The Biggest Bank Bailout in History
Over the past few weeks, several large banks have failed or needed emergency loans to survive. The press and the Biden administration have done everything possible to avoid explaining what has caused the collapse. They have given the impression this the losses were generated by pure panic that fed on itself. If depositors had just trusted the government to fix things, all would be well.
The banking system is not sound. Most banks sit on losses that amount to at least $1 trillion. In trying to fight inflation, the Federal Reserve began increasing rates last March in what has become the sharpest rise in interest rates in banking history. As rates go up, the value of bonds goes down. A 10-year government bond that was worth $140 a year ago is now valued at $100.
The bank that has been given the most media coverage is Silicon Valley Bank. At its peak, SVB’s stock sold for $597.16 per share, with a market cap of $40 billion. When it was taken into receivership, the whole bank was sold for a single dollar. As it became clear that SVB was in trouble, people began withdrawing their money, forcing the bank to sell its bond portfolio at a huge loss. Within just a couple of days, the whole bank reached a negative value.
The management of SVB is blamed for not using proper risk management. The bank didn’t have insurance to protect itself against rapidly rising rates. When you have bonds trading at around 1%, it would be very expensive to find someone to bet that rates will remain low for several years. If SVB could buy insurance, it would be immediately applied against the bank’s balance sheet, hurting earnings.
What makes it dangerous to have your money in a bank is that they are not required to use mark-to-market accounting. This is a method of measuring the fair value of accounts that can fluctuate over time, such as assets and liabilities. Mark-to-market aims to provide a realistic appraisal of an institution’s or company’s current financial situation based on current market conditions.
A very important date is 12 Mar 2023. After taxpayers funded the bailout of the big banks in the Great Financial crisis, regulators said that any future rescues of banks would be done by bail-ins. The bank would be sold, money raised would cover the debts, and any money left over would go to depositors. People with $250,000 would be covered by the Federal Deposit Insurance Corp. and get all their funds back. When the feds realized that as many as 500 tech firms could wipe out by this plan, regulators decided to go back to a full bailout. On that Sunday night, the taxpayers picked up $14 trillion in new obligations.
A complete bailout of all depositors creates a huge moral risk. The banks are being paid the full value of their bonds. If they lost billions on bad trades, the fed will make them whole. If Uncle Sam is going to make up any loss, the bank should just move its operations to Las Vegas.
JP Morgan strategist Nikolaos Panigirtzoglou believes that the Fed may inject $2 trillion of funds into the U.S. banking system to ease the liquidity crunch. These injection numbers are always low. It could easily balloon to $20 trillion when even foreign banks come for a handout.
The most troublesome thing about this crisis is how fast it has occurred. When Bear Stearn went bankrupt in Mar 2008, the next shoe to drop in the Great Financial Crisis didn’t occur until 5 months later. This time around, the first to go down was Silvergate; a week later, Silicon Valley Bank collapsed; Signature Bank was a couple of days later; 72 hours later, Credit Suisse Group needed a $50 billion loan; and as I’m writing, 11 big U.S. banks swooped in to rescue First Republic Bank with a flood of cash totaling $30 billion.
You can’t have a true banking crisis without the Treasury Secretary assuring us that all is well. I think Janet Yellen got the job done: “I can reassure the members of the committee that our banking system remains sound and that Americans can feel confident that their deposits will be there when they need them,” she said. “This week’s action demonstrates our resolute commitment to ensure that depositors’ savings remain safe.”
Fed chief Jerome Powell clearly has no idea of what he is doing. Two weeks before the collapse of Silicon Valley Bank, he warned Congress that more rate increases were needed to get Inflation under control. Once SVB imploded, he instantly abandoned the belt-tightening and poured $2 trillion in more funds into the banking system. The Fed’s balance sheet has already gone up by $300 billion, which wipes out 8 months of quantitative tightening.
I’ve frequently pointed out that the hand of God is the only reason why the economy holds together. Since 2008, we’ve had around a dozen events that could cause a 1929-style crash, so it’s a divine miracle that we’ve survived each crisis. The people running the show become more corrupt with each passing
–Todd
God’s Prophetic Microscope
Convergence of all indicators signal that this generation almost certainly is the one that will experience Daniel’s seventieth week—the seven-year Tribulation. We look at the signals every week in these commentaries, usually in considerable depth.
Despite the importance of each of these indicators, a couple of specific ones have emerged that we should focus on intensively. That’s why I liken “focus” in these particular prophesies to being under “God’s microscope.”
These two indicators are becoming more sharply defined by the day while we watch things unfold in hourly news feeds. Hopefully, shining biblical light directly on these matters will present an unmistakable image that leaps into our spiritual sensors.
