The Trillionaire Mindset - 77: How Silicon Valley Bank Collapsed

Starting point is 00:00:00 Coming up on this episode of Trillionaire Mindset, we're talking about the Silicon Valley bank collapse signature bank collapse and everything in between. We're hitting everything regulatory problems where they went wrong. One more thing. Also, Bing gets real weird about China. Oh yeah, super weird. China. Ah, whoa, and then also... What was that? Oh, big news for the apes! You're gonna want to stick around! You guys might be in trouble!

Starting point is 00:00:28 No! That stuff! It might be... Yeah, we'll find out! Wait, you might be a billionaire! Hmm! Ha ha ha ha ha ha! Hello, back to the trailer reminds-set. Hey everybody, welcome to the Trilier Reminds set.

Starting point is 00:01:07 Please, real quick, check out the disclaimers so we can get that out of the way. We, you guys know how bad traffic is in LA. Ben is once again stuck in traffic. I had to get out of the car and walk to the boat. All right, so I'm here alone, but that's fine. We're going to get started. He's going to, he'll get through the traffic and he'll be here, but we're going to get started without him. And it does pain me because I know he would love this so much. We're going to be talking about the SBV collapse. They were going to be talking

Starting point is 00:01:37 about signature bank. So I feel like there's a perfect starting point right here. We got to talk about our boy Jim Kramer. Let's check this out. Antsle, don't you want? This company's a merchant bag with a deposit base that Wall Street had been stately concerned about. As you beat, sales sales value back. We just need one of our favorite research firms,

Starting point is 00:01:56 Buffett, Nathanson, and it's become less dependent upon private equity and venture capitalists all offerings. Wait a second. Those try it up this year. They could come back. Yes, some of could come back. Yes, some of them come

Starting point is 00:02:06 back here with a stock directly flexed in over sold position. Stock was the fourth worst performance in 2022. I think the fears were not justified in a very

Starting point is 00:02:14 compelling situation. By the way, long-term private equity venture capital has gone away. Being a banker to these best-in-bent pools of capital has always been a very good business.

Starting point is 00:02:22 Stock's still cheap. We love our boy Jim Kramer. Don't worry. He's he's right What the hell was that Are you guys picking something up in the oh Brother How you doing brother? How are you doing brother? Oh, you know I'm doing I'm so pissed off Okay, my little ball didn't freak Jim Kramer I'm out here listening to him. Dr. Shilohn MSNBC. It has no idea what you say anymore. You know what I think what's that man? What's that my Greek friend? Oh, okay?

Starting point is 00:03:07 I think he uses too much shoe shine on that bald head of his and it clouds his judgment that maybe you know He's up there shot at that thing day and night and it's just seeping into his little piggy brain Making them think all sorts of crazy things that he doesn't fully understand them think all sorts of crazy things that he doesn't fully understand. None of us really do if I'm gonna be honest if I can, can be fair about it. But this guy thinks I do whole-edder-rural. I gotta agree with you. So Griemer, I've got a message for you. Young man, old fart, you fucking piece of shit, Cogsucker.

Starting point is 00:03:42 Please, for the love of God. Let me know what stock you recommend next, so I can know which one to short into the fucking basement and make a ton of fucking money, okay? Okay, Kramer, how about this? I got a brand new stock recommendation for you. It's a brand new company that I'm starting today, and I want you to be the first investor.

Starting point is 00:04:04 It's called Cogsuckers International be. But I heard a rumor that Jim Kramer went long airline stocks the day before 9-11. Is that true? That's not what I don't think so, but you know, Jim Kramer, Kramer, you know, Jim Kramer, Kramer, is a great guy. He's a great guy. He's a great guy. He's a great guy. He's a great guy.

Starting point is 00:04:22 He's a great guy. He's a great guy. He's a great guy. He's a great guy. He's a great guy. He's a great guy. He's a great guy. The gym creamer went long airline stocks the day before 9 or 11. Is that true? That's not- I don't know, I don't think so, but you know, you know, gym creamer, Cramer is so dumb. If I were to start an airline called G-Hot Airlines, he'd be first in line to buy a shit. I gotta tell you, by the way, do you have a name?

Starting point is 00:04:40 Do I- should I call- we've made my- Oh, me? You can just call me. The guy. Okay, the guy. I'm the guy! Well, you're pissed off at some carrainer. I gotta tell you, the guy, you're...

Starting point is 00:04:53 What? You're not gonna be happy about this, because there's more. There's more? I'd like to show you what he was saying about signature bank. You gotta be fucking shit me. Just wait. Let's start about signature bank is going to be fucking shit me. Just wait. Let's start with signature bank. This is a New York-based commercial bank,

Starting point is 00:05:10 but it's got 36 private clients, it's sprinkled across the New York Venturaria, California. And what do you want? The thing about signature is that it's a business area to bank. And to the extent that they have a consumer business, it's focused on the wealthy Namely business owners and senior executives do a lot of business and you can make a lot of money working You're telling me that you recommended signature break also. That's a bullet clap. That's what I'm trying to tell you Grable here is wrong as you are ugly man. I'm so mad. I

Starting point is 00:05:44 So mad You're as wrong as you are ugly man, I'm so mad. I sp- I'm so mad. AHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH Cramer you've messed up for the last time who's that what's whoa Oh God, who is that guy? I don't mean to learn you brother, but that's just my alter ego Joshua Joshua seem kind of oh Cramer I have got a real bone to pick with you sir What you've done is fiscally irresponsible. Oh God Cramer I swear to God I'm terrified right now because Joshua, when he gets upset, I gotta keep him under control and I'll frankly do know what to do right now with all of this. I gotta say a kind of leg job.

Starting point is 00:06:32 Joe, don't do it! No, here he comes again! All right, Mare, I respect your career as a broadcaster and as a finance professional, but frankly, your track record as of late speaks to your apparent lack of due diligence and your lack of professionalism. Oh, God, Joshua, go easy on him, brother, holy Christ, on the cross. Boy, I better get going before Joshua starts to say something real mean, and then I get up in trouble with the law and the courts and what not.

Starting point is 00:07:05 All right. Kramer, as always, you better watch your back, brother. God, I'm coming after you. I'm waiting for you to respond to my challenge to, you know, wrestle me or whatever. But anyway, brother, it's always been good. What's your name again? Emile. Emile, all right.

Starting point is 00:07:24 Now we like that. So long, the guy. You's your name again? Emile email. All right. No, we like that so long the guy you look good as hell Thanks, pal. All right take care everybody Gramer fuck yourself And there he goes gone again. Oh My god holy crap. Sorry about that. Geez man. The traffic clear up. Yeah, it was I don't know it was like a pancake syrup spill or something. I asked Hp and he told me to move along or he's gonna fucking shoot me so I didn't know, it was like a pancake syrup spill or something. I asked. P.A. and he told me to move along or he's gonna fucking shoot me. So I didn't bother asking anymore.

Starting point is 00:07:48 I gotta tell you what the guy stopped by again. The guy, oh man, he's a fucking, he's the man. And also, yeah, apparently his name is just the guy. Yeah, I know. You didn't know that? I didn't know that. Yeah, he's the guy. It's funny because he's like this big wrestler persona.

Starting point is 00:08:03 Imagine a WWE guy was just like, I'm the guy. Yeah, yeah, well, sometimes the simplest names are the most memorable ones. Sure. Because then you're going and forgetting and you're like, what is it, he's the guy. Yeah, I mean, that's the guy from the thing. Yeah, when we were grabbing drinks, he was telling me that. You were getting drinks with that guy?

