RUTHFULLY YOURS

https://issuesinsights.com/2023/03/15/this-is-good-inflation-news-not-if-you-need-food-heat-or-a-place-to-live/

Inflation eased again.” “CPI inflation rate slows to 6%.” “Inflation fell for the eighth straight month in February.” Those are the headlines that greeted the latest Consumer Price Index Report. Why aren’t those ungrateful families celebrating?

Prices in February climbed 0.4% from the month before and 6% from the year before. Both are down slightly from January.

President Joe Biden cheered the news, saying that “today’s report shows annual inflation is down by a third from this summer” and is “the slowest annual increase since September 2021.”

Huzzah!

OK, sure, that 6% year-over-year bump is still three times the average inflation for the past three decades. And sure, it comes on top of the 7.9% jump in prices in February 2022. And, yes, it means that the Consumer Price Index has now risen 15% in the short time Biden has been in office.

But fear not! Because Biden is on top of the situation, and his “inflation reduction act” is clearly working. Right?

The problem with the focus on the overall CPI – which measures cost changes in a “basket of goods” – is that people aren’t buying this basket every month. Most are just trying to make ends meet. They’re trying to feed their families. Keep the lights on. Avoid eviction.

https://asiatimes.com/2023/03/feds-try-to-stop-bank-crisis-of-their-own-making/

NEW YORK – US bank regulators on Sunday announced a massive response to last week’s run on Silicon Valley Bank (SVB) and the risk of copycat runs against other regional banks.

The Federal Reserve will provide one-year loans against banks’ security portfolios through a new Bank Term Funding Program, eliminating the risk that banks might be forced to sell their US$4.4 trillion in government securities at a loss.

The Federal Deposit Insurance Corporation (FDIC), meanwhile, will make whole all SVB depositors, as well as those of the Signature Bank of New York, closed by New York state authorities on “systemic risk” grounds.

Federal regulators have slapped a rather large bandage on a gaping wound that they cut into the banking system. By tightening credit to control a wave of inflation that had nothing to do with credit in the first place, the Treasury and Federal Reserve have created a credit problem where none existed before. There are few comparable instances of self-sabotage in the annals of bank regulation.

Although depositors won’t lose money, holders of bank bonds may take substantial losses. That augurs poorly for a recovery in credit markets already stressed by Federal Reserve tightening.

Sunday’s announcement will ease market fears that the run on SVB, which saw $45 billion in deposits leave the bank in little more than a day, might spread to other regional banks. The value of regional banks’ stocks collapsed on March 10 in response to the fear of a general run.

https://openthebooks.substack.com/p/the-silicon-valley-bank-coverup-and

Last Friday, when the Silicon Valley Bank quickly imploded and rocked the U.S. financial sector, it was taken over by federal regulators. The bank was known for backing tech start-ups, and had come under fire for prioritizing investments into climate change and social ventures rather than those that could make a predictable return.

The executive roster of the bank had a questionable track record. For example, SVB’s Chief Administrative Officer, Joseph Gentile, was the CFO of Lehman Brothers investment bank when it collapsed. SVBs Chief Risk Officer position was left vacant for nine months through January 2023.

The CEO, Greg Becker, was a director at the San Francisco Federal Reserve Bank from 2019 until termination on Friday. Becker’s also under investigation for selling $3.6 million in bank stock during a period when SVB was in the markets to raise $2 billion from investors— an effort to keep the bank solvent.

Silicon Valley Bank’s “Behested” $100,000 Gift To Newsom’s Nonprofit

Our auditors at OpenTheBooks.com found that California Governor Gavin Newsom, through a nonprofit organization his wife, Jennifer Siebel Newsom founded, the California Partners Project, has very close ties to the bank.

In 2021, SVB gave $100,000 in corporate gifts to the Newsom nonprofit. These gifts are so intertwined with the Newsom’s that they are listed as a matter of California ethics law on a state government website, California Fair Political Practices Commission.

https://unherd.com/2023/03/the-ghost-of-ancient-rome-haunts-america/

The death of Ancient Rome wasn’t so much a collapse as a slow, interminable decay: between the second and sixth centuries AD, its population declined from a million people to just 30,000. Since then, 15 centuries have passed and thousands of cities have been built. And yet, as Rome’s greatest chronicler Edward Gibbon warned in 1776, a similar fate awaits our modern metropolises. This time, however, their decline will radically alter our perception of what “urbanism” really means.

