David Forer MW

aka Dave the Neighbor! Master of Wine, food lover, traveller. The glass isn't half-full, it's overflowing.
Co-owner of a small winery in the Priorat.

[David Forer MW @DavidForer]

@AnneInVino Love it! Hey, maybe you know the answer to this? I’ve never known when is the vineyard spelled with a k (“Doktor”) and when is it with a c? Is that producer specific?

[David Forer MW @DavidForer]

@FelicityCarter PBS did it in the States about 12 years ago. It was called The Winemakers. IIRC, 12 people made wine in Paso Robles and there were judges like @LettieTeague1 and elimination rounds. Just lasted one season.

[David Forer MW @DavidForer]

@pmabray Discord still exists? 😝😝

[Jim Bianco @biancoresearch]

Lots of really bad takes about SVB. Let’s try and correct

This is not a solvency crisis like 2008. Bad loans or poor investments were not made. Money was not lost. So, everyone is going to get their money back. (And please no takes about no interest rate hedging. Asset/liability mismatches are how banking works.)

Instead this is an old fashion 1930s liquidity crisis. Too many depositors demanded cash at once (as in right now) and SVB (and SI) could not convert loans and securities (and crypto) to cash that quickly. So, everyone is getting their money back from SVB (and SI), just not at 8AM Monday. And, yes this is a big problem as this is working capital for a lot of companies. They have payrolls to meet and vendors to pay next week. And if they don’t pay bills and employees, they in turn don’t pay their bills and this can quickly cascade into a major economic problem.

The important question is why so many demanded their money back at once. And I’m not referring to the last two days. I’m asking about the days/weeks leading up to this last two days forcing SVB to sell securities and realize a $1.8B loss, necessitating a capital raise. Why were depositors withdrawing in big enough amounts before Thursday/Friday?

First, welcome to the world of mobile banking. Gone are the frictions of standing in line with tellers instructed to count money slowly. (Media images of lines Friday were largely gawkers)

How did $42 billion get withdrawn Friday alone without thousands in line?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. The entire $17 trillion deposit base is now on a hair trigger expecting instant liquidity.

Add in social media and millions get a message, like Peter Thiel telling Founders companies to pull out, or Senator Warren gloating that SI went under, and pick up their phone open a Chase account and Venmo-ed their life savings into it in 10 minutes. Instant liquidity (not solvency) crisis with everyone still in bed.

Banking will never be the same.

The second, and I did a long thread on this on Friday … banks are over-reserved, after 14 years of QE, and are still paying 0.50% on accounts when T-bills are yielding 5.00%. They don’t need to compete for deposits.

Initially as rates passed 2%, 3% and 4%, the public did not notice. So bankers thought deposits were well anchored at their bank and not moving regardless of the interest rate paid.

But at 5% the public finally noticed, and millions reached for the phone at once and transferred to a money market account or Treasury direct to buy T-bills. Banks were squeezed to convert loans and securities to cash instantly so depositors could leave for better rates.

Add in the bleed out from tech firms struggling, and Senator Warrens tweeting with glee about SI going out of business, and depositors at SVB got the message and picked up their phones and acted.

This is why I have been tweeting that this has to stop now. The Fed is meeting Monday at 11:30. Too late! They need to meet today (Sunday) at 11:30.

What needs to be done? Two things.

The FDIC needs to raise the deposit insurance ceiling to unlimited as they did this in 2008. Besides $250k is a made up number anyway. So make up a bigger number.

Banks need to get their deposit base to stop figuring out how to buy a 4.5% money market fund. They need to raise the interest rates they pay 3.00% - 3.50%, from 0.50%, immediately. Yes, this will kill bank profitability so expect Bank Execs to balk at doing this.

This way the public gets the message that you money is safe, no matter the bank, or the amount, and the rate paid on your money is at least competitive with other alternatives. So, do nothing.

Otherwise, if we are all waiting for the Fed to START a meeting at 11:30 Monday, hundreds of billions of deposits will have moved by phone and it will be far worse.

[Masters of Wine @mastersofwine]

Congratulations to Wojciech Bońkowski MW and Joshua Grainer MW - the two new Masters of Wine! Read the full press release to find out more about the IMW’s new members: https://t.co/vGRwZmhZZX #mastersofwine

[Sam Neill @TwoPaddocks]

#PrimeMinister @jacindaardern resigned today. I am not surprised nor do I blame her. Her treatment, the pile on, in the last few months has been disgraceful and embarrassing. All the bullies, the misogynists, the aggrieved. She deserved so much better. A great leader. Thanks PM!

[David Forer MW @DavidForer]

@HistoryandWine Zoltan is right - Enric Granados. And it's where Gresca is.
Other options - Raval (like Hotel Casa Camper); Born (close to Passeig del Born); Gracia, Placa del Sol (like Hotel Sonder).
Poblenou, no, too quiet. Poblesec, no, few restaurants of note.

[David Forer MW @DavidForer]

@MadScientistFF $3.75 (Canadian dollars). Schlepping boxes around in a warehouse on Saturdays. I was 15.

[David Forer MW @DavidForer]

@hudin In the foreground there. Isn’t that the compound/mini-village that’s for sale?

[David Forer MW @DavidForer]

@AnneInVino @VinousMedia @antoniog Fantástico! Congrats!

[David Forer MW @DavidForer]

@omnivorebooks God, I love Lewis BBQ. Heaven.

[David Forer MW @DavidForer]

@Photos_in_Chile Great wine. Enjoy!

[David Forer MW @DavidForer]

@RivieraWineAc That looks like a truly perfect tartare.

[dVIN Labs (🍷, ⛓) @dVINLabs]

🍇🌍️ Want to hear first-hand expert accounts of 2022 vintage across the wine world? Join #ClubdVIN founding members @LitmanValentina @DavidForer #RajParr & @daniel_petroski on a virtual journey to their respective wine regions
Visit https://t.co/SVFacEx51G for more details.

[David Forer MW @DavidForer]

@winemakersway @MNWineGuy Why is it the right thing to do? Truly an honest question. Trying not to sound snarky. Just trying to wrap my head around those empty tiny discard bins.
Having spent hours on sorting tables I don’t see the point in what they’re doing there.

[David Forer MW @DavidForer]

@omnivorebooks @susanorlean Yeah, there are no masks really here in Spain either. Life is back to normal pretty much. A big difference from SF when I was back there last month.

[David Forer MW @DavidForer]

@gilescooke Toronto YYZ is abismal. Suffered through both terminals this summer. Awful.

[David Forer MW @DavidForer]

I suspect Spotify will get a lot of searches today for The Smiths…

[David Forer MW @DavidForer]

@HistoryandWine So many passionate wine professionals in Southern Africa that are from Zimbabwe. It’s been a joy to meet some of them.