Starting point is 00:08:19 What's he like out on his... He's very calm. He talks like this, he's actually kind of nerdy. That might have been Joshua you were out with. Oh, well that might be his real name. I don't know. I don't know his deal, man. He's unstoppable in the ring. I tell you that. I mean boy that guy you should see in some of these backyard shows. Oh boy. Wow. Incredible body on him. Yeah, wow, I've heard rock hard. Makes me rock hard. Well, let's see, we've got the livestream coming.

Starting point is 00:08:49 Oh my, my throat hurts. That's weird. Probably all that yelling and traffic. Probably all that syrup. Yeah, sticks to my throat. I got out and licked some. We got a livestream next week. March 23rd, only on YouTube.

Starting point is 00:09:02 On what? YouTube. YouTube? YouTube. YouTube? YouTube. Is that their new food focused tube? Yeah, it is. Check us out on YouTube. Well, only so only on YouTube next week.

Starting point is 00:09:16 March 23rd, Thursday at 3PM. But also potentially on TikTok as well. Yeah, yeah, we might be doing it on TikTok. So what we say, only on YouTube? Yeah, also on TikTok. Maybe when we say only on YouTube? Yeah. Also on TikTok. Maybe. But yeah, 3 p.m. Pacific. And hey, guess what gang?

Starting point is 00:09:29 We got the stickers. Yeah, not only can you get the classics, but- It's things tight. Look at this. That is the thing. Put one on my truck. But this is the real treat. Yeah.

Starting point is 00:09:40 Read it for the audio listener. What does the stickers say? It says, nothing like phone sex in your brother's root go between. And for those of you not in the know, that's a reference to when my brothers and I used to abuse the free AT&T service for the heart of hearing where you talk to a live operator

Starting point is 00:09:58 and we made them say naughty things to each other. I'm so horny, I'm so hot right now, whatever the fuck we would like. Nothing like phone sex in your brother through a goby-tween. Very sick. Yeah, so. This should go on the truck. That should go on the truck. I need to put some of Phil's stickers on my truck.

Starting point is 00:10:16 You gotta go with a classic. I heart my shitty life. I love my shitty life. I wanted to put my, I love my shitty life on the back of my scooter helmet, but then I feel like that's cursing me to crash. Then you'd really love your shitty life. Yeah. Yeah, yeah, yeah.

Starting point is 00:10:30 Well, we got a real doozy of an episode for you today. Holy God. Do we? Yeah, we got a lot to cover. Yeah, it all happened right after we recorded our episode last week. Yeah, it all happened so quickly. And then I was in the desert getting texts from people gone. Like in the morning going, oh, I bet this episode's going to be crazy.

Starting point is 00:10:52 And I was like, brother, yeah, it's not going to be that crazy. I know. I just finished playing tennis. Yeah. I didn't get any of those. I got like one text and I just said, yeah, we're gonna cover it next week. Which is actually a pretty good thing because then we end up having more time

Starting point is 00:11:08 for the story to shake out. You don't have any, you don't have any trilly peppers texting you? Oh, I like that, really. That's actually shout out to my friend Matt. He came out, he came up with that. He calls himself a trilly pepper. My good friend Kate is a trilly pepper.

Starting point is 00:11:21 Shout out to Kate. But did she come up with a cool name? I don't know, she might have. Cause she she come up with a cool name? Uh, I don't know. She might have. Because she'll come up with one. She's a genius. So, well, let us know when she has one. Yeah, I'm sure that as soon as this comes out, and she hears it, she'll be texting me, being like, oh, zzzz.

Starting point is 00:11:35 Okay, but Red Hot Trilly Pepper's is already taken. Red Hot Trilly Pepper's is pretty good. Um, so... Trilly Pepper's for sure. Right. Should we, should we get right into it, man? No, let's meander for a bit. Are you serious? No. Oh, okay.

Starting point is 00:11:50 Wow, so unless you've been living in a rock, in which case, say... Don't do the joke. They hide in the bugs for me. No. And what's the rent like under there? Is that the other one I usually do? I can't even remember. Oh, yeah, yeah, so Silicon Valley Bank.

Starting point is 00:12:08 Is it Silicon or Silicon? I don't know because you made fun of me one episode for the way I said it. Let's do real fast, Google, Google. How do you pronounce Silicon? And then someone commented and said, it's funny Ben made fun of the meal for the way he said it. And then said it incorrectly. So I think neither of us know.

Starting point is 00:12:25 Yeah. Just scroll down. There's going to be an actual Google thing. There should be. It should be a Google like how to pronounce thing. Gosh, this is embarrassing. Silicon. Let's see.

Starting point is 00:12:36 The name of this chemical element. Jesus. Let's break down the pronunciation. Oh, come on. Just get to it. So silicon silicon silicon that's crazy. I'm okay. So look at all right silicon. So also really making a whole new out of it.

Starting point is 00:12:56 You have to pronounce it. Let's talk about this chemical. English pronunciation. Also how are we getting a French dude telling us how to... Yeah, okay. Famously, guys with peanut butter stuck to the ribs of their mouths. He's gonna tell me how to do it. Have you ever gotten peanut butter stuck to the roof of your mouth?

Starting point is 00:13:14 It is no fun. It can be scary, man. You feel like you're choking. Anyway. So, we're gonna do a timeline and put a little background first. So, Silicon Valley Bank. Right, a lot's happened since. So Silicon Valley Bank was the preferred bank for venture capitalists and startups and

Starting point is 00:13:35 individuals. Like they did everything from, they did mortgages, personal banking, they did. But a lot of those came with, they were part of a white glove package that you would get for banking with them. Right. You know, the majority of their, it seemed like their depositors were VC guys, startup guys, you know, if you just got your series A funding, you're, you're marching your ass down to SVB and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and and, and, and, and, and, and, and, and, and, and, and, and and, and, and, and, and, and, and, and and, and, and, and, and, and, and and, and, and, and, and and, and, and, and, and and, and, and and, and and, and, and, and, and and, and and, and and, and and and, and and, and and, and and, and and and, and and and, and and and and, and and and and, and and, and and and, and and and and and, and and and and and, and and and and and and and, and and and and, and and and and and and and and and and and and and and and and and and and and and and and and deposit it there. That check. So their Silicon Valley banks balance sheet basically grew from about $60 billion in 2020 to $190 billion in 2022 due to the boom in venture funding from perennially low interest rates.

Starting point is 00:14:18 Right? And so when you're a bank and you got all that money, you got to wonder how do banks make their money. Well, one of the ways that they make their money is and you got all that money, you got to wonder how do banks make their money. Well, one of the ways that they've made their money is they've got all this money that you've deposited and they do shit with it. They lend it out, they invest it, they do all kinds of shit, right? Well, Silicon Valley Bank invested $120 billion of their money into bonds.

Starting point is 00:14:50 They did mortgage- securities and treasury bonds. And at the time, they were doing it when bond yields in the interest rates were low. And they were essentially betting that bond that interest rates would stay low. But so they had their balance sheet split into two categories. One, they historically had. Yes, exactly. For like 10 years, I mean, can you blame them? But so they had their balance sheet split into these two categories. AFS, which is available for sale, aka things that they buy and sell freely.

Starting point is 00:15:20 And the way that those are accounted, it's called Mark to Market. So let's say that the price changes today and drops 10%. On their balance sheet, it gets recorded as such. Oh, this one dropped 10%. Boom, it's recorded that way and it's like a stock, basically. So they got those that they mark to market. And then they also had bought the longer term bonds, the majority of what they bought were these held to maturity bonds, which they expected to be held long term.

