[sgbuffett]

Just like Financial Crisis people don't run don't take precaution until too late they keep thinking bull run around corner.

You think it only one or 2 banks?....No.

What happen is many banks took depositor money just like SVC to buy high yielding MBS(mortgage back securities) ...there are many bank stocks collapsing right now...below is just one.



What has happened  ...many don't understand but let me explained clearly.

Many US banks bought MBS (mortgage backed securities) these pay high interest and using depositors money to buy they can earn the extra interest.....how much did they buy almost $3 Trillion.



As Fed hike rates, the price of these MBS goes down because investors demand higher yield on  these as interest rate goes up.

This means the banks suffer losses. About 400B in losses are now on books of commercial banks. SVC because of use by crypto users and collapse of FTx resulted in withdrawals it had to sell its MBS and realise losses ...this cause the collapse.

Many banks now have a big hole. The US housing market has fallen sharply just like during financial crisis.....expect more bank problems and problems to spread.

Those who last few yrs advocate buying US stocks are clueless of the underlying financial problems.

MBS index chart below.


Not only does Fed has to stop hikes they need to cut fast to prevent this collapse...but they will fail to take the right actions in the name of fighting inflation.