London, New York, San Francisco, Chicago, Los Angeles — these urban centres epitomised what Jean Gottman described in 1983 as “transactional cities”. Based on finance, high-end business and IT services, they were defined not by production and trade in physical goods, but by intangible products concocted in soaring office towers. For years, academic researchers, both on the Left and Right, envisioned a high-tech economic future dominated by dense urban areas. As The New York Times‘s Neil Irwin observed in 2018: “We’re living in a world where a small number of superstar companies choose to locate in a handful of superstar cities where they have the best chance of recruiting superstar employees.”

Yet even before the current downturn, the data defied the bravado. For decades, the ultra-tall towers that once symbolised urban greatness have been as anachronistic as the cathedrals of the Middle Ages. Office occupancy has been declining since the turn of the century, along with the construction of new space. In 2019, before the pandemic, construction was one-third the rate of 1985 and half that of 2000.

More serious still has been the movement of people. Migration to dense cities started to decline in 2015, when large metropolitan areas began to see an exodus to smaller locales. By 2022, rural areas were also gaining population at the expense of cities. The pandemic clearly accelerated this process, with a devastating rise in crime and lawlessness: notably in London, Paris, Washington, New York, Los Angeles, San Francisco, Philadelphia and Chicago. In some parts of Chicago and Philadelphia, young men now have a greater chance of being killed by firearms than an American soldier serving during the Afghanistan or Iraq wars.

https://www.wsj.com/articles/president-biden-bank-failures-silicon-valley-bank-signature-bank-markets-white-house-fdic-deposit-insurance-fund-a5538900?mod=opinion_lead_pos1

President Biden tried to reassure Americans early Monday morning that the banking system is safe and not to worry about the failures of Silicon Valley (SVB) and Signature banks. Markets didn’t believe him because bank stocks took another plunge, with some down 60% or more.

Perhaps investors don’t believe the Administration’s Sunday interventions solve the problems. The Federal Deposit Insurance Corp. says it couldn’t find a private buyer for SVB, though a source tells us Treasury and the Federal Reserve favored one. FDIC Chairman Martin Gruenberg nixed it owing to hostility to bank mergers.

Instead the regulators offered solutions that bail out even uninsured bank depositors and other banks at unknown costs that Mr. Biden isn’t acknowledging. Take Mr. Biden’s pledge that “no losses will be borne by the taxpayers.” He said “the money will come from the fees that banks pay into the Deposit Insurance Fund.”

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That’s not nearly the full story. The FDIC’s Deposit Insurance Fund normally guarantees up to $250,000 in deposits, which protects small retail customers including mom-and-pop businesses. Banks pay for this guarantee with insurance premiums, but the insurance fund isn’t intended to backstop deposits of bigger customers with more capacity to weather losses if a bank goes under.

Yet after venture capitalists (Democratic donors) and Silicon Valley politicians howled, the FDIC on Sunday announced it would cover uninsured deposits at SVB and Signature Bank under its “systemic risk” exception. Apparently, Silicon Valley investors and startups are too big to lose money when they take risks. They benefited enormously from the Fed’s pandemic liquidity hose, which caused SVB’s deposits to double between 2020 and 2021. SVB paid interest of up to 5.28% on large deposits, which it used to fund loans to startups.

https://nypost.com/2023/03/13/as-banks-headed-for-crisis-team-biden-focused-on-prescribing-wokery/

The failure of three banks in the last two weeks, including Silicon Valley Bank and Signature Bank just this weekend, is a saga of utter government incompetence.

Call these bank collapses Biden’s Banking Busts. The administration has been obsessing on woke causes while banks teeter toward insolvency.

Three days before Silicon Valley Bank’s Friday failure, Treasury Secretary Janet Yellen cautioned that climate change puts the banking industry at risk.

Yellen was in la-la-land, speculating that future storms and tornadoes could diminish the value of banks’ assets.

Weather is a risk, but she was oblivious to the much more immediate problem facing banks — the plummeting value of the bonds they own. 

She was heedless to the impending downfall of SVB and possibly several other small banks that had purchased long-term bonds when interest rates were near zero.

After doing nothing to tame inflation the previous year, the Federal Reserve hiked rates repeatedly in 2022 to make up for its inaction.

Those rapid rate hikes, the most drastic in decades, made the banks’ bonds lose value.

A week before Yellen’s climate-change harangue, Moody’s Investors Service already had delivered SVB the bad news that it was about to be downgraded several notches because its bond inventory was not worth enough to repay depositors.

The day before Yellen’s loony speech, Federal Deposit Insurance Corp. Chairman Martin Gruenberg also warned that the diminishing value of banks’ bond holdings meant a $620 billion problem ahead.