Starting point is 00:15:48 So the distinction between those two is that the held to maturity bonds are marked at book value. They're not, they're not, even though their price is fluctuate, they're not marked to market on the balance sheet. So like the price could drop, but you know, as far as you know, they're just the same price, right? Okay. And like I said, three quarters of the portfolio

Starting point is 00:16:15 was in that mostly in Treasuries and mortgage-backed securities. It's normally pretty safe, except those kind of long-term bonds have what's called interest rate risk. They're not totally without their own risk. Right, because when they started parking in those treasury bonds, what was the yield? One and a half percent? Something like that, like 1.75%.

Starting point is 00:16:36 Yeah. So what happens when interest rates rise? Now people are going to be able to go out and get bonds at a higher yield. Exactly. So what happens to the bonds that you out and get bonds at a higher yield. Exactly. So what happens to the bonds that you're currently holding? Hey, hey everybody, I know you can go and get like 5% on bonds, but we have these bonds that are yielding like 1.5% do you want them? Right.

Starting point is 00:16:59 No. So, well, you could tell I'm just at a much cheaper price. Yeah, exactly. So you're going to lose a lot of money. You're going to lose a lot of money. You're going to lose a lot of money. As the Fed starts raising interest rates, their investment is fairing worse and worse. Yeah, especially that available for sale part, even though it's a smaller part of their portfolio, it started to get hammered. So they're stuck holding the bag, so to speak, on these bonds that yield less. And it was this terrible confluence of events because they're reliant on venture capital money

Starting point is 00:17:28 continuing to flow in. But as interest rates started to rise, that venture capital money started to dry up. Right. It's a real perfect storm. Yes. They're raising rates, which is making their investment worse, worth less. Yes. Which is also drying up the money. So you you so they're taking a huge hit on deposits I think they maxed out somewhere around 200 billion and then month to month they're they're down to like 173 billion 163 billion. Yeah, so

Starting point is 00:17:55 Their clients are slowly starting to withdraw money because they needed it and eventually Silicon Valley bank was forced to sell those AFS the the available for sale, bonds at a loss. And then in January, they also revealed in their filings that their longer term securities had paper losses of $16 billion. Against their 11 and a half billion dollars intangible equity, AKA, if they were to have to liquidate those longer term securities, they'd be fucking bankrupt. There's a hole.

Starting point is 00:18:29 Yeah, there's a massive hole. So around that time, in January, when they had to liquidate the shorter term, not shorter term, but the available for sale stuff, you know, the rumor's starting to spread that they've got a cash burn problem. The more money flowed out, the more that Longer term portfolio was at risk of needing to be liquidated. The group chats. The group chats are lighten up. Oh man I'm sure they're all just in between talking about whatever fucking fleece pull over the They're like, honey. Did you hear about that? I don't know about all this. So the biggest red flag was the fact that they had incredibly insufficient risk strategies in place.

Starting point is 00:19:13 No. Yeah. Can you believe it? No. In fact, they only they only hired a chief risk officer in January. And they were without a senior most risk officer for eight months out of the year last year. And of the seven board members assigned to their risk committee, only one had a background even closely related to risk management. Is that good?

Starting point is 00:19:40 No. No, you would think that with the portfolio of that size, they would have sizeable hedges in place. I believe the the the amount of hedges that they had I read was only around $500 million. It was but it was like it. That's like less than half of a percent. Well, that's okay because you figured what a little bit of a deposit 173 200 billion dollars 500 million all to cut it. Don't you think? I don't do it. I don't do it dude They're deposits $173,200 billion. 500 million dollar cut it, don't you think? I don't do it.

Starting point is 00:20:07 I don't do it, dude. So going off of the confluence of events, you also had Silvergate was this other bank that had collapsed on March 8th. Silvergate was this middle man between institutions and crypto exchanges. So basically, if you're an institution and you wanna invest in crypto,

Starting point is 00:20:25 you funnel your money through Silvergate for whatever fucking reason. I don't know why they need to be the intermediary. I don't understand it. But so after FTX collapsed, customers were withdrawing their money from Silvergate and they had to sell just over $5 billion in debt securities. They even went to the Federal Home Loan Bank

Starting point is 00:20:43 for $4.3 billion. The federal home loan bank for the uninitiated is the, it's the bank that you go to. It's the bank that regional banks go to when they need cash. Elizabeth Warren criticized that move and she pointed out, rightfully so, how the crypto market risk was coming

Starting point is 00:21:03 into the traditional banking system. And in the nutshell, Silvergate couldn't handle the withdrawals because no bank actually has enough cash on hand to handle if everybody decides to pull their money out at once. So that led to them losing a billion dollars in Q4. They went into receivership pretty quickly, meaning the government took over. And prior to their collapse, customers were moving their money to other crypto-friendly banks like signature bank of New York, which also just collapsed. But we'll get to that. So now, let's go look at the timeline of events that happened last week.

Starting point is 00:21:43 Where should we start? Wednesday? I feel like you hit a lot of the timeline. I mean, yeah, but then the actual timeline was such that so Wednesday, last week, they put out a press, uh, uh, uh, Silicon Valley bank put out a press release stating that, okay, we sold the majority of our available for sale securities and Which was 21 billion dollars worth of yo low-year yo low of low yield US treasuries And how much were they losing and they realized a 1.8 billion dollar loss, you know, all right and investors like this They felt good about investors are like well, okay, they're being honest and forth No, but they didn't like no. No, they did not like that.

Starting point is 00:22:25 Well, because then Silicon Valley Bank also said it was this very long press release that I poured over, it was like 50 pages or something, but they said that they were also raising to an a quarter billion dollars to quote, strengthen our financial position, all right? And reposition their balance sheet to take advantage of higher short-term

Starting point is 00:22:45 interest rates, to lock-in funding costs, to protect interest income, and enhance profitability. Sounds nice, right? Okay, what happened Thursday? Well, well, but first, on the heels of the collapse of Silvergate Bank, just a couple weeks prior, there was this venture capitalist-induced panic as they started to instruct their companies to move their money out of Silicon Valley bank. Nobody wanted to panic, but also nobody wants to be the last guy in line at the bank to get their fucking money out. Right.

Starting point is 00:23:16 It's also important to know Silicon Valley is different than other banks, right? We talked about how, you know start up guys bringing their money in. Most banks, and we're going to get to all the stuff with the FDIC and how your money is insured up to 250K, most banks are somewhere between 40 and 60% of their funds are over the 250K threshold. So their deposits, 40% to 60% of their deposits are not insured. So a Skone Valley bank was at like 91% to 95% of their deposits were uninsured. Because they were over the 200,000 threshold.

Starting point is 00:23:59 And so that's where a lot of the stuff like you're talking about, these mortgages, they offer these checking accounts with privileges and everything. That's part of their service because they wanted people to keep, they didn't want people spreading out their risk and putting it in other banks. They wanted everyone to be banking with Silicon Valley Bank and keeping all their money there.

Starting point is 00:24:14 And so part of that panic is people going, well, Jesus Christ, I got a lot of fucking money in there over the 250,000 thresholds. Right. Yeah, and that presents a problem because when you're the bank, even though you got $120 billion worth of customer funds, if everybody tries to, it's not like they got $120 billion cash, waiting like, okay, yeah, if everybody wants to bail it,

Starting point is 00:24:39 once, fuck no, they do not have that. Yeah. So anyway, on Thursday, the next day, the CEO of Silicon Valley Bank, Greg Becker, who by the way, up until very recently, served on the board of directors of the Federal Reserve Bank of San Francisco. Yeah, we'll get to Greg Becker. Ah, yeah, yeah. So he put out a statement trying to calm investors, but it fucking backfired when he literally

Starting point is 00:25:02 told people to stay calm. Nothing like keeping everyone calm by screaming. Stay calm! Stay calm! You never freaking out. And on Thursday, the stock dropped a precipitous 60%. He also couldn't assure people that this would be the only capital raise they would need to do.

