This video could be the most important video that you watch in finance this year because a potential 2008 is brewing and it just started. Let's just put it this way: there's a bank called Silicon Valley Bank that is now having trouble helping you withdraw your money. That's because they're suffering from what's known as a bank run. Everybody's trying to get their money out of small Banks And you should too.

I'm not trying to cause Panic I'm trying to prevent you from losing access to your Capital Be very careful because there are dirty things happening on balance sheets and you already have panicked investors like Bill Ackman begging the government to bail out the banks that are not letting people get their money out of the banks right now. That's scary because the banks have already squandered that money. There's a reason why Silicon Valley Bank Dropped 45 in one day and even though the stock is suspended right now is likely to end today down another 50 percent. This is despite the fact that people like Jim Cramer told us everything is fine at Silicon Valley Bank This company is a merchant bank with a deposit base.

That Wall Street Had been stately concerned about SUV's on. Silicon Valley Bank Recently bought one of our favorite research firms. Buffett Nathanson It's become less dependent upon private equity and venture capitalist offerings. Wait a second.

Let's try to play. Sure they could come back. Yeah, some of them come back here with a stock directly affectionate, oversold position. Stock was the fourth worst performer in 2022.

I Think the fears were not justified and it's a very compelling situation. Yes, that was. Jim Cramer Literally talking about this bank that's now trading for under a hundred dollars a share back when it was 300 saying Wall Street is wrong to think that this Bank isn't distract yet. Now the bond market is starting to price in that this Bank could go bankrupt.

Then again, Jim Cramer's track record isn't that great here. He is talking about Bear Stearns back before the company went bankrupt. Look at what it was trading for when Jim Cramer was pitching it okay Peter writes sure in terms of liquidity and get my money out there. No, your money.

Yeah, this is real okay. If there's one takeaway other than the plus 400 somewhere, Bear Stearns is not in trouble. I mean if anything, they're more likely to be taken over. Don't move your money from Fair that's just being silly.

Don't be silly. Okay, just so you get a sense of what's causing the agony by this point. I Know you've been talking about it. It's financials led by Bear Stearns After what essentially is a bailout from the FED Bear Stern shares down 90 percent this morning.

And it's not just Bear. Pretty much every single bank is plunging an early trade this morning Lehman which is very similar to Bear and its Reliance on fixed income is down nearly 30 percent. You have big names like Goldman Sachs down eight percent Citigroup down eight percent. So it is paying across the board this morning and as you know, it all emanates from uh, this.

Well, the shock this weekend that JP Morgan along with the Fed was going to be bailing out Bear Stearns for two dollars a share. This is a stock that recently was trading at 80 last year was trading at 160. it is the fifth biggest bank on Wall Street. It is significant in that it is establishing a price for some of these hard to Value Securities and as you are well aware, that price is pretty much zero and that's why why you're seeing pain across the street.

It's also despite the fact that JP Morgan said everything is fine at Silicon Valley Bank In fact, we think it's going to go to the moon and it's going to be worth 375 dollars. They never told you that maybe there would be a bank run and their assets are toxic. Their money raise is failing. The money raised.

We're going to talk about that. they announced yesterday has already failed. We'll talk about that as we go through the sheets in this video. but the stocks are likely to close down even more today as they Trend towards bankruptcy.

But the contagion is not just Silicon Valley Bank it's already spreading. First Republic Bank is presently Frozen for trading because First Republic Bank of San Francisco is down 21 on the day and likely to fall more. We have to pay attention to this because this could be the beginning of a 2008 financial crisis again, but with two quick notes that St Patty's Day is coming up. So we've started the amazing sale on the programs and building your wealth linked down below.

prices will be going up after that sale. and if you're interested in investing in my startup house, hack, that opportunity will end March 31st for accredited investors where you can still get warrants and then we're moving on to the non-accredited round probably in May or June Househack.com Silicon Valley Bank is a complete disaster and it should scare you. This is the 15th largest bank and it basically used to probably still at this point does, but not for long back. about half of all Silicon Valley startups, Silicon Valley and startups are notorious for losing money and in tough times going bankrupt basically potentially being vampire companies that if they don't have a product that can cash flow, end up sucking more cash out of the systems only to potentially go bankrupt.

