ever experienced before.

Unthinkable as that prospect is, it’s not hyperbole. The tails are getting fatter by the day and this week at least, a clearing of the clouds will herald the beginning of the storm, rather than the end.

End quote

 

This ancient demon simply won't shut up. Of course when he speaks, he does reveal himself to be the enemy of humanity.

"George Soros' demand that America and Israel 'open the door to Hamas' makes its rounds once again "

https://www.theblaze.com/news/georg...the-door-to-hamas-makes-its-rounds-once-again

"While Al-Shabaka might not speak for the 93-year-old leftist billionaire, Soros has previously appeared to suggest that the West should work with Hamas. In a 2007 Financial Times op-ed, which recently began making the rounds again, Soros argued that "America and Israel must open the door to Hamas

"In a March 2007 article entitled, 'America and Israel must open the door to Hamas,' Soros wrote, 'The Bush administration is again committing a blunder in the Middle East by supporting the Israeli government in its refusal to recognise a Palestinian unity government that includes Hamas.'

"Soros did not get his way 16 years ago. However, in the time since, he has managed to pad the pockets of others who might be eager to hold the door for Hamas.

"The Palestinian activist group Al-Shabaka stated within hours of Hamas terrorists savaging hundreds of civilians that it 'rejects the Israeli regime's colonial borders that work to fragment and ultimately erase Palestinian existence. Breaching these boundaries expands the Palestinian imaginary for possibilities of both resistance and collective freedom."

" 'We recognize that decolonization is not a metaphor; it is not merely statements or analysis, but an active process that demands the dismantling of colonial power and the reclamation of land,' continued the statement.

"NewsBusters recently reported that Open Society Foundations, the grant-making network founded by Soros, gave Al-Shabaka $550,000 between 2017 and 2021 alone while the aged billionaire was still in charge. In the apparently pro-Hamas group's spring 2023 annual report, Al-Shabaka lists OSF as one of its valued supporters.'

"BLM [Black Lives Matter], which has reportedly netted tens of millions of dollars in grants from OSF, saw its Chicago chapter post an image last week of a paraglider with a Palestinian flag captioned "I STAND WITH PALESTINE," just days after Hamas terrorists paraglided into Israel.

"Money from Soros' organizations appears to have also made its way to others who have blamed Israel for its recent misfortunes, such as Rep. Rashida Tlaib (D-Mich.). "

------------------------------------

Parent article:

Answers, Please! Why Did George Soros Fund a Radical Pro-Hamas Group?

https://www.newsbusters.org/blogs/b...e-why-did-george-soros-fund-radical-pro-hamas

"Al-Shabaka, also known as the 'Middle East Policy Network,' published a disgustingly brazen post on X (formerly Twitter) in support of Hamas roughly a day after the terrorist group launched thousands of rockets on Israel and proceeded to rape women, murder civilians and kidnap children and the elderly. 'We stand alongside those committed to this effort [of decolonization from Israel] and to the liberation of Palestinians worldwide,' Al-Shabaka spewed on X Oct. 8. “Al Shabaka rejects the Israeli regime’s colonial borders that work to fragment and ultimately erase Palestinian existence.”

"Open Society Foundations records show that when George Soros was in charge, OSF gave the group a sizable $550,000 between 2017 and 2021 alone. George Soros’ son Alex, the newly-minted, unhinged heir to the $25 billion OSF empire, was deputy chairman during the funding period. In the group’s Spring 2022-Spring 2023 annual report, Al-Shabaka listed OSF as one of its 'valued supporters.' ”
.....................................................................................................................................................

https://newsbusters.org/blogs/business/joseph-vazquez/2023/07/13/alex-soros-his-own-words

"George Soros — one of the world’s most powerful and influential leftist billionaires — finally found an heir to his massive empire. Alex Soros was named the new leader of his father’s $25-billion Open Society Foundations. That gives him the resources to be, in his own words, even 'more political.'

"Alex tweeted that the GOP was 'the Confederacy' for pushing the repeal of the pro-abortion Roe ruling. He hates both recent Republican presidents. Alex smeared former President George W. Bush by claiming he was a 'criminal deserving of impeachment.' He prophesied the possible 'end of democracy' and 'civil war' should former President Donald Trump get reelected.