Starting point is 00:25:21 And by the end of Thursday, 42 billion dollars worth of deposits were withdrawn. Silicon Valley Bank had a negative cash balance of $958 million. And none other than Peter Teal took to Twitter to tell people to take their money out. So he kind of, he wasn't the first domino, but he was definitely the biggest. There was a lot of people, Jason Callicanos. There was a lot of people, Jason Callacanis. There was a lot of people just running screaming, go get your money now. You're talking about that. I'm pretty sure.

Starting point is 00:25:52 Bill Ackman was crying about others. Bill Ackman, David Sacks, Jason Callacanis. People were going to have trouble making payroll that they weren't going to be able to access their money all the shit. But Peter Teal was explicitly telling everyone if the Founders Fund get your money out of there. Now move it to other banks. And when Peter Teal talks, people do be listening because he's, you know, he's one of the biggest

Starting point is 00:26:17 baddest venture capitalists that there ever was. So his, his word holds sway and it certainly did. I mean, as is evidenced by $42 billion worth of deposits getting withdrawn. And just like that, on Friday, Silicon Valley Bank collapsed. The second largest bank collapse in history, the 16th largest bank in the United States with a total of $210 billion in assets.

Starting point is 00:26:43 And technically it was due to a liquidity crisis because not enough money was available to cover all of the outflows, but it was really due to poorly managed funds and having virtually no risk protocol in place. Right, I mean, are you done with the time? Well, also, it's important to note. So on Friday, the federal government, the federal government in California took the bank over. Right. Um, originally, it worked real quick. Originally trying to sell the bank to someone

Starting point is 00:27:20 couldn't get someone to take over the bank. And then they said that I think by Sunday evening, they said everyone's what's gonna be covered. They were using what's called the systemic exemption rec, risk, systemic risk exemption, excuse me. Did you see that? Yeah, that was a big problem. So the 250,000 threshold was not going to matter. If you were above that, depositors are going to be covered, right?

Starting point is 00:27:45 Which is like good news, but it's also confusing because it kind of means like, okay, nothing means anything then. What's the point of even state? Oh, it's a pretty insane precedent. Yeah, there's basically no, there's no limit. Right. Yeah. So I got a hand at the federal government for stepping in and apparently I learned that banks fail all the time, especially smaller banks, regional banks, they fail all the time.

Starting point is 00:28:14 So the government is adept at stepping in, taking over and making sure things get handled appropriately. But I also don't think they have quite the mess that someone like SVB made for themselves, right? And so a lot of people are talking about, well, is this a bailout? Yeah, it is a bailout. They're making all these people whole

Starting point is 00:28:37 who were a bit irresponsible. And then, you know, who's responsible? I mean, a lot of people are responsible for this. You know, Greg Becker. CEO. CEO of Silicon Valley Bank, Silicon, Silicon. Doesn't matter. Silicon, Silicon. There is, and I hate to always bring in the regulatory record on all these things, but it's the most frustrating thing in the world, right?

Starting point is 00:29:01 So in 2015, Greg Becker started to lobby the federal government, right? Because in the wake of the financial crash, Dodd Frank was passed, which put in a lot of new regulations for banks. One of them was a certain threshold. When you hit a certain threshold of deposits at your bank, you're going to be, you're going to be, you have to be subject to an enhanced regulatory program, right? So you're going to make sense. You're going to be subject to stress tests, you know, certain liquidity requirements, all of these things, right?

Starting point is 00:29:38 So Greg Becker was saying, we want to change that threshold. The threshold was $50 billion. When your deposits hit $50 billion, you have to start, you've to start adhering to this. I'm guessing he was bitching because it's going to cost them money. Oh, 100%. He said, you know, SVPs, SVB's deep understanding of the markets it serves our strong risk management practices.

Starting point is 00:30:02 Becker argued that this bank would soon reach $50 billion in assets, which under the law would trigger enhanced potential standards, including more stringent regulations, stress tests, and capital requirements for his and other similarly sized banks. Becker insisted that $250 billion was a more appropriate threshold. Without such changes, SVB likely will need to divert significant resources from providing financing to job-creating companies in the innovation economy to complying with enhanced potential standards and other requirements. Boo fucking who?

Starting point is 00:30:34 Suck my dick, Greg Becker. So this is him writing to Congress who he reportedly sold $3.6 million of his own stock two weeks ago in the lead up to the banks collapse. Given the low risk profile of our activities and business model, such a result would stifle our ability to provide credit to our clients without any meaningful corresponding reduction in risk. Okay, so this is 2015. So he's saying that all of these things wouldn't do shit for their risk management. It's just it's not what he's saying. Well, no, that's what yeah, he's saying that these additional steps wouldn't enhance our our risk. He's saying we're already low risk. Don't make us do

Starting point is 00:31:12 this because it's going to cost us money. Exactly. And what we do is we provide people a service so they can create jobs. Right. Get out of our fucking way. Yeah. Right. So that was 2015. Who was in office then? In 2015? Yeah, Obama. Obama, yeah. But then... Friend, I mean, he's no like enemy of Wall Street, Obama. But it wasn't until 2018, in 2018, they were able to roll back these.

Starting point is 00:31:40 It was, it was, fuck yeah and it wasn't just republicans that's you know they were so i can go ahead it was it was about fifty republican seventeen democrats they were able to pass this through and raise the threshold to two hundred fifty billion dollars how they're five times that so now not only do you have pretty sizeable banks without this regulatory schedule? They're also, it's leading to consolidation because banks are going,

Starting point is 00:32:08 fuck yeah, now we can get five times as big without having to hit this fucking regulatory program. Pretty sick, huh? That's tight. And now, had they been subject to these things, Silicon Valley bank would have probably been a bit more aware of what was going on. Sure silicon valley bank would have probably been a bit more aware of what was going on short uh... they probably would have achieved risk officer in fact they probably want to go to fucking year without a chief risk officer yeah you know they probably would have had to hit certain liquidity requirements

Starting point is 00:32:38 uh... case that's probably wouldn't this probably wouldn't have fucking happened yeah uh... you know my favorite take on this was the Wall Street Journal's Andy Kessler had a, he blamed wokeism. Of course, because he said, in its proxy state, this is a quote from Andy Kessler, in its proxy statement, Silicon Valley bank notes that besides 91% of their board being independent and 45% women, they also have quote, one black, one LGBTQ plus and two veterans. I'm not saying 12 white men would have avoided this mess, but the company may have been distracted

Starting point is 00:33:16 by diversity demands. Fucking psycho. All right. Did you see a failing bank can go? You guys know how black's women and veterans are stupid, right? Yeah. All right, so you can see a failing bank and go you guys know how black's women and veterans are stupid right yeah I mean Geez Louise buddy Andy Babu I love how he also says I'm not saying and it's like no you are though. Yeah

Starting point is 00:33:34 I'm not saying well white men would have we just saw you but the company who was the CEO? Also, he lists one black guy one person black. Yeah, one black, one black, one queer, two veterans. Andy, God bless you, sir. But that's the thing because they need to do that. They need some kind of, they need an easy thing to blame. They need a culture war thing because what really need, what we really need is hard. It's they need to adhere to regulation. And for all we know, the black and the queer were like, yo, we need a chief, we need a chief risk officer.

Starting point is 00:34:16 I mean, that's just never gonna fucking happen, right? These guys go round and round. Like, yeah, in 2019, Becker was elected to serve on the board of directors at the Federal Reserve Bank of San Francisco. Left the board on Friday, I wonder why. Geez. And they're all just fucking going around. And, you know, and we're going to see it keep happening. Our entire life has been a cycle of people just completely fucking up the economy. Yeah. And going, I don't know, we'll be better. Sorry, we blew through regulations, or

Starting point is 00:34:42 there were none in place because we fucking went down to Congress and fucking cried. Yeah. So hard. Listen, buddy. It's just it fucking, it drives me nuts. Okay. They're, you know, Wall Street and big business. They're just, they're fucking babies and they just want this, you know, zero regulation, zero interest rate environment.

