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There have been 562 bank failures since 2000

yarn.pranshum.com

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Re: There have been 562 bank failures since 2000

#91

Post by asimpletune »

lazide wrote: post #55
mxkopy wrote: post #38

Earlier quoted context omitted.

> Congress are cowards and won’t do what should be done - raise taxes. They're still cowards for not doing it but what should've been done is an increase in interest rates half a decade ago.

The fed tried - and the chairman almost got fired for it. Remember? [ https://www.cnbc.com/amp/2018/12/22/trump-reportedly-wants-t... ] Almost 5 years ago exactly.

Yeah it's crazy bc everyone's talking like it's just the rise in rates that's to blame for the asset/deposit mismatch, but really it was the 0% interest rates that came before that really did it. It was during that time that SVB had a lot of extra deposits, but no short term way to back it, since short term t-bills were paying practically 0% interest.

Re: There have been 562 bank failures since 2000

#92

Post by tekla »

ezekg wrote: post #63
tekla wrote: post #57

Earlier quoted context omitted.

There doesn't really seem to be any evidence of greater contagion, SVB is already gone.

It’s been a day. We don’t know anything. The day before SVB fell, everybody said everything was fine. There could very well be contagion come Monday.

SVB was gone Friday morning. There was a entire half day of churn that should have been much more evident if there was systemic risk.

Re: There have been 562 bank failures since 2000

#93

Post by adolph »

lifeisstillgood wrote: post #76
tines wrote: post #36

Earlier quoted context omitted.

I know nothing about economics. Can you help me understand how raising taxes helps deal with inflation? Is the idea that the federal government "deletes" some of the money it receives through taxes, like the opposite of printing more money which cheapens the existing supply?

You have stated Modern Monetary Theory precisely. Yes that is the new modern argument - government prints money, spends it on hospitals etc thus putting it in circulation and deletes it by taxation. One HN comment == ten years of economic debate. :-)

Too bad malloc gets called significantly more often than free.

Re: There have been 562 bank failures since 2000

#94

Post by marginalia_nu »

rvz wrote: post #34

This is total 'whataboutism'. This bank failure is the second largest of all time in the US, and has a potential massive contagion with lots of ripple effects through the tech industry. This "Not just SVB" and "There have been 562 other bank failures before" deflection doesn't help those affected.

I think 'whataboutism' only really makes sense in accusations of moral error.

You can accuse the financial sector of many moral errors, but I don't think SVB would intentionally fail.

Re: There have been 562 bank failures since 2000

#95

Post by mindslight »

nico wrote: post #82
saveferris wrote: post #27

Earlier quoted context omitted.

Not the poster you asked. But, a lesson we continue to ignore is that there are other options to tame inflation besides raising interest rates. The problem is the option isn’t politically expedient so Congress just raises its hands in mock exasperation and says well, it’s the Fed’s mandate to manage inflation. Congress are cowards and won’t do what should be done - raise taxes. That is likely the fastest least painfu…

Unfortunately, the current tax structure disproportionately affects not-as-wealthy people/companies. So raising taxes would probably be a very unfair move to most people. My fantasy would be for the government to abolish taxes altogether and just print the money they need, then use whatever mechanisms they have to take enough money out of the market to keep inflation in check. That way we wouldn't have to pay taxes a…

> then use whatever mechanisms they have to take enough money out of the market to keep inflation in check.

What mechanisms would these be, if not taxes?

The other main contemporary mechanism is raising interest rates, which only works on money that has been previously loaned out at a lower rate, and thus isn't a long term sustainable mechanism for recapture.

Re: There have been 562 bank failures since 2000

#96

Post by asimpletune »

ajross wrote: post #24
xwdv wrote: post #12

Earlier quoted context omitted.

It’s because “ramen profitable” is for losers now: Small bootstrap operations with uninteresting tech trying to not starve. The days of dorm room wunderkids are over. You don’t build a company like Facebook anymore with one guy and a website. Big tech is always watching and anyone that is doing anything of potential will attract money. If they aren’t, then it