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Coal Mine Canary

coal mine canary SVB, Silicon Valley Bank, failed last week! The event went unnoticed by most outside the the financial community. They worry whether this could be the coal mine canary.

SVB was mostly unknown outside the tech community, but this institution was not small:

Silicon Valley Bank on Friday became the biggest American bank to fail since the collapse of Washington Mutual in 2008, at the height of the global financial crisis.  The implosion of Washington Mutual, as well as the investment banks Lehman Brothers and Bear Stearns, was followed by a systemwide failure. From 2008 to 2015, more than 500 federally insured banks failed.

There is reason for worry! Unrestrained Government spending has left government technically bankrupt (liabilities exceed assets). That is before recognizing the $100 Trillion of debt represented by Social Security, Medicare and Medicaid promises. The interest cost on current debt is rising rapidly as more debt is added and interest rates climb. Insolvency cannot be avoided without continuing increases in debt. This process is known as the Debt Death Spiral!

For those who believe our leaders are capable of solving the problems they created, I suggest you view the following by L. Reichard White:

Masters of the Universe??

As the myth goes, Fed Chair Bernanke, Sec. of Treasury Hank Paulson, his right-hand man Neel Kashkari, Speaker of the House Nancy Pelosi, Senator Christopher Dodd — and the rest of The Masters of the Universe — stepped up to save us from total economic disaster with what they called a “break the glass” rescue.

…they told us that unless we acted, the financial system of this country and maybe the world would melt down. They used those words in a very kind of calm voice.” –Sen. Christopher Dodd

They indeed “acted.” None the less, we ended up with what Bernanke would later describe as “the worst economic disaster since the Great Depression.” Would things have been any worse if they hadn’t tinkered with the economy, especially since it’s that very tinkering that causes economic disasters?

As the saying goes, “There’s nothing more sobering than meeting your heros up close and personal.”

With the stage set by Ron Paul, here they are in their own words — up close, personal, and more than a little sobering: The Masters of the Universe and how they “handled” “the worst economic disaster since the Great Depression” – – –

So, leaving Fed Chair Bernanke, NY Fed Chair Geithner, the SEC’s Cox, and the U.S. Treasury’s Steel speechless, as Sen. Jim Bunning asked, “How do you let the entire financial system become so fragile that it could not tolerate one failure?”

The answer is, as you may know but The Masters of the Universe apparently don’t, “All you have to do to make the economy fragile is violate the U.S. Constitution by abandoning the gold standard.”

What do you suppose will happen THIS time?

HERE for updates, additions, comments, and corrections.

AND, “Like,” “Tweet,” and otherwise, pass this along!

The passage of time will answer both questions. What is certain, however, is that “solutions” to current problems will avoid the underlying causes. As such, they are not solutions but merely time-buying political fixes.  Whether this works one more time is debatable.  That another fake financial solution will be tried is not!
A complete financial collapse is unavoidable given the ineptness, greed and dishonesty of most politicians. The question is whether it is this time or next time.

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