And unfortunately, one of the first Banks uh, exposed to the Silicon Valley startup world is going under. Well, at least they say they're not going under. but and some people actually think it's a buying opportunity. but I think they've lost their mind because this is really bad.

Let's go ahead and cover what's going on. so let me give you a little bit of background first. Basically, there's a banking world where what banks like to do is they take customer deposits and then what they do with those deposits is they invest them in things to collect yields. Basically to yield Farm if you will.

And what a lot of banks did is they would take deposits and then they put that money into bonds and they would. Those bonds would vary. They could be treasury bonds, shorter duration ones. Not very risky, right? If you put your money into six months, 12 months, 18 month bonds.

Little risk because you could just hold those bonds and take money from them right over time. And when you need the cash, the money shows up in 6 12 18 months. But what happens if you've committed to, let's say mortgage bonds and you've committed a lot. And I mean billions of dollars to mortgages which are much longer in duration.

Like commercial bonds which might be a 10, 20 years residential bonds which could be as long as 30 years. Well, all of a sudden, when interest rates go up, the value of your bonds plummet. and that means your balance sheet has what are known as unrealized losses. and when you need to raise money, you might have to start realizing some of those losses.

That's exactly what just happened at a Silicon Valley Bank And it's leading to potential fears that we could see a bank run where people basically go to the bank and say we're taking all of our money out of the bank because we don't trust you anymore. The problem though is if everybody starts withdrawing their money from the 15th largest bank, what does that mean for the rest of the banking system? Well let me give you a little hint. It's bad news. yesterday: 90 billion dollars of banking market cap evaporated on the market.

and that is because institutions are very fearful about what just happened with Silicon Valley Bank Now this is different. I Want to be very clear, it's very different from Silverty. Silvergate was a Community Bank in California much smaller that helped provide liquidity in the crypto space. It basically let Banks or or gave people an on and off ramp to go from dollars to crypto.

24. 7 was their pitch. they're liquidating, they're closing down their Bank Well, just a day after Silvergate suggests, you know what, we can't survive anymore. we've got to close down our bank.

Who who Falls next? Well now potentially the 15th largest bank. Now before we go into some of the financials: I Want you to know some of the background of what's going on? Peter Thiel He has has a venture capital fund and he started telling all of his companies to withdraw their money from. Silicon Valley Bank The more people withdraw their money from the bank, the less cash the bank has since. Banks Generally invest their money into something that might be upside down when people demand cash.

What happens? The bank has to take more losses on loans or bonds or whatever they have. When the bank takes more losses, then eventually they might default on their own borrowings on their own obligations. And when a company with what used to be 210, 211 billion dollars of assets starts defaulting on some of their own debt, guess who starts taking the L then well, potentially companies like JP Morgan Goldman Sachs Other big companies big Banks That's when you really start having potentially systemic issues. There's a reason why Bill Ackman is suggesting that the Federal Reserve should actually bail out silver.

Uh, Silicon Valley Bank How crazy is that? Right back to 2008 bailout world, because we are concerned about the consequences of a bank run at one company potentially spreading. But it's not just Peter Thiel Who suggests you know what? There's relatively low risk of you taking your money out of a bank, but you don't want to be the last person standing. Why would you take the non-zero risk of potentially losing your Capital at a bank if you could just withdraw your money and go put it in a safer Place Remember, anytime you have more than 250 000 at a bank, you're generally over the FDIC limits now. I Say generally because sometimes you can have your money divided up by something like Robin Hood where they divide your money into multiple banks for you.

But what's remarkable here? It's not just the 90 billion dollar banking Wipeout but the fear that is spreading Peter Thiel suggests people take their money out of Silicon Valley Bank Not only that, but you've got Venture Firm Tribe Capital Advising companies move some or all of their balances out of the bank as soon as possible because the risk of a default and essentially being the last person standing without any money and then you get caught up in litigation for year years to try to get Pennies on your dollar back is non-zero In other words, get out. There's another Capital company sending emails and text messages urgently imploring their CEOs to move money out of Silicon Valley Bank This is a classic Bank Run That's what this is. This is a bank run. so you have the 15th largest bank in America now going through a bank run during a Fed induced recession.