Wars and Rumors of Wars
The first prophetic indicator most terrifying. That is, it used to be the most terrifying, as we’ve looked at before in these articles.
And ye shall hear of wars and rumours of wars: see that ye be not troubled: for all these things must come to pass, but the end is not yet. (Matthew 24:6)
This prophecy of Jesus, I thought, seemingly was being fulfilled when I was a teenager many years ago.
This, as I say, used to be the most terrifying matter. I remember in 1958, as a high school student, being quite troubled while reading a headline during study hall in the school library. The headline at the time of the Cold War warned of nuclear weaponry that had, in testing, dissolved entire islands in the Pacific. If America went to war with the Soviet Union, there would be little to no chance of survival—that was the dire prognosis.
Back then, there were fears and rumors going around amongst us teenagers that America and the USSR were going to war and the world would come to an end.
This seems so strange now, in light of that all has transpired over the decades. Teens today (and a few adults), as far as I can discern, harbor little such fear. I can’t see a teenager today looking at newspaper articles to find out if nuclear war is about to break out. Of course, that whole concept of newspapers among kids today is perhaps a non sequitur; the logic doesn’t follow. Newspapers aren’t really part of communications these days. Neither, however, are students looking on their devices for news of impending nuclear war between Russia and America.
Some might be concerned with climate change, but most are just concerned about conducting their lives through social media, without anxiety over wars and rumors of war.
Yet the Lord Jesus Christ gave this prophecy as a primary signal to look for when the age is on the cusp of His return. Thus, believers should be looking for a profound increase in war and rumors of war.
In my thinking, there is now the greatest likelihood of nuclear war occurring to this point in modernity. That is, if we consider that the Western alliance, led by the present US presidential administration, NATO, and the globalists elite within the World Economic Forum and other nongovernmental organizations seem to be poking that bear. There is an obvious effort to try to get Vladimir Putin to go nuclear, at least in the tactical sense.
But God’s restraining hand is preventing such a catastrophic conflict that would almost certainly take place should the New World Order builders be able to provoke the Russians into using nuclear weapons in the Ukrainian war.
The fact is, we are precisely where Jesus prophesied the end-times generation would be in terms of wars and rumors of wars. This is, therefore, one of today’s two most significant matters to observe intensively under God’s prophetic microscope.
The second to look at—and even more significant, in my opinion—is the matter of the paradox we observe in America in particular. I go back again, maybe for some to the point of ad nauseam, to the prophecy of the Lord Jesus as recorded in Luke 17:28–30.
The Economy and Business and Usual
The love of money, the Bible tells us, is the root of all kinds of evil. We’ve been shown throughout the years of suffering modern wars and rumors of wars that the military-industrial complex President Dwight Eisenhower warned us about has fed the flesh and blood of the young into the war-machine grinder. Great wealth continues to be derived from the production and sales of this machine of horror. For the Russian and the Ukrainian people, this is fully in effect at the moment. And it’s not difficult to discern that the entire globalist New World Order cabal is pushing to bring America and Europe’s youth into that war-machine grinder.
The economy, then, is predicted by Jesus Himself to be prevalent and even in more pronounced ways at the very moment leading to His next catastrophic intervention into the evil affairs of humankind.
The paradox is found in that, at the same time, business is going on as usual—quite vigorously. Wickedness is flowing like a raging river just beneath the seeming normalcy of the time. Money is being made hand over fist at the same time the most wicked, debauched things imaginable are going on in the dark, sinful places of society and culture…all just like in the days of Lot.
Here again is Jesus’ prophecy that places our time, societies, and cultures—particularly here in the apex nation, America—as they were in the days when Lot was removed and God’s judgment began to fall on Sodom and Gomorrah.
Likewise also as it was in the days of Lot; they did eat, they drank, they bought, they sold, they planted, they builded; But the same day that Lot went out of Sodom it rained fire and brimstone from heaven, and destroyed them all. Even thus shall it be in the day when the Son of man is revealed. (Luke 17:28–30)
This is, in my opinion, the most critical prophecy to view through the prism of God’s microscope at this moment. This condition in America and the world today puts this generation right at the very end of the Age of Grace (Church Age) and at the point of entering the Tribulation.
The rumors of nuclear war will, shortly after the Rapture, quickly begin to roar within the judgments of Revelation. It’s time to realize the signals God is allowing those who are His own as a heavenly heads-up.
“And when these things begin to come to pass, then look up, and lift up your heads; for your redemption draweth nigh.” (Luke 21:28)
—Terry