What in the world just happened? On Friday, Silicon Valley Bank collapsed and was taken over by regulators, and then on Sunday regulators swooped in and shut down New York’s Signature Bank. In a desperate attempt to prop up faith in our rapidly failing banking system, the Federal Reserve unveiled an emergency plan late on Sunday that is absolutely staggering.
All of the depositors at Silicon Valley Bank and Signature Bank will be protected, and all of them will have access to their money right away. They aren’t calling this a “bail out”, but that is essentially what it is. But will it be enough to stop the bank runs that are already happening?
Late last week, huge lines at Silicon Valley Bank quickly made headlines all over the nation.
NEW: Massive line forms outside Silicon Valley Bank in California as customers panic.
Welcome to Biden’s America. It will only get worse.pic.twitter.com/MNCQuKIc9h
— Collin Rugg (@CollinRugg) March 10, 2023
The panic at Silicon Valley Bank quickly spread to other banks in California. In particular, First Republic Bank was hit really hard…
Dozens of customers lined up outside of a First Republic Bank in southern California on Saturday eager to withdraw their funds in the wake of the collapse of Silicon Valley Bank.
There had been fears following SVB’s demise for First Republic’s future when analysts pointed out the similarities between the estimated value of their assets versus the actual value.
As news of what was unfolding in California spread like wildfire on social media, soon there were lines at various banks all over the nation.
Shades of 1930’s. This is my bank in Wellesley this morning. Boston Private Bank, recently acquired by Silicon Valley Bank. Ruh, roh. pic.twitter.com/MAD46ozShx
— Lawrence Lepard, "fix the money, fix the world" (@LawrenceLepard) March 10, 2023
But most of those that have been pulling money out of U.S. banks over the past few days never stood in any line.
And that is because we now live in an era where most banking is done on phones and computers…
Question: How did $42 billion get withdrawn Friday alone without thousands in line?
Answer: your phone!
This is not the Bailey Savings and Loan anymore.
This should scare the hell of bankers and regulators worldwide.
We have never seen anything quite like what we witnessed on Friday.
When it became clear that Silicon Valley Bank was collapsing, unsecured depositors engaged in a mad scramble to get their money out while they still could.
Silicon Valley Bank was the main bank for two of our companies, my personal savings, and my mortgage. This is how things unfolded for us:
Between 2013 and 2023, all good.
Thursday, 9 AM: in one chat with 200+ tech founders (most in the Bay Area), questions about SVB start to…
— Alexander Torrenegra (@torrenegra) March 11, 2023
And this wasn’t just happening in the United States.
Silicon Valley Bank had branches all over the planet, and so the panic that we were watching was truly global…
Startup founders in California’s Bay Area are panicking about access to money and paying employees. Fears of contagion have reached Canada, India and China. In the UK, SVB’s unit is set to be declared insolvent, has already ceased trading and is no longer taking new customers. On Saturday, the leaders of roughly 180 tech companies sent a letter calling on UK Chancellor Jeremy Hunt to intervene.
“The loss of deposits has the potential to cripple the sector and set the ecosystem back 20 years,” they said in the letter seen by Bloomberg. “Many businesses will be sent into involuntary liquidation overnight.”
This is just the beginning. SVB had branches in China, Denmark, Germany, India, Israel and Sweden, too. Founders are warning that the bank’s failure could wipe out startups around the world without government intervention. SVB’s joint venture in China, SPD Silicon Valley Bank Co., was seeking to calm local clients overnight by reminding them that operations have been independent and stable.
Of course not everyone that had money in SVB got burned.
For example, Peter Thiel and his minions got their money out in time…
Peter Thiel’s Founders Fund had no money with Silicon Valley Bank as of Thursday morning as the bank descended into chaos, according to a person familiar with the matter.
Founders Fund withdrew millions from SVB, said the person, who asked not to be identified discussing private information. It joined other venture funds that took dramatic steps to limit exposure to the now-failed financial institution. Founders Fund also advised its portfolio companies that there was no downside to moving their money away from SVB, even if the risk was low.
And a number of key SVB executives conveniently sold off shares in the bank just last month…
Bill, this may interest you:
Before the collapse, executives sold shares.
Gregory Becker, CEO, sold 11% on Feb 27, 2023.
Michael Zucker, Counsel, 19% on Feb 5.
Daniel Beck, CFO, 32% on Feb 27.
Michelle Draper, CMO, 25% on Feb 1.
Read more: https://t.co/GI3EDmPOGU pic.twitter.com/5kXUr34Wf6
— unusual_whales (@unusual_whales) March 11, 2023
But countless others did not pull the plug in time.
Apparently, that even included Harry and Meghan.
BREAKING: HARRY AND MEGHAN STAND TO LOSE MILLIONS IN COLLAPSE OF SVB BANK
Sources tell iSN the couple set up accounts following the advice of friends in Silicon Valley.
"This is a major blow," said our source, "They had all of Harry's money there." pic.twitter.com/d5qrfYa2Qo
— iSource News (@isource_news) March 11, 2023
Oh the humanity!
There was no way that the Federal Reserve was going to allow Harry and Meghan to lose millions.
So now they have stepped in with mountains of fresh cash.
But is the Fed prepared to do this for all of the other banks that will soon be in trouble too?
According to CNN, U.S. banks “were sitting on $620 billion in unrealized losses” as of the end of last year…
Silicon Valley Bank’s collapse last week sent tingles of panic down investors’ spines as it highlighted a larger problem across the banking sector: The widening gap between the value large lenders place on the bonds they hold and what they’re actually worth on the market.
SVB’s downfall was tied, in part, to the plunge in the value of bonds it acquired during boom times, when it had a lot of customer deposits coming in and needed somewhere to park the cash.
But SVB isn’t the only institution with that issue. US banks were sitting on $620 billion in unrealized losses (assets that have decreased in price but haven’t been sold yet) at the end of 2022, according to the FDIC.
This crisis is far from over.
As I have been arguing for years, our deeply flawed system simply cannot survive without artificial support.
What has transpired over the past several days is clear evidence of this fact.
The Federal Reserve has decided to ride to the rescue once again, and the financial community is cheering.
But will it be enough to stop the wave of panic that has now been unleashed? We shall see.
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Article cross-posted from The Economic Collapse Blog.
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