Starting point is 00:35:03 So they can just make a mess of everything and take huge risks with everyone's money Mm-hmm. And then when it goes wrong, they just go, I don't know. Sorry. We want the government to help us even though we told them to get the fuck out of her way Yeah, and if you step in and have any kind of dissenting opinion, they try to make a fool out of you Mm-hmm And you just end up some like footnote in Some documentary or book. You're gonna be like Brooks Lee Bourne. Who?

Starting point is 00:35:29 Brooks Lee Bourne. She works for the CTFC. She basically tried to tell Larry Summers, Alan Weinzpan, all of them about the, exactly. Who? She tried to tell everyone about the dangers of the derivative market leading up to the financial crash And everyone was like shut the fuck up Brooksly born. Yeah, and now she gets to some like award. No one knows about Well, you know capitalism isn't without its flaws It's just that we've only had what how many crises since in the last fucking 20 years that seems normal

Starting point is 00:35:59 That seems part for the course. Yeah, no There's a lot to be pissed off about here. There is. And it's not just the regulatory schedule either, right? Like, these guys were risky with their money. It wasn't just the, like, Greg Becker thought, who fucking cares? We don't have a chief risk officer for a year, right? Where invested in the, in the safest shit imaginable. And it's not just them, right? All these companies were keeping their money in this bank way above the risk threshold. Sure, yeah.

Starting point is 00:36:30 And, you know, there are now, there's an article on Forbes with just like an entire game plan of how they could have mitigated this risk. If anyone, you know, you have companies like Roku, they had close to $500 million. In cash. In cash. In that bank.

Starting point is 00:36:49 Sitting in Silicon Valley bank. Yeah. Well, and you know what's funny is, now all of this money flowing out of, so there hasn't, there has been a bit of contagion because now a lot of people who bank with smaller regional banks have kind of panicked and well, cause a bunch of people who bank with smaller regional banks have panicked and because a bunch of things have happened, Moody's, one of the three big credit rating agencies cut its view

Starting point is 00:37:13 on the entire banking system to negative from stable. They said, quote, we have changed to negative from stable on our outlook on the US banking system to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley bank, Silvergate bank and signature bank and the failures of SVB and SNY, uh, Moody said banks with substantial unrealized securities losses and with non retail and uninsured US depositors may still be more sensitive to depositor competition or ultimate flight with adverse effects on funding, liquidity, earnings, and capital. So basically, all of these other small banks are at,

Starting point is 00:37:51 kind of equal risk. If everybody tries to run for the exits, these banks are gonna fail because they don't have ample liquidity to cover enough. So this week, you saw, there were multiple banks. There was Jesus Christ first first republic Western Alliance

Starting point is 00:38:10 There were a few others that their their stocks were down their stocks were cut in half on Monday It was amazing. You see these charts and they're just a waterfall and Guess who who wins fucking JP JP Morgan, Bank of America. Right. They saw an influx of an inflow of, I think, JP Morgan alone this week. So like $15 billion, probably way higher by now, right?

Starting point is 00:38:33 Of people coming in. So Jamie Dimons jerking off in his private jet, um, right now, celebrating. Also, you know, who was down the funny, so we mentioned Dodd Frank, the Frank in theirs for Barney Frank, one of the authors of the bill. Right. Who was trying to regulate banks in the wake of the financial crash. Mm-hmm.

Starting point is 00:38:53 He... Give it to me. ...was on the board of signature bank. Oh, yeah, baby. And you know what he was doing as well? Mm-hmm. He was down at Congress lobbying for signature bank to be free of the same regulations. We're not risky, we know what we're fucking doing as well. He was down at Congress lobbying for Signature Bank to be free of the same regulations. We're not risky.

Starting point is 00:39:07 We know what we're fucking doing. Get out of our fucking way. We know what we're doing, baby. You got a cash out, baby. There was a great article in Financial Times, the headline just Barney Frank. It's just as Barney Frank. Well, I had to make money. That's beautiful.

Starting point is 00:39:24 It really is. It's beautiful. I had to make money. That's beautiful. It really is. It's beautiful. They had to make money. Yeah. Well, because guess what happened on Sunday? Signature bank collapsed with $110 billion in assets. Got shutdown Sunday after customers withdrew more than $10 billion in deposits on Friday due to fears of exposure to crypto.

Starting point is 00:39:41 And guess what happened, man? In 2018, it really is poetic. closure to crypto and guess what happened man in 2018. It really is poetic. So in 2018, as signature bank is leaning more and more into crypto, the CEO Joseph DePolo said, and I quote, blockchain technology is the future. Scroll, it's up, it's up, there it is. In 2018, the CEO Joseph DePolo said and I quote,

Starting point is 00:40:07 blockchain technology is the future. You don't want to be caught short because in five years, a number of banks will not be around because of blockchain technology. And in five years, the very bank that this man run, ran, is not around because of blockchain technology. It is unbelievable, truly unbelievable. The whole thing is truly unbelievable. It really is, and this was the third biggest bank

Starting point is 00:40:36 collapse in American history. Two and three, right after one another. And these are just all our smartest, biggest brained guys. Oh yeah. You know, they're in charge of the economy. They've got it all figured out. Don't you fucking worry. Don't you fucking say a goddamn word about regulation.

Starting point is 00:40:54 Also, a lot of these regulations, they would just save them from themselves. Yeah. It's just like, that's the point. Insane. You know, and you see people crying about it online, you know, well, what are you supposed to do if you have, you know, all this money You're just supposed to spread it out to a bunch of banks like you and give them each 250 grand. Yes, dude

Starting point is 00:41:12 That's the whole fucking point of it to mitigate risk. So if your bank fails You don't have all your money wrapped up in one bank. Well, it is tough because what do you do if you've got like fucking 50 million dollars? Well, there's a lot of a lot of banks offer things, you know, companies manage this risk of bank failure through recognized insurance strategies. There are private sector solutions, intrifies insured cash sweep, which essentially cuts up large accounts into 250 grand pieces and splits them across banks, participating in its network. C-Dars, another intrify product is a less liquid option that segments cash into CDs. You know, there are also some cash management accounts with a sweep feature or additional

Starting point is 00:41:49 insurance to take this take out. There's a Forbes story with like all of these also presumably, if you're a bank or if you're a company that could afford to have $500 million in cash parked in a bank, you could afford to have a chief risk officer who could who could figure this out for you, right? Sure. A way to mitigate this risk. I just don't understand if I'm going to be covered $250 at, let's say, 10 banks for two and a half million dollars total across 10 banks.

Starting point is 00:42:18 And I'm going to be covered that way anyway. Why not just cover me at one bank? Did you not just hear what I said? No, I did, but like still because if the government is covered, what? Because it mitigates everyone's risk, the government saying you're covered up to 250 K. Right. If you park $2.5 million into one bank and that bank fails, you're on the line for $2.5 million. If you park $250 grand in a bunch of banks and one bank fails, you're only You're saying it saves the government. It saves the government. It saves everyone Yeah, they're the ones funding this FDIC fund, right?

Starting point is 00:42:52 You're smart, dude That's smart, but that's the problem. No one's like thinking about this They're just going oh, I don't get it. Just let me leave it in one bank if you're gonna cover it You should you should be in charge. I don't want to fucking be charge. I think you should. All you do, that's the thing. All you do is get kicked around by these people. Yeah, these banks. Anyone trying to do any kind of sensible regulation. Yeah.