So why is the market pissed? Well, the Market's really pissed because this is exactly the kind of Black Swan event that everyone is worried about that could potentially take down a greater portion of the financial system. That's very scary. That's why you have Bill Ackman saying hey, we need to bail this company out because if we don't things could actually end up being worse. That's scary.

But think about this if you really want to see why the markets are fearful, all you have to do is now. look at stock prices. look at what the Bond market is telling you. The Bond market was telling you.

Ah, the Fed's probably going to raise rates 50 basis points soon. Ah, the terminal rate's going to go up to 5.6 Oh, Break Even Inflation rates are rising. What actually happened? All of those were versed. Break Even Inflation rates on the five-year plummeted about 45 basis points yesterday.

That's a big deal. That means we were starting to show signs of potentially inflation expectations running away, which is really bad for inflation. Potentially shows that Uh oh. Paul Volcker's got to come to town soon because inflation's being sticky.

Oh nope. Those inflation expectations plummeted. But they didn't plummet because inflation is now all of a sudden not a problem anymore. They're plummeting because of fears about real financial distress in the banking sector.

The last place you want to hear about a crisis Because that's what led to the 2008 crisis. A real estate bubble that led to a failure of financial institutions. That's scary. Listen to: Bill Ackman For example: Bill Ackman tweeted to be clear, a bailout should be designed to protect Silicon Valley Bank Depositors not Equity holder.

So he's already having to defend this argument that the government should guarantee Silicon Valley Bank He says the failure of Silicon Valley Bank could destroy an important long-term driver of the economy as venture-backed companies rely on Silicon Valley Bank for loans and holding their operating cash. In other words, Bill Ackman is starting to say look, Silicon Valley Bank goes away and they stop providing loans to venture capital. Well then Silicon Valley goes bust and all the people who think they're rich in Silicon Valley they go bust. They stop spending money.

They stop spending money. Good luck at earnings For companies in the S P 500 or the NASDAQ This is exactly the kind of Black Swan you want to avoid. And so this is why Bill Ackman says if private Capital can't provide a solution, a highly dilutive government preferred bailout should be considered, you literally have Bill Ackman The guy who went on CNBC screaming that we should lock down the entire economy for 30 days to stop the spread of covet, just shut everything down. While he's actively shorting the market, he's on CNBC yelling shut everything down.

He basically perfectly made the bottom of the market March 23rd of Uh of 2020. the same person is now saying the government should bail out Silicon Valley Bank The same person Now this is insane because not only is he calling for this kind of bailout, but what's actually really interesting is Jim Cramer Made a CNBC video just a few days ago. He had a piece on uh Silicon Valley Bank and unfortunately, much like Bear Stearns suggested Silicon Valley Bank is potentially a buying opportunity before it lost 60 percent yesterday and another 50 percent in pre-market right now. This is eerily similar and ways that you don't want it to be similar to 2008 and to the collapse of Bear Stearns Bear Stearns was about a 40 to 50 dollar stock when Jim Cramer told us your money is safe with Bear Stearns and what ended up happening, the company ended up being bailed out by JP Morgan for ten dollars per share.

Massive collapse. From that point, the same thing is now happening with Silicon Valley Bank. It was almost the kiss of death for Silicon Valley Bank But it's not just that, it's the financials. I Want you to see the financials, of how dirty these financials actually are and what the company is doing and why the stock is falling as much as it is.

So take a look here. This document right here shows you first of all: I wrote some notes at the top in terms of, uh, some some losses here that have been happening with the stock. But first I Want you to look at this. Today we took strategic actions to strengthen our financial position.

Basically, we's running out of money. But not only are we running out of money, the company sold substantially all of their available for sale Securities portfolio with the intention of reinvesting the proceeds, and commenced an underwritten public offering. In other words, the company is scrambling to raise 2.25 billion dollars, 1.25 billion from shares, 500 million from another private company General Atlantic who's investing 500 million and then a bond race. In other words, the company, as of yesterday's market cap, is scrambling to raise one third of the company's value in cash just to try to stay afloat.

