821–830 of 889 posts
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Meanwhile, Peter Theil is openly encouraging everybody to tell each other that SVB is sinking and to pull their money [0]. What a guy. [0] Thiel Fund, Venture Firms Advise Companies to Pull Money From SVB
Probably selling short
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It's really amazing that both Thatcher and Reagan came to power at around the same time, delivered such fabulous witticisms, and caused very similar societal harm.
Fabulous witticisms is usually take down of someone or something that is hard to argue against, but rarely actually factually correct. People who deploy it are arguing by emotion and insult, which would explain why they are also people capable to cause a lot of societal harm. "Fabulous witticisms" feels good to listener and is funny, because it validates what people want to hear. It is rarely actually correct or actu…
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my cousin's grandfather is 101 and lives in the house he lived his childhood in; i think he was born there. he and his parents have expanded the house significantly since then, as well as, of course, repairing and maintaining it. it's very comfortable now. a society that builds durable housing stock is saving up the goods and services that went into its construction one of the things in the house is a nearly complete…
Nice stories, and I don't doubt that some money can be productively invested. But does the marginal dollar saved wind up in a productive investment, or does it wind up malinvested? In other words, is money the bottleneck for increasing productivity, or is it figuring out improved processes and predicting the future economic landscape?
but money is not really a bottleneck or a resource; it's just a way to keep score
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Telling everyone to withdraw their money at exactly the same time is a great way to cause more damage to those startups by creating an actual bank run. Do you now if that "investor" is short Silicon Valley Bank's stock, took out long puts, or has other conflicts of interest? Because if so, they just committed a felony. That "investor" had better hope one of the recipients doesn't forward the email to the SEC. Are you…
It's a pretty standard example of a prisoners dilemma. Each VC telling their companies to pull is the right thing for them in isolation.
The same VC funds influence all of the startups with deposits at SVB. This happens on the tails of Silvergate, where the major exchanges (who also share investors and have overlapping board control) coordinate a bank run, while Elizabeth Warren did everything she could to rug that bank, by spreading FUD and also by forcing them to pay back their emergency loan.
This entire thing is honestly more than a little fishy. Call me crazy, but it feels like a controlled demolition and open financial warfare on the startup and crypto industries.
It will be interesting to see if there isn't new regulation that gives the government far more power conveniently sitting on the shelf that's about to be pushed through.
It could just be unlucky revenue management at these banks, where they locked up way too much of their deposits in fixed rate bonds before the Fed decided to jack up rates, but that begs the question... why didn't the Fed know that raising rates this aggressively would cause bank failures? The Fed should have been aware of the bank's position with Treasuries. On some level this is a controlled demolition. It's just a matter of who is doing the demolition.
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Especially in contemporary times banks make money in an immense amount of ways that don't involve touching customer funds: debit transaction fees, international exchange rate "adjustments", ATM fees, the million 'special processing fee' type fees, and so on. In other countries I've even had to pay a fee when depositing, which was quite odd. Of course this all is going to pale in comparison to the amount that banks ma…
The Medicis couldn’t loan money at interest— that was usury—so they made money by charging a fee for allowing customers to deposit at one place and have the money available in other locations. That was not considered usury
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> 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…
My point is that banning debt wouldn't cause starvation. Apologies for the terminology, the other commenter is right that I was using the original meaning. I don't think the rate of interest is relevant since the mechanisms that make debt dangerous still exist at 7% or 70%. Lending to a "No Income No Asset" person who has 0 chance of paying off the debt is immoral at any interest rate. I'm interested why you think th…
I agree that lending to individuals without assets or income is immoral. That is a very small sliver of debt activity.
Lending to a business based on an analysis of their future earnings potential is not immoral. It is a risk, but that's the business banks are in.
Honestly in the light of the day I'm not sure what point I was trying to make about the GFC, so I'll give you that one :)
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Believe me I wish there was no hunger in those places too
I definitely misspoke there: I meant that they have no debt and no mass starvation. I’m aware there’s a lot of poverty in the Islamic world, but it’s not because Usury is illegal.
1. The Bank lends money to startup
2. They raise money from VC
3. They pay back the loan to the bank using the VC money
4. Valuation raise and the VC shows high returns
5. VCs raise more money to repeat the process
6. Small investors buy shares of high-tech company because bonds yields 0%
It works, until it doesn't anymore.
I just received an email from one of our investors, sent to all portfolio companies, advising everyone to transfer all of their money out of SVB at 8:30am tomorrow morning. Investment/VC funds are doing the same (we’re talking many, many billions of deposits lost in a span of a few days). There is a chance SVB will freeze assets while they deal w liquidity crunch which may impact startup ability to pay bills, pay sal…
I will not be giving advice or opinions, but please don’t post anecdotes as facts to generate panic. This isn’t what most VC funds are doing.