"Alex has already been hard at work establishing major influence with world leaders, including President Joe Biden, who either fully or partially share his radical views. The Soros crown prince is now a world leader in his own right. Records revealed in May that Alex visited the White House at least 17 times, according to Fox News. Two of those visits were with Biden’s former Chief of Staff Ron Klain. Alex has also met regularly with some of the most powerful heads of state across the globe. '‘He’s earned it,’ said the elder Soros to The Wall Street Journal of Alex’s coronation. Alex was formally elected as OSF's chairman in December, 2022, according to The Journal.

"Alex takes over the incredibly influential, leftist Open Society Foundations, which have operations in 120 countries and a $25 billion war chest. The foundations were established by George Soros in 1993, and he has given well over $32 billion to them to promote his twisted “open society” vision. That concept includes everything from climate radicalism and racial division to open borders and outright anti-Americanism."
------------------------------------------------------------------------

 

"The Fed Is Bankrupt"

By: Thomas L. Hogan, Ph.D., is senior research faculty at AIER. He was formerly the chief economist for the U.S. Senate Committee on Banking, Housing and Urban Affairs. He has also worked at Rice University’s Baker Institute for Public Policy, Troy University, West Texas A&M University, the Cato Institute, the World Bank, Merrill Lynch’s commodity trading group and for investment firms in the U.S. and Europe.



https://www.aier.org/article/the-fed-is-bankrupt/

Begin quote

The Fed is bankrupt — and I don’t just mean intellectually.

Like a private bank, the Fed maintains some level of capital as a buffer against losses. When those losses exceed the value of its capital, the Fed becomes insolvent, meaning the liabilities it owes to others are greater than the total value of the assets it holds.

The most recent data show that the Fed owes the Treasury over $41 billion, which exceeds its total capital. The Fed, by common standards, is indeed insolvent.

Deceptively deferred assets

What does the Fed do when its liabilities exceed its assets? It doesn’t go into legal bankruptcy like a private company would. Instead, it creates fictitious accounts on the assets side of its balance sheet, known as “deferred assets,” to offset its increasing liabilities.

Deferred assets represent cash inflows the Fed expects in the future that will offset funds it owes to the Treasury. As the Fed describes, “the deferred asset is the amount of net earnings the Reserve Banks will need to realize before their remittances to the US Treasury resume.” The Fed had already accrued $41 billion in deferred assets, and the amount is only getting larger.

The advantage to deferred assets is that the Fed can continue its normal operations without disruption, although considering the 40-year-high inflation, its recent performance has been less than ideal.

The disadvantage is that, at a time when the Fed is already worsening the US fiscal position by raising interest rates (and therefore interest payments on the federal debt), it is further robbing the Treasury of revenues by deferring them into the future. Those deferred payments, of course, must be shouldered by American taxpayers until the Fed’s remittances resume.

These losses may be offset by any previous gains on the Fed’s QE portfolio, but assessing the net effects of those actions is even more difficult. QE has created massive distortions in the financial system. The Fed’s interest rate tools of interest on bank reserves and ONRRPs have significantly curtailed short-term lending in the banking and financial systems.

[Old Gzr; the most important paragraph is the one just below -- I'm going to highlight it in Bold face print. True financial institutions are forbidden from engaging in these charades, this fraudulent behavior. The Fed is dead and has to be propped-up at the expense of tax payers and those attempting to secure mortgages for a home they wish to purchase.]

A job for Congress?

In addition to its role in managing the money supply, the Fed is the primary regulator of most US banks. If any private bank behaved this irresponsibly, regulators, such as the Fed or Federal Deposit Insurance Corporation (FDIC), would force it to close. Bank managers would lose their jobs and incomes.

Clearly, Congress is not planning to shut down the Fed, and is unlikely to punish it for its poor performance, but there are changes that could be made. The banks that are members of the Federal Reserve System could be forced to cover the capital shortfall, as described in the Federal Reserve Act. The Fed could return to a corridor system of monetary policy, resulting in lower interest paid on bank reserves and ONRRPs relative to market rates and therefore fewer reserves held at the Fed.

Shrinking the Fed’s balance sheet would make another Fed insolvency less likely, while also reducing the Fed’s footprint and the distortions it creates in the financial system. At very least, Fed officials should better manage its operations so as not to be a drain on American taxpayers again in the future.

End quote

 

The above post dealt with the demise of the U.S. Fed. The following article deals with the predicament of the European Central Bank.

Overview: The financial situation in most all Western central banks is one of grotesque instability. They are teetering on the brink of destruction. Any more boo-boos in government banks or in the financial world in general could blow-down the current house of cards. And that's what we're talking about here, a house of cards.