That's very bad. very bad. And look, they provide a lot of liquidity for Silicon Valley and startups, but that liquidity is now gone because the company doesn't have any money anymore. now.

could this have been seen? How could you see things like this potentially coming? Well, the beautiful thing is, you could go into their earnings and you could see where these losses actually Mount up And it's kind of scary to look at, but we'll take a look at exactly it because these are the things that if you're exposed to banking stocks you potentially want to start paying attention to. So first thing we have to do is we're going to go to the Q4 report from Silicon Valley Bank Silicon Valley Bank Q4 and we can jump on over to page 14 of the Silicon Valley Q4 report. and I want you to see what you have over here. So this is page 14 of Q4 And what I want you to know is this company just took an over 1.8 billion dollar loss on their available Securities And what I want you to see here is the net income for this company.

The net income for this company on an annual basis was 1.5 billion dollars last year 1.77 The year before that they just in one. Fell Swoop Lost over one year of income. Okay, it's not just that though, because even though they may have taken around a two billion dollar loss, that's just the beginning because their losses are actually substantially greater than that. and you could see unfortunately similar things in the banking sector and other areas as well.

which I'll show you. So now we're going to go to the annual report and we're going to look at Page 64. So what do we have at Page 64. Well, Page 64 shows you where this company this is.

Silvergate has unrealized losses. So what banks are allowed to do is they're allowed to show you. hey, look, we have a lot of bonds and security. Holdings See here are some of our residential bonds.

Here are some of our commercial bonds. Here's some uh of the the other agency bonds that we have. These could be like to: Jeannie Mae Fannie Mae Where these bonds are doesn't so much matter. But what's scary are the potential unrealized losses that this company has.

And what you're going to find is they have losses in excess of 15 billion dollars. Take a look at this. this is the actual Q4 right here. And what you can see right here is the helter maturity Securities Show An actual value of a 76 billion dollars.

but they're actually showing them on their balance sheet at 91 billion dollars. So this is how the banking system can literally lie to you in your face. they will tell you on their balance sheet. Look, we have 91 billion dollars in available capital from these hell to maturity Securities Like those bonds that I showed you? Oh, but in this footnote over here, we're actually going to let you know that that's actually only worth 76 billion dollars.

That difference is an unrealized 15 billion dollars of losses at the 15th largest bank in the country. That's because they're yielding may be about 1.9 percent on the average of their bond portfolio. Well, free risk-free rates right now are sitting around four percent. In order to sell off these bonds.

To raise cash, you basically have to give the bonds away. And why would you have to sell bonds? Well, you have to sell bonds when people stop depositing money with your bank. And guess what, startups don't have money to deposit with your bank anymore. So now not only are you running out of the potential deposits that basically fund your Ponzi, but people are actively being told to as quickly as possible withdraw money from Silicon Valley Bank now JP Morgan wouldn't have been any use to you.

Unfortunately, because take a look at this that I saw on Twitter Somebody posted this from November 15th of 2022 and they wrote they provided this JP Morgan piece which gave an overrate weighting of this stock of 375 dollars. and they bragged about how even though this company has unrealized losses, this company is probably going to see a massive inflow of client funds and the exact opposite is happening. So in other words you add JPMorgan covering for Silicon Valley Bank which is now I mean the stocks trading for for a fraction of what it has been trading for. So right now Silicon Valley Bank is trading for a hundred and six dollars in pre-market it is actually down to 36 dollars.

The day before yesterday it was trading for 267 dollars and it had a price Target from JP Morgan of over a hundred dollars more than that of 375.. So in other words, JP Morgan was telling the world: Oh, don't worry, this bank's gonna get massive inflows. It's worth 375 dollars. Not only is it worth 375 dollars, but we know it's only trading for 275 right now.

And don't worry about all the unrealized losses the company has. Don't worry, it's fine. they'll get massive inflows from their clients. Well, now, not only are they not getting deposits, they're basically suffering a bank run.