Starting point is 00:43:12 You get fucking kicked around. They tell you, oh, you're just, you're getting in the way of fucking job. Trying to create a job. I'm trying to create jobs. And you're trying to tell me I can't gamble with people's money. Cause it's gonna cost me more money.

Starting point is 00:43:23 This fucking sucks. And they scream and cry and bitch. Yeah. And they fucking pull your pants down on TV. Yeah. And they point to your little dick and say, Look at this. Look at this.

Starting point is 00:43:33 This is what government regulation looks like. Yeah, and it did. And it did. Look at his little silly penis. Yeah, and it's Ted Cruz and we're all like, we knew it was pathetic. Ted Cruz does not want to regulate anything. So it's not Ted Cruz, but.

Starting point is 00:43:47 Ted Cruz is smooth as a fucking kindle down there anyway. But it's just, and I mean, that, you know, I'm sure not even only in the government, I'm sure there were people at these companies going, ah gee, whiz, don't you think we should and they go shut the fuck up? Yeah, yeah, get the fuck outta here. Don't you like making money, you fucking loser?

Starting point is 00:44:05 Yeah, so there's a, man. So the collapse puts the Fed in a tricky position because the Fed's tightening cycle is now kind of on the brink of jeopardizing financial stability as is evidenced by these banks failing because it's pretty much a direct cause, you know. But it's not the fault of the Fed. And still data is showing that the interest rates aren't restrictive enough to curb demand.

Starting point is 00:44:34 So if that's the case, the Fed might have to choose between financial stability and inflation. And you should argue that they should prioritize inflation because any kind of financial instability might actually help with the inflation problem. So what was the thing you said to me, the saying the fed raises rates till it breaks things or something? I mean, I didn't say that, but yeah, the fed, the fed, yeah, yeah. I can't believe you're doing this. But no, I'm gonna pursue.

Starting point is 00:45:03 You fucking said it to me. But so now everybody's got to recalibrate their projections for rate hikes. It was 50 basis points, but now it's 25 and no mirror. I know we're on the mirror, even said that they think that the fed is going to pause given the recent news. But you want to what you want to metaphor that I do like because you won't come. It would go me on that one. Okay, so this is from Nick Timmeros at the Wall Street Journal. The one he's the, the Fed whisper.

Starting point is 00:45:28 Just always covering the Fed. You're going to like this. Oh, give it to me. I'm ready. The Fed raises rates to fight inflation by slowing the economy through tighter financial conditions such as higher borrowing costs, lower stock prices, and a stronger dollar. That curb demand.

Starting point is 00:45:42 But the effects of those actions don't show up right away and can be akin to getting ketchup out of a glass bottle. Smacking the bottle repeatedly leads to no results and then too much of the condiment pours out. Ooh man, you're like, everybody knows you gotta tap that shit on the neck. That's how you get the ketchup out. But everyone knows that, like, yeah, yeah, and then all of a sudden,

Starting point is 00:46:03 and then, great, the whole fucking bottle came out. Yeah, god damn, that's a pretty good, that's pretty good, Nick Timmerl's. So that's what the fed's doing right now. Yeah, tap in the bottle, come on baby. Look, tap, tap, up, too much ketchup. Ruined a couple bags. Whoops.

Starting point is 00:46:19 So yeah, like I said, the treasury said, said on Sunday that it, well, I didn't say this part. I said moody, but then the Treasury also said on Sunday that it sees some institutions with issues similar to Silicon Valley bank and investors worried that customers were going to worry and pull their funds and move them to big banks. Also the Federal Home Loan Bank, like I pointed out, was a key source of cash for regional banks raised $88 billion in bond sales, which freaked out the market even more because Federal home loan bank, like I pointed out, was a key source of cash for regional banks, raised $88 billion in bond sales,

Starting point is 00:46:48 which freaked out the market even more, because it meant that the banks may require funding to back up deposits in anticipation of all these withdrawals. So then, like I said, you had a bunch of other banks' stocks tanking. First Republic went down 60% Western and Lions went down over 50% wind trust, pack west. It was just a mess of a week and it's still shaking out like first republic then bounced over a hundred percent and did I trade it? Fuck yeah, you better believe I traded it and but then it's down back to it's down

Starting point is 00:47:17 Like 30% as of us recording right now But then there were rumors that What's the bank that's CS credit squeeze? No, the other one. Fucking city. Oh god, damn it. I don't know. There was there was a bank that was rumored this morning to be making an offer to take over first republic, but as of right now, it's still so unknown. Like it, yeah, because these things have kind of result the Silicon Valley Bank and

Starting point is 00:47:45 signature bank thing has resolved quickly. It kind of a lot of people are being like whoa it's over that's it. And but it's like no there's still might be some other things that need to shake out. They're wheeling Joe Biden out to to reassure everyone. Nothing nothing nothing gives me more confidence than our just necrotic decaying president to his direct metaphor for the American Empire just got everyone settle down The American economy is strong. Yeah, I'm pissed off because I have Some put options on signature signature bank. I have the June

Starting point is 00:48:22 80 strike put option on signature. I'm old with like 22 grand and it's just frozen and nobody seems to have an answer for me for what's gonna happen. I got an answer for ya. Thank you Charlie Munger. So I'm pretty pissed off because the stock just doesn't trade anymore.

Starting point is 00:48:41 It's just technically worth like zero and I'm talking to my broker and I'm like, hey, so I have these options and he's like, yeah, well, there's not really an answer right now about what to do. And it's like, well, that's not fair. Well, that's not fair. Well, the other party to those options wrote those options.

Starting point is 00:48:59 Yeah. And it's like, oh, they get to just get away, Scott free, like, well, thank God that company doesn't even exist anymore. So, woo, thank God. Like get the fuck out of here, that's not how it works. The options clearing corporation is guaranteed, they better fucking fix this or I will raise hell.

Starting point is 00:49:17 And you know I've got the clout in the finance world to make waves, ripples. Is that true? Droplets. Droplets? in the finance world to make waves, ripples. Is that true? Droplets. Droplets? What's smaller than a droplet? Particle? Particle?

Starting point is 00:49:32 Particle? I can't do shit, but I have the luxury of time that they don't expire until fucking June, but still. Ah, yeah, yeah, so. I'm sure work itself out by then, and if it's not, it won't matter, because everything's probably belly up anyway. Yeah.

Starting point is 00:49:48 So it's not worked out by tune or in trouble. Yeah. Well, so where are we now? The everyone's trying to keep an eye on everything and make sure this doesn't, yeah. And the Biden, like you said, really tank everything. They also, so the Fed introduced this BTFP, the bank term funding program.

Starting point is 00:50:09 When did they do this this week? Yeah, in the wake of all this. So, a bank measures to counterfall out from the failure. The Federal Reserve said it would create a new lending program for banks, the bank term funding program. The facility will allow banks to take advances from the Fed for up to a year by pledging treasuries, mortgage-back bonds, and other debt as collateral. By allowing banks to pledge their bonds, they can meet customer withdrawals without having to sell their bonds at a loss, which is what Silicon Valley Bank did last week, sparking a run on the bank. So they'd put their own lining assets up as collateral? Right. Okay. But the weird thing about it is they don't have to take any losses on it.

Starting point is 00:50:48 They just kind of just freeze them. Well, because if you hold the bond to maturity, you're not going to lose anything. You're going to get the yield regardless. Yeah. Yeah. So, I like that. But it was funny. You were right.

