Brian Austin

March 12, 2023

Sunday Bank Run Fraud - The REAL SBF

Hungry Hungry Hippos 💸🦛

Intended to write a couple of posts but time got away from me the last few weeks. Now in light of the Silicon Valley Bank issue it seems a little tone deaf to ignore the 🧐 obvious elephant in the room. I am not one to buy into the Internet hype cycle, but I spent the weekend pondering how the latest financial debacle could impact me.

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A while back I wrote about my agreement that this time it's a lot like the dot-com bubble, and how that could impact workers. I did not anticipate that the situation could deteriorate into a late 1970s inflation cycle that I've only read about. It’s a nightmare scenario for some, but it’s worth a quiet reminder that the economy survived. 

Jimmy Carter 🔨 or Herbert Hoover 📉

A couple of key pieces of information hit over the past week. Obviously, the shut-down by the California Department of Financial Protection and Innovation. This is bad for tech and start-ups, but I don't think it constitutes a 1920s style bank run. Question I ask, is with a mostly automated, digital withdrawals can that even happen? Yes it can. It's not like regional banks are sitting on giant piles of cash in a money bin. You can empty out your account with the click of a mouse instead of a wheelbarrow.

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Hey, lookin' at you again Uncle Scrooge.

Beans and Tortillas 

Second, I finally caught up on a recent interview with former fed advisor Danielle DiMartino Booth. Essentially the case being made is that the economic numbers are not good and with a yield curve inversion and spread that rivals the 1970s the U.S. needs to buckle up for interesting times.🐼 Everything from overly leveraged households (debt), smaller tax returns and acceleration in manufacturing layoffs are a perfect storm for consumers to pull back.

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🌯 Damn, no need to attack me Danielle💀

The last, most concerning news that aligns with my thesis that we are in an early 2000s style slow-roll recession is the announcement of layoffs and plant closures. For example, a paper mill in North Carolina that employees pretty much everyone in the town is scheduled to shut down. Obviously, the town is concerned about it's future, likewise the 800+ families to directly depend on the plant for income.

So What About Me? 💸

The big take away is that economic indicators are deteriorating, and a bank induced cash flow issue will challenge many non-profitable companies. Is it the end of the world, no. Will it have a spill-over effect that will affect folks outside of the industry, yes. 🤡 Clowns will be revealed.

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Everyone is a clown, Gen Z already figured it out

My personal (not investment) advice is: prioritize survival. Clean up your personal balance sheet, keep an emergency cash fund and don't take on any new debt. If you owe money on variable rate debt💳, pay it down. Interest rates can and will remain high for quite some time. (e.g., 10+ years) 

Above all remember that your job is not your identity and that your loved ones are the most important thing in your life. Work may come and go, but your responsibility is to those that depend on you.

About Brian Austin

A software engineer building products and services for smaller companies. This newsletter syndicates all of my LinkedIn content.

For AI project updates check out Project Maestro on Substack.

All other links at https://bit.ly/m/bwaustin