People are running to the the exits as you should. I would not be speculating on this Bank I'd be getting my money out of a Silicon Valley Bank if I had any money exposed to them or any of the other companies that they're involved with. I I personally would recommend getting my money out. But anyway, so you have a stock trading for in the 260s that JP Morgan says is worth 375 because don't worry, money's gonna come in.

Then money stops coming in the Ponzi stops, the stock goes down to 100 bucks. Now it's down to thirty six dollars at the same time as the company is trying to raise a third of their yesterday market cap. Okay, but wait a minute. If the stock is now down another two-thirds that means they're basically trying to raise as much money as their market cap.

They're going to crush this stock. This is like Rivian all over again, except it's in the banking sector. and rather than just a car company going bankrupt where you have a car company that's worth 15 billion dollars supposedly that needs to raise another 15 billion dollars to survive rather than just having a car company going bankrupt, This could really have systemic issues for the entire Financial system. and this is why bond yields are actually falling.

This is why expectations are uh oh. the Fed's not going to go 50 because they could actually break what's turning out to be a fragile banking system. This is scary. Not only is it scary because you think okay, well, it's just Silicon Valley Bank Like, who cares, right? It's worse than that I Want you to see three pages from the JP Morgan annual report and in my opinion, this is scary.

Okay, you ready for this: I Don't like this I Don't like reporting bad news, but look at this first. I Want you to look at this: JP Morgan on their balance sheet shows 185 billion dollars that they have lent out to other institutions. They also hold hell to maturity Securities Much like Silicon Valley Bank Data somewhere around 600 billion dollars right here. But be careful because Securities borrowed means Securities or or like bonds or whatever things they've lent out to other companies.

it's an asset. That's how you know see assets. That's how you know it's lent to someone else. Well, what happens if a Silicon Valley Bank has to start defaulting on stuff they've borrowed? Well, then JPMorgan potentially starts getting hit.

And what if they have to start raising money? Well then you have a big oopsy-doopsy Why do you have an oopsy-doopsy Because JP Morgan as well has massive unrealized losses. Look at this folks right here. Unrealized gains slash losses on investment Securities 11.7 billion dollars. But it gets worse.

Ready for this we go to, we go to. I Mean this. This is like insane. It's it's like borderline fraudulent.

You ready for this? Look at this over here. So that's just the available for sale Securities Losses right? Watch this chart. This is from: JP Morgan December 31st JP Morgan This isn't Silicon Valley Bank anymore. This is JP Morgan Look at this.

This column here is Unrealized gains. This column here is unrealized losses. Which means they're actually not showing up on net loss yet. They're just sitting on those losses.

Oh, it ain't a loss until you sold. Well, what if you suffer a bank run or other Banks Stop, start losing their capital or defaulting on their obligations to you JPMorgan Well watch this. You ready for this? Follow that column. Okay, the left side is unrealized gains.

The right side is unrealized losses. You ready for this unrealized gains: 995 million unrealized losses 47.9 billion dollars of unrealized losses at JP Morgan 47.9 billion dollars of unrealized losses. Do you think the the 15 billion over there at Silicon Valley Bank is bad? JP Morgan's got three over three times as much in unrealized losses now. hopefully.

JP Morgan and the other Banks Don't hit any kind of banking crisis or bank run because then you'll really got oopsie doopsy problems now. I Don't think so. But let me put it this way. you got to pay attention to: Silicon Valley Bank This is not a matter of some stock that you wish you shorted two days ago.

Everyone and their mom wishes they shorted it two days ago. Okay, that's not the issue. The issue if nobody really cares about Silicon Valley Bank Other than people who have deposits there and then some of the Venture Capital folks who are like, damn it, there goes our easy money I Mean quite frankly, money is still so easy. which is insane.

The fact that you could have an AI startup called character AI which is just two employees who left Google who worked in the AI Department start a company in Andreessen Horowitz gives them a 250 million dollar cash bundle at over a billion dollar valuation. That shows you how frothy the market still is. It's absolutely insane. This is really bad.

This is the start of what a Black Swan looks like. It's the beginning of the dominoes falling. It's really bad. We don't yet know all of the implications of this, but you need to pay attention to this whether you're exposed or not.