Treasury Steps in to Prevent Further Bank Runs

After Silicon Valley Bank collapsed and was seized by regulators on Friday, the government has taken steps to prevent further runs on the bank. First, on Sunday the FDIC announced that it would make all depositors whole. It extended its typical insurance limit of $250,000 per account to cover the full amount on deposit. This is not a "bank bailout"; the bank is still failed. Investors lose all their money, and executives will have to find jobs at others banks to ruin. The protection for is the people who had accounts there— which actually is a lot of companies that have their accounts there for things like payroll. I know, because I've worked at multiple companies with checking accounts there— including my present employer. 😱

The second major step the government took was this morning. To prevent runs on the bank at other banks as investors and depositors react in fear, the US Treasury has promised to redeem their underwater Treasury Bills at face value. This is arguably also not a "bank bailout" as the payments are actually loans, not full redemptions. I'm still trying to find details on it— which is hard even in financial media at the moment because of the amount of misinformation and outright disinformation (purposeful lies) that pollute the channels.

The bond loans are critical because it's US Treasury bonds that sunk Silicon Valley Bank. That's right, it wasn't something crazy and risky like cryptocurrency or "liar loans" that wrecked them, it was good old, safe, sensible Treasuries. What happened was all the bonds they bought a few years ago, when rates were really low, are now worth much less than their face value since rates are really high. For buy-and-hold investors that's not a problem; if you hold bonds to maturity, you're paid the full face price. But banks and other investors who need to sell bonds early to pay for something else— like larger-than-expected withdrawals from bank accounts— have to take the current market price. SVB got burned on that, tried to raise capital with a new stock offering, and triggered a vicious downward cycle, a run on the bank.

Update: my crosspost of this journal entry to LiveJournal hit the daily Top 15 list there in less than an hour!

Heavy Rains Cause Damage; More to Come!

The SF Bay Area got hit the past few days with another Pineapple Express, a big winter storm system. Air temperatures were warmer with this one so we didn't get snow like the storms two weeks earlier delivered. But as these storms added to an already-wet year, with most locations around the Bay Area now over 150% of normal season-to-date rainfall, damage from flooding is piling up.



In Soquel on Friday a flooded creek wiped out part of Main Street. It seems the culvert under the road got clogged with debris. Water in the swollen creek then surged over the top of the roadway. The roadbed was swept away. BTW, the picture above shows the creek after the flooding has subsided. Some initial pics I saw on Friday had the water only inches below the surface of the road after the washout happened.

Soquel is 35 miles south of us, on the Monterey Bay coast near Santa Cruz. My area is not under threat of harm like this. For one, we don't live in or near mountains, where rain runoff pours huge amounts of water into creeks. Two, the coast, and especially the coastal mountains, are almost always hit harder with rain than we are. The mountains wring moisture out of the storms as they arrive from across the Pacific.

Speaking of mountains, though...



A bit closer to home, on this side of the Santa Cruz Mountains, rains caused a washout on Route 84 above Los Altos. This spot is up in the mountains near Route 35, Skyline Blvd. Again, it's not near us and doesn't represent a danger that threatens our city, though this is a route we usually drive at least a few times a year when visiting parks in the mountains. For example, we drove this road home after hiking at Russian Ridge several weeks ago.

These are just two examples of damage caused by the storm that started last Thursday. There are plenty of others, including the flooding of Pajaro Creek in Monterey County. At the moment we're in a lull between storms.... The next pineapple express is supposed to arrive tonight!

The Pacific, ep. 8: Iwo Jima

Recently I watched episode 8 of The Pacific, a 10-part miniseries about WWII on HBO Max. The episode is entitled "Iwo Jima" and chronicles the major battle there between US Marines and the Japanese Army in 1945. The series originally aired in 2010.

Medal of Honor recipient John Basilone reenters the plot in Iwo Jima. He's tired of hucking war bonds and partying with Hollywood starlets and asks to return to war. "That's the spirit that makes me proud to be a Marine," the general says as he assigns him to train the next wave of marine recruits at Camp Pendleton before deploying with them to the Pacific.

( Two spoilers about John Basilone that are historically accurate )

As with most of the episodes in this miniseries, the fighting depicted in this episode is brutal. The Marines are under nearly constant fire from machine guns, artillery, or both as they struggle to wrest control of this tiny island— "Only 8 square miles," the narrator notes at the beginning— from the Japanese. If you're triggered by watching people get mangled by guns and explosions, don't watch this episode. Actually, don't watch this whole series. 😧

One... odd... thing about Iwo Jima is that the writers don't include a scene of possibly the most iconic thing from that WWII military campaign, the raising of the US flag there. You may not know it by the name Iwo Jima (the full name is Raising the Flag on Iwo Jima) but if you've studied WWII history at all you've probably seen this classic photograph made by Joe Rosenthal of the Associated Press:



(Link on picture is to Wikipedia page about it.)

A sculpture based on this photograph was commissioned as the US Marine Corps War Memorial and placed in Arlington National Cemetery. Replicas of it are also placed at the entrance to some Marine Corps bases, such as Quantico and Parris Island. The image has been reproduced in countless works of civic art, as well, including commemorative coins and postage stamps.

All I can figure is that as indelible as this image is in 20th century US history, the writers felt it's so overdone that it wouldn't make sense to include it. OTOH, I think it would have made the emotional climax that the writers failed to achieve in the spoiler I mentioned above. I know I would have choked up watching a portrayal of soldiers raising that flag after watching so many of their comrades dying to make it possible.