[Politics_Observer]

@Rancid

VB wasn't investing directly in tech startups (AFAIK). If they were, it wasn't in large numbers. That is not what precipitated the downfall. They are not a venture capital firm. What they were doing is just being the bank for start-ups. That is, once a start-up is funded by a venture capital firm. The money given to the startup was deposited into SVB. The start-up would use SVB to pay its employees, buy capital equipment, pay operating expenses, etc. etc.

SVB put a lot of that deposit money into US bonds actually (they were actually trying to be responsible lol). Once interest rates went up, those bonds loss value. The bank decided to issue new shares to raise money to cover the losses. A panic event ensued when this news spread (recall what I said about velocity of money and social media). Then a bank run happened, also shares on the secondary market for the bank were sold off too (thus making it harder to raise the capital through new share issuance.).

The funny shit is, if there was no panic, this bank probably would have raised the capital no problem. There probably wouldn't have been a bank run, and the hit to their share price probably would have been minimal (just the new share dilution). The venture capitals scene is still strong despite economic headwinds and inflation of the last few months. There probably still would have been wind in the sails of SVB. This event shows us that the system is too loose for the technological, social, and economic structures of today. IMO, this is a good thing we are seeing this now. hopefully the right adjustments are made.

Basically, the bank failed to take into account interest rate risk in relation to bonds. It sounds like they failed to diversify to minimize their risks.

[Rancid]

Basically, the bank failed to take into account interest rate risk in relation to bonds. It sounds like they failed to diversify to minimize their risks.

True, this is a fuck up on their part. That said, I think it's good this happened. It exposes more issues in the system. The only thing we need to hope for is that people don't go into a rabid panic, which is still very possible though.. Then maybe it won't be such a good thing... If that is the case though, what must happen, must happen then. one way or anotehr this shit needs to get exposed.

Some of the smaller banks that took a hit late last week, have seen rebounds. Perhaps the market is coming to its senses and realizing we shouldn't panic.... at least not yet.

I'm all for panicking, but only when it is warranted.

[XogGyux]

@Rancid



Basically, the bank failed to take into account interest rate risk in relation to bonds. It sounds like they failed to diversify to minimize their risks.

Well, maybe. But by reports it seems that the main issue is fear rather than an actual accounting issue. They asked people to "not panic" and annouced they would be selling a bunch of crap at a loss to get enough funds and sure enough people panic. The CEO selling stock? This guy should go to jail for insider trading lol, could it possibly be any more obvious?
But then again, what about signature bank? That one doesnt seem to have the same issues? And a lot of banks also losing stock value, which could further worry people?
The reality is the banking system works on fractional lending which means if people start to panic, no back, not even chase or bank of america can survive this. Even if their finantial sheets are otherwise healthy.
There might be incentives for hostile entities such as Russia/China to spread disinformation and/or fear via bots, internet, etc. But it does not even have to be them, you could have investors short selling the banks. Remember AMC stocks? Herd mentality is stupid and manipulable. The US better beef up its cyber security and start acting more transparent to avoid china/russia getting an advantage.

[Politics_Observer]

@XogGyux

If that CEO was insider trading, they need to lock his ass up.

[Fasces]

[AFAIK]

The whole point of reserve banking is lending out more money than you have on deposit and then playing the victim by declaring a bank run when your depositors ask to have access to their own money. Anyone who deposits money at a bank is gambling that they're more likely to have access to that money later than they would have if they kept it at home. Of course if you don't put your money in the bank it is guaranteed to lose much of it's value to inflation so you're pretty much damned if you damned if you don't.

[Wellsy]

[wat0n]

https://twitter.com/andrew_g_nelson/status/1635281940189425664?s=64&t=7ypAbC6Md5l8cpErBPUjXQ

Should've told that to the bankers who went bust in the Great Depression.

[Rancid]

The sweet spot

[ness31]

Which way will Credit Suisse go? I say it gets saved by the Swiss government.

Edit - at the time of writing this post CS had already borrowed 54 billion from the central bank. Maybe that’s enough? lol