Starting point is 00:51:02 They did wheel out Biden and he reassured the public this weekend that their money was safe and that the system is fine. Did you, did you worry at all? I didn't at all. I had no, I didn't give it a second thought. Just before we, we will get to that. I just want to make sure, so people are kind of confused about the bailout aspect of it and everyone saying it's not taxpayer money, but I guess with this,

Starting point is 00:51:20 so if the banks can't repay all the advances in a year's time, the Treasury Department is providing a $25 billion credit $25 billion of credit protection to the Fed just in case the Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds But so it is being backstopped The taxpayer may be on the hook if they can't get this under control. Well, what's one more thing for us to be on the hook about at this point Right, what is it? privatized gains Socialized losses. There you go. Yeah, that's one more thing for us to be on the hook about at this point, right? Right. What is it? Uh, privatized gains, uh, socialized losses. There you go. Yeah. That's exactly what is it.

Starting point is 00:51:49 What were you asking me about? Uh, uh, I don't know. Oh, was I worried about it? Oh, yeah. Were you worried about it? I mean, I was, I had the loveliest weekend. I couldn't, I couldn't, you were too busy watching tennis. We were, we, I couldn't be more unbothered. Um, I, I didn't want to be.

Starting point is 00:52:05 Been answered. You know, we were truly, I got there Thursday evening and we had been invited to a private country club for tennis. So we went, we played three hours of tennis and we woke up the next day, went back to the country club, ate in the morning, we were playing tennis, then we went straight to the games and then Saturday woke up, went back to the country club, eaten the morning, we're playing tennis, then we went straight to the games and then Saturday woke up, went back to the country club, back to the games.

Starting point is 00:52:30 Wow, okay. Well, and truly just a fantastic weekend. That's great. And, you know, just knowing that in the background, just silicone Valley tech guys are freaking out. That's just, that's just bonus for me. You know what I mean? Pretty cool.

Starting point is 00:52:47 I'm just there at the buffet scooping more on my plate. You know what I mean? Yeah, more beans. More beans for me, please. More beans for tennis boy. Shit, you know, I forgot what I was going to say about this thing and about Biden and stuff, but I think we've covered just about everything there is to cover. We can get into other. Do you think we've covered just about everything there is to cover. We can get into other...

Starting point is 00:53:05 Do you think we've covered it all? Yeah. Can we scroll down? There was more that we had... Oh yeah. Oh, well, the China being a better broker for world peace was the thing when you mentioned the decline and decaying of American imperialism. I saw this interesting piece that I shared with you.

Starting point is 00:53:21 This Harvard professor Stephen Walt commented on China's Saudi Iran deal. Well, hard transition. It, well, kinda, it's just, to him, this is China picking up the mantle of being, quote, a force for peace in the world, which the US has largely abandoned in recent years. How dare you, Steven? Yeah, fucker.

Starting point is 00:53:43 Listen, you've ever heard of a piece through for forcing people to be um but it is an interesting uh take on it which is that China uh basically wants to just be left alone and leave everybody alone and because of their increasingly looming position as the the world leader in terms of GDP at least. They might be the ones to eventually take over and set the example that America has long since lost side of to to be like America. Who are you fooling anymore? Like who are we fooling? Tons of people. Yeah, exactly. Well, but like the smart ones. There are tons of people in America who I think they think every time we get involved in another country, they're like,

Starting point is 00:54:29 this is good and we're promoting peace. We're good in democracy. Where are the good ones? Yeah. No, we have done. We had the toppled that democratically elected government. Yeah. You saw them.

Starting point is 00:54:39 They might have, they would think about doing land reforms. Yeah. Did you see the president of El Salvador just gave a really riveting speech to his own parliament or whatever, excuse me, I don't know. But he basically just said like, we are not gonna be told what to do. We are our own sovereign nation

Starting point is 00:54:57 and we want to be left alone and do our own thing. It's like, fuck yeah. Yeah. We fucked up so many, we have fucked up so many countries. Wow, what a novel idea. Yeah, yeah. We have a country have some autonomy to run the around government. And I wonder if this kind of thing with China and Iran is going to serve as a wake up call

Starting point is 00:55:17 for America that like, hey, you can't be on top forever. I mean, I think it's almost, you know, you're talking about China moving into being the world power. I think we're certainly gonna see a multi-polar world where there's not just war. Where there's snow everywhere. Where there's not just one superpower who controls everything and this is part of that, right?

Starting point is 00:55:38 And I'm sure the US is very worried about that. You know, for a long time, they were the only game in town. Yeah. And now they're like, well shit, you're supposed to come to us. And we're gonna give you, you know, a terrible deal through the World Bank and IMF, and then we're gonna own you forever. Yeah.

Starting point is 00:55:55 And you're gonna have to service this debt. And then when you default on it, we come in and fuck all your shit up. Yeah. And we actually helped bring China out of the position that they were in, the poor position that they were in decades ago. And it's kind of poetic to see the protege, the student becomes the master. I don't know if I would put it that way.

Starting point is 00:56:17 Really? That we didn't, didn't we give a bunch of shit to China? I mean, for a long time, it's like what we do, we just shun them. We wouldn't even recognize mainly in China as a country. We recognized Chiang Kai-shek in Taiwan, or what was known as Formosa, I guess. But we didn't because China is coming. Because of Mao.

Starting point is 00:56:40 And it wasn't until Nixon, who started going over there normalizing relations. But I mean, that's insane. So now, and it wasn't until Nixon, who started going over there normalizing relations. But I mean, that's insane. It's like, if we opened up, if we normalize relationships with Cuba and be like, well, we fixed it for you. Yes. Yeah.

Starting point is 00:56:56 But part of normalizing relations was opening up trade. Sure, yeah. And which was it major, major boom. But I don't think it's fair to be like student because. Well, of course. But I'm just using a bad example of like, because that would be, I'm gonna keep it, because that is, let's keep it, no, it doesn't work.

Starting point is 00:57:15 Yeah, but it's more poetic that way. Don't you want it to be poetic? No, it's also weirdly, Right, I've retracted this weird paternalistic relationship with other countries where it's also weirdly... Right, I've retracted. This weird paternalistic relationship with other countries where it's like, but we do that to everybody. And it's a problem, and we gotta stop. Maybe China will be the one to finally give us world peace.

Starting point is 00:57:39 Who knows? Yeah, but it also takes a lot away from, you know, the Chinese government and they were, look, I don why you're putting me in a weird position where I have to defend the fucking CCP and be like, I mean, they were able to bring a lot of people out of poverty. But I'm, yeah, we're not, I'm simultaneously saying that I'm not going to give the US that... I think the credit for that, I'm also not gonna be like... Yeah. The CCP is strong. Yeah, I think the conclusion is that pretty much all the world powers are innately intrinsically bad and shits fucked.

Starting point is 00:58:19 God, we did such a good episode. Now you're just like devolving to like shits. You're like a like a high school, our college freshman and just don't like, shits just fucked up. Oh, fuck. You know what, you know what, you know what, here's some good news. AMC apes can rejoice.

Starting point is 00:58:35 There we go. At least there's some good news. There we go. Well, tell me what I voted overwhelmingly in favor of a 10 for one reverse split. And the CEO, Adam Aaron, Adam Aaron, whatever, tweeted today was a huge step forward for AMC, you voted yes, yes, and yes, and it was a landslide vote 2, 88% yes for proposal 1, 87 yes for proposal 2, and 87% yes for proposal 3.

Starting point is 00:59:00 My sincerest thanks for giving AMC the tools we need to continue fighting the good fight on your behalf Man, what a fucking con artist shister. It's going to enable AMC to further dilute the apes That's it. So what did they so they it was 10 to 1 So basically for every 10 shares you've got now, you only have one and the price is multiplied currently, whatever the price is currently, or at the time of the split, will be multiplied by 10. So this is not so much of a split, more of a consolidation.

