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Bank run on Silicon Valley Bank

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Re: Bank run on Silicon Valley Bank

#781

Post by gadders »

simonh wrote: post #681
dijit wrote: post #661

Earlier quoted context omitted.

Honestly, I'm not an economist, even worse I was not a fully functioning and critical thinking adult before the Thatcher era, you could well be right but I find it really hard to believe. For example the UK has also had subsequent Conservative victories for the last 12 years or so but every single argument made in 2010 about their approach has been proven true. To the detriment of every person in the UK. So it doesn'…

I can't argue with you on the recent Conservative track record, they're a pale shadow of the party they once were. The only thing that's saved them is that Labour under Corbyn was plainly, obviously such an utter catastrophe in the making the Cons couldn't help looking good. There certainly was an aspect of that back in the 80s. In the early years Labour was lead by Michael Foot, basically a likeable version of Corby…

As someone who was born at the start of the 70's, I think you really had to live through the 70's and early 80's to realise how bleak it was. And I say this as someone who grew up on mostly free school meals, had their phone cut off for non-payment etc.

Re: Bank run on Silicon Valley Bank

#782

Post by johnbellone »

justinzollars wrote: post #720
johnbellone wrote: post #81

Earlier quoted context omitted.

All due respect, nah, nope. Today I learned that many startups park their money at one bank. I hope that isn’t true. If it is I’d be moving my funds regardless right now.

What do they do if this is their only account?

You better hope you're able to move your funds this morning.

Re: Bank run on Silicon Valley Bank

#783

Post by MengerSponge »

gadders wrote: post #746
MengerSponge wrote: post #683

Earlier quoted context omitted.

"Defeating communism" like this: https://www.youtube.com/watch?v=7AfPFlWnww8

No, by outspending them militarily, encouraging Solidarity in Poland, and forcing Gobarchev to realise the inevitable.

Encouraging Solidarity in Poland was the right call, but it's not likely that different leaders would have opposed it.

"Neither the strong nor the weak version of the proposition that American defense spending bankrupted the Soviet economy and forced an end to the Cold War is sustained by the evidence."

https://www.theatlantic.com/past/docs/politics/foreign/reagr...

Re: Bank run on Silicon Valley Bank

#784

Post by calderknight »

3np wrote: post #339
notch898a wrote: post #313

Earlier quoted context omitted.

My anecdotal experience is jokes/poorly supported takes get downvotes. If you want to get flagged, the best way to do that is to make an irrefutable strong argument that ruffles political or economic feathers of a popular ideology on HN. There's nothing that enrages people here more than an unpopular but sound argumen they don't like, so they flag it to make it go away. If they can quickly disprove you or make you to…

Please link examples.

I found various examples of notch making "ancap" arguments and getting flagged. They're examples of comments getting flagged due to their expression of unpopular viewpoints, although frankly they were lacking in quality argumentation so they're not the greatest examples of his point.

Re: Bank run on Silicon Valley Bank

#785

Post by sanderjd »

bink wrote: post #643
sanderjd wrote: post #340

Earlier quoted context omitted.

I don't remember hearing that in 2007. Pretty much the first thing I heard about the financial crisis was that there was gigantic contagion risk throughout the financial system.

Maybe not that exact phrase but it does conjure to mind the video of Cramer saying Bear Stearns was fine. https://www.youtube.com/watch?v=gUkbdjetlY8

Ah fair enough. Yeah Cramer was wrong about everything in the period and very mainstream. Point taken.

Re: Bank run on Silicon Valley Bank

#786

Post by carlosjobim »

freddie_mercury wrote: post #389
FormerBandmate wrote: post #60

Earlier quoted context omitted.

This is how every bank has always worked since banks were invented

The very earliest banks didn't do fractional reserve banking so it isn't true to say it is how every bank worked since banks were invented. The first known instance of fractional reserve lending was with an medieval Italy but banks have been around since 2000BCE. You are right that it definitely explains 99.99% of banks in history. But there are a handful of historical examples -- even after "modern banking" began in…

> The very earliest banks didn't do fractional reserve banking

I am certain they all did it, but in secrecy. Even when banks stocked grains and not gold.

Re: Bank run on Silicon Valley Bank

#787

Post by sanderjd »

kragen wrote: post #583
sanderjd wrote: post #532

Earlier quoted context omitted.

> I don't understand why the government would need to "take over everything" to avoid starvation. If the non-starvation examples are all dictatorships, then what's your point here? I agree that it's possible for capitalism to exist without "usury". Definitions of "usury" tend to define it as "unreasonably high interest rates". Interest rates right now are like 7%, which isn't particularly high and certainly isn't "un…

you're responding to someone using the traditional definition of "usury", a sense already marked as obsolete in web1913: "The practice of taking interest." that is what is prohibited in sharia, charging interest at all, not charging unreasonably high interest; at least in medieval interpretations of sharia and modern fundamentalist interpretations plausibly the other commenter should avoid using such confusing termin…

Yeah.

Re: Bank run on Silicon Valley Bank

#788

Post by adam_arthur »

dkrich wrote: post #650
adam_arthur wrote: post #16

Earlier quoted context omitted.

Re: your duration point, these loans can be sold, either on the open market or a private exchange. Calling it a duration mismatch is a bit misleading. They took on duration risk and their loans lost value is more accurate. Otherwise they would just sell the loans (which they stated they did, but clearly it wasn’t enough thus the equity raise)

Wasn’t enough for what, though? To pay out money deposited with them on a short term basis.

They invested in bonds which lost value, thus they don’t have the money. Nothing to do with duration.

Calling it duration driven obscures this pretty simple fact

Re: Bank run on Silicon Valley Bank

#789

Post by tootie »

jen20 wrote: post #524
tootie wrote: post #504

Earlier quoted context omitted.

I feel like this is unlikely. Startups didn't spring into existence in 2005. Every business was a startup at one point. Even venture capital isn't new. I'd wager every suit and tie wall st old guard firm knows how to handle startups just fine. SVB just had the right branding for young entrepreneurs who assumed JP Morgan wouldn't talk to them.

They might know how to, but they choose not to.

In that case it would just SVB has a much higher risk tolerance and it seems that may have bitten them in the ass.

Re: Bank run on Silicon Valley Bank

#790

Post by adam_arthur »

chollida1 wrote: post #769
adam_arthur wrote: post #16

Earlier quoted context omitted.

Re: your duration point, these loans can be sold, either on the open market or a private exchange. Calling it a duration mismatch is a bit misleading. They took on duration risk and their loans lost value is more accurate. Otherwise they would just sell the loans (which they stated they did, but clearly it wasn’t enough thus the equity raise)

I'd say it was a duration mismatch. Remember my point was it was a 1-2 punch. 1) their duration mismatch their long term assets lost value, this isn't a problem if you can hold to maturity as you'll get all your money back. 2) people flocked to the bank to pull money out as tech went down, their deposits really fell as those companies needed the cash to fund operations and layoffs. When the demand deposits were requi…

Bonds carry risk. The value declined, thus they don’t have the money.

If the bond issuer defaults then they wouldn’t receive money back on any timeline. Thus calling it a duration mismatch is misleading.

More accurately, they took on a level of duration and credit risk, and it didn’t pay off.

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