View attachment 7976


Notes:
ECT stands for European Central Bank;
QT is the abbreviation for quantitative tightening


"Central banks’ trillion-dollar problem"

"Bloated balance sheets need to come down without endangering financial stability"

November 16 2023

By: Tej Parikh

Tej Parikh is the Financial Times's economics leader writer. Before joining the FT he was a director of economics at Fitch Ratings and chief economist at the Institute of Directors.

https://www.ft.com/content/98cfe9c2-d7de-4825-8d8c-508b309c142f

Begin quote:

From 2009 until the end of last year, net asset purchases by major central banks — the US Federal Reserve, European Central Bank, Bank of England, and Bank of Japan — totalled about $20tn. That figure must come down. The big question is how far, and how fast.

Following the financial crisis, central banks hoovered up bonds as part of quantitative easing programmes to stimulate demand-sapped economies. Then the pandemic hit, leading to a further bond-buying binge to calm markets. Central banks (with the exception of the BoJ) have been slimming their balance sheets this year via quantitative tightening: letting expiring bonds roll off their balance sheets, and in the case of the BoE, through sales.

When central banks buy bonds from banks, the latter receive a credit known as central bank reserves — the safest and most liquid financial assets. QT reverses the process, reducing liquidity in the system. Still, the Fed’s total asset holdings amount are equivalent to about 30 per cent of the US economy — just under $8tn — and the ECB’s, more than half the eurozone’s gross domestic product.

Maintaining too large a balance sheet leads to heightened financial instability — excess reserves distort the private market for liquidity provision, create dependence on the central bank, and, as Andrew Hauser, an executive director at the BoE, outlined in a recent speech, it can incentivise inappropriate risk-taking.

It can also raise operational and reputation risks for central banks. When interest rates rise, central banks suffer losses on their bond portfolios and pay out more interest on bank reserves created by QE.

“Many central banks are now facing big financial holes, which are politically uncomfortable” said Ricardo Reis, a professor at the London School of Economics. In July, the BoE forecast it would make a net loss of more than £150bn over the next decade as it unwinds QE. Although the cost is covered by treasuries, it is hardly good for the public image of the central banks. The aim of QE should be to calm markets or provide stimulus when rates are already low. If it is not unwound, central banks risk being seen as financing government deficits.

A more trimmed balance sheet also allows central banks to regain “valuable policy space in an environment in which the current large volume of excess liquidity is not needed”, as Isabel Schnabel, a member of the ECB’s executive board, noted in a speech in March. Rates may also need to be pushed higher than would be the case with smaller balance sheets, raising the chance of deeper recessions — particularly if they just ratchet higher with each crisis.

But the trillion-dollar problem facing central banks is how to shrink their footprint without sparking ructions. High government deficit forecasts, particularly in the US, point to an ample supply of government bond issuance down the line. Ongoing QT with bond sales only adds to that supply. This may push yields too high, and lead to something breaking in the economy — the Fed’s QT efforts in 2019 drove market convulsions. Calls to abandon QT are already mounting.

How far central banks should go depends on what is the optimum size of their balance sheets, or the preferred minimum range of reserves as the BoE calls it. “It should be large enough to satiate the demand for reserves,” Reis argues. This means central banks should not slim down to pre-global financial crisis levels — economies have grown and banks’ liquidity needs have risen (as demonstrated by the demands on Silicon Valley Bank following rapid deposit outflows that led to its collapse).

That has made calculating the precise level of the PMRR more difficult. In the US, the banking system’s lowest comfortable level of reserves has been estimated by analysts to be about $2.5tn, compared with more than $3tn currently. This suggests the end of QT is still distant, particularly when factoring in the Fed’s other liquidity facilities.

But there are several complications: can central banks cut rates on one hand while carrying out QT with the other? And for the ECB, QT is complicated by the need to defend “peripheral” sovereign bond yields, stopping them from widening too far from those for other eurozone debt. Given it holds a disproportionate amount of these bonds, QT sales could put pressure on them.

Central banks should, nonetheless, dip their toes, and aim to bring down their holdings to more appropriate levels over the long-run. It will not be an easy process — and the dieting will need to be calibrated, fitting in with monetary and financial policy risks. Perhaps, though, the difficulty of offloading assets will spur a rethink on how generous central banks ought to be with buying them in the future.

End quote

The unforeseen can never happen, right?! Hmmmmm .....

 

Given how long have been the cover-ups, all the patchwork, all of the debt-concealment, ... to pretend that fiat currencies have value, when this dam breaks, it's gonna be catastrophic. It may take a few months of bank failures and people running on the banks; however in the end, there will be chaos not only in banking and finance but also on the streets. Governments will not be able to contain the mayhem -- and too, how do you fund a government when the people can't pay taxes, nor are willing to do so had they the resources.