Starting point is 00:59:37 Yeah, a reverse split is done. A reverse split. A reverse split is done when a stock. When a name is split. Yes, thank you. Is done when a stock is in the shitter. It's on the brink of getting delisted. Also when a stock reaches a certain dollar amount, some institutions just have a hard and

Starting point is 00:59:58 fast rule against investing in it. It's done to make it more attractive and make it look more respectable because you know buying a $40 stock is better than buying a fucking $4 stock. Interesting. But it also enables the company to then sell shares still and that's probably what they're gonna do. Because a formal split has a forward split. The other kind is when a stock is too big and then you gotta make it more attractive. Which also makes it more attractive.

Starting point is 01:00:30 Yeah, yeah. You wanna be in a stock that's doing a forward split, not a reverse split. But the apes like this. I don't even know. I haven't looked on the subreddit, but I'm sure that they are doing all kinds of mental gymnastics.

Starting point is 01:00:44 Well, they've become, they're a bit like Q-ish, right? So when Q gets something wrong, they can spin it. No, no, this is a good thing. Yeah, or this is all part of the plan. Yeah, yeah, yeah. So it's the same. It's a very, I think the apes have that mindset where nothing is bad news. Yeah.

Starting point is 01:01:00 Oh, it's down to zero. I'll put it as a plan, baby. Cheaper to get in. We'll get some new guys in here It's just funny that this guy is so good at He he's kind of like become the The snake charmer the pipe pipe the pipe or so to speak he's saying thanks for continuing to fight the good fight You're giving us the tools. It's like dude. Oh man. Just no shame in this guy. What's the follow up tweet down below?

Starting point is 01:01:28 Oh, yeah, oh, it's saving AMC is my so it's really funny Listen listen, saving AMC is my professional mission and remember that I own millions of AMC shares and ape units too I very much want AMC to succeed. I am absolutely too. I very much want AMC to succeed. I am absolutely and passionately convinced that what you have approved today is in the best interests of AMC and all of our shareholders. Yeah, I mean, he's not wrong. Saving AMC is his mission and he's going to have to do whatever it takes to get there. And that's going to involve selling shares to raise cash because they need fucking money to continue doing what they're doing. So what happens now? We cannot implement what you approved today until the litigation in Delaware

Starting point is 01:02:09 Court is all. The next court hearing is on this matter is set for April 27th. Huge third tweet. Yeah, so we had to bury the lead. Oh, boo. Also, our hands are pretty much tied until we can clear some of those litigation stuff A-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a- a name stop subreddit or maybe AMC talking about the Moas and they're just I couldn't tell if it was joke post trying to get Moas if you know what I'm saying. Oh yeah, Dougie. It's just saying that I don't care. I'm either going to hold to zero or they keep they always say that I'm either going to hold to zero or be a fucking multi billionaire. I'm pretty sure that by now it's going to be hold by zero. I think they think that it's pretty well established.

Starting point is 01:03:04 You have to say they are right. They are right. They are going to be hold zero. I think they think that it's pretty well established. You have to say they are right. They are going to hold the zero. They are either going to hold the zero. They are going to hold the zero. They are going to hold the zero. Ah yeah, yeah. He's not wrong when he says I'm either going to. Yeah, or yeah.

Starting point is 01:03:18 What else have we got? It's just heavily weighed in one. There's got to be one more little thing. Should we talk about the opening thing? I just yeah I mean open the eye because there's this yeah we'll save it put Jesus Christ. Jesus Christ is my Lord and Savior. Does my favorite Jesus Christ will forgive my sins and take me to heaven with him? Is that real? Nope, just made it up.

Starting point is 01:03:45 Off the dome. Really like that song. Yeah. A friend of Jesus is a friend of mine. Yep, that's right. Jesus, grass. We love him. We celebrate him every day. Can't wait for his, is, is, um, this is a Christian finance bug. I don't mention that a lot.

Starting point is 01:04:02 It is the number one Christian finance bug. The number one Christian finance podcast. You find me mention that a lot. It is the number one Christian finance podcast. The number one Christian finance podcast. You find me another one and or your money back. Or there might be some Christian finance podcasts where they're like the best thing you can do. Donate. You're funny. Donate.

Starting point is 01:04:16 Cause that comes back to handful, baby. The yield on that is unbelievable. Yeah, you know what the best yield out the price? Paradise. No, no, no. God's love. God's love. God's love pays infinity, infinite, infinite amount of yield.

Starting point is 01:04:30 I mean, when you could go find 6% here, you could find 10% there, but only Jesus' love gives you all the yield that you need in your heart. So give to us. And we'll donate. Or in will, you know. You got it. Yeah, yeah, yeah, he just breaks character. Yeah, they've been doing it for like 10 years So he's just like falls out of the preacher voice. You guys you folks will find it you find a find the link on the website

Starting point is 01:04:58 Donate all that you can it does it does fear that my private plane is leaving. So do I do have to go Well that about wraps it up for this episode. Yeah, I think so. That wraps it up. That wrapped it up. Yeah, we're gonna in there. Yeah, they're saying that wrapped it up. They're saying that they're giving us the old hook. Yeah. I'm hearing I'm hearing breaking right now that that wrapped it up. To all of our new subscribers out there if you made it this far We like to say what the fuck so you're sick, but also welcome and I want you to help I want you guys to get help if you're still here every one of you still watching

Starting point is 01:05:36 If any if anything that I said about China upset you. I'm sorry Yeah, he got real weird with the Listen, I don't got real weird with the giant It's, I don't. I got real weird with the giant. What the hell was that? It's fucking first thing in the morning folks. I don't know what's going on here. I don't know what to think anymore about anything. So please forgive.

Starting point is 01:05:54 Ben gets weird about giant. Oh man, China, I love that food though, man. You can't stop me when it comes to that orange chicken. Oh baby. And those rails that they build, they do it so fast, and those trains go so fast, and I do appreciate it. Anyway, that, I think I have to give it to him.

Starting point is 01:06:10 I gotta give him props. I do. They put up rails like it's nobody's business. Yeah, yeah. Wish they'd make it mine. So stick around for after hours. We're gonna be talking about how we scammed a restaurant to let us in, and what else are we gonna cover? We're gonna be, I how we scammed a restaurant to let us in and what else are we gonna cover?

Starting point is 01:06:26 We're gonna be I'm gonna talk some shit on Talk some shit about Ryan Reynolds, you know, oh, yeah, we gotta talk about Rye Rye We're gonna talk some shit. Oh, we can tell them about the Ryan Reynolds joke from Japan. Oh, yeah You got it. We got it. We gotta be running. Yeah, we're gonna save a team G Studios.tv Where you want to go and stand up and subscribe? In other ways, thank you to your mates for visiting and we'll see you next week. This week on After Hours.

Starting point is 01:06:49 We're just looking at my penis. No, I was looking at your mic wiggling around. You were looking at my penis. Now I'm looking at your penis. God, I can see the outline. The bisexuals are going, but Nan is right now. Another theory was that the pilot did a suicide thing. Well then, so that kinda makes sense

Starting point is 01:07:03 with the other one where it's like, okay fine. Then what do you do with all those people? At that point, why not just say, yeah, where the United States is? You're gonna do that 270 people? Hold on, your neck. I basically was like, look, I'm not playing this game. And he said, it's alright, you're just a kid. I said, don't put your fucking hands on me.

Starting point is 01:07:22 That was the scariest thing I've ever heard. I don't put your fucking hands on me. That was the scariest thing I've ever heard. I don't fuck her. Sign up on TMG Studios.tv to watch the full bonus episode.

The Trillionaire Mindset - 77: How Silicon Valley Bank Collapsed

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