The socialist Venezuelan government props itself up with oil money and help from other socialist/communist nations. Were such not the case, Venezuela would have have gone full-tilt chaos, complete with unchecked violence. Currently, it is estimated that 7.7 million people have fled Venezuela. Having gone to other South American nations only to find more poverty and unemployment, millions are headed north to flood into America ... where they will end up on the streets.

The following articles have a bunch of "politically correct" bias, so take that into consideration. The numbers of refugees they cite, I do believe. And oh by the way, the U.S. can't take-in all of the people in Central and South America. Our government is bankrupt as it is. Even the Fed can't pretend into existence an infinite about of fiat / pretend money in order to cover that.

https://www.csis.org/analysis/persistence-venezuelan-migrant-and-refugee-crisis

https://en.wikipedia.org/wiki/Venezuelan_refugee_crisis

 

If a country's government loses control of finance it loses control of the country, they will hang it to it even if there is rampant inflation.

 

We are living in a world of economic dominoes

"US bank stocks sink after New York Community Bancorp cuts dividend"

https://www.reuters.com/business/fi...umbles-dividend-cut-surprise-loss-2024-01-31/

Begin quote

REGULATORY THRESHOLD

NYCB's shares sank as much as 46% in early trading, but have since pared losses to show a 36% drop.

The bank, which bought some of Signature Bank's assets last year, said it was cutting its dividend by 70% and building capital to bolster its balance sheet.

The Signature Bank purchases, along with its 2022 purchase of Flagstar Bank, pushed NYCB's balance sheet above a $100 billion regulatory threshold that is subject to stricter capital and liquidity requirements. It had assets of $116.3 billion as of December.

Regional U.S. bank stocks sank on Wednesday, dragged down by a 37% plunge in the shares of New York Community Bancorp (NYCB.N) after it cut its dividend and posted a surprise loss, renewing fears over the health of similar lenders. The KBW Regional Banking Index (.KRX) fell by nearly 4%, putting it on track for its biggest one-day drop since May 2 last year after JPMorgan Chase (JPM.N) announced it was buying failed First Republic Bank. It was the third bank to collapse on deposit runs last year after Silicon Valley Bank and New York's Signature Bank.

Deposits have since stabilized, but some investors said Wednesday's sell-off highlighted ongoing concerns over regional lenders' health, including concerns that the cost of retaining deposits would squeeze net interest income (NII) which drives lending profits.

End quote

 

As I saw someone say this morning , It's going to get worse concerning inflation and people's money for purchasing their survival needs continue to shrink . Those that stockpiled some extra stuff and that was the beginning and the ending of their prepping are now slowly seeing their stockpile evaporate . Running to those nice neighbors ain't likely to pan out either , as the neighbors situation is probably just as bad , if not worse . -- As I have said many times " self sufficiency " is the key and will eventually separate the survivors from non-survivors .

 

Self sufficiency in terms of feeding yourself is easily doable if you have some land, true self sufficiency in terms of covering all your total needs is impossible on your own/small family...it will need to become 'tribal'/community sourced for long term survival; a lone wolf may (just about)survive on their own but they will leave nothing for future generations.

 

On this we agree . However I do believe a lone savy individual could survive . But such a type person is few and for between . Some may recall the incident a few months ago here in the United States where three individuals thought they could survive in the wilderness with zero outside contact . They found their remains . They had starved to death . --- I am not going to count my tribe up at the moment , but I will estimate it is around 20 . We are all in multiple houses and for the most part within a half mile area . We even have our own professional medical person on site , that neighbors sometimes call when they have a medical emergency . Many that know us would leap at the chance to be taken into our survivalist fold , but I am not interested in trying to enlarge our group . At our disposal is a perpetual never ending food and water supply . A perpetual food supply is where I observe many people , imagining food adequacies that simply in real life would not be practical and they would likely join the ranks of the starving .-- Of course this scenario is based upon a total collapse , as in no stores for food for humans , pets , or livestock . --- It appears many do not believe such a total collapse could occur thus do not prepare for such an extreme existence . That though is exactly what I prepare for .

 

Groups would start forming within days of it hitting the fan simply for self protection, humans are fundamentally 'herders'

Ray Mears was asked if he could survive on his own for a year in the UK, he said it would be extremely difficult and near impossible without transport to allow you to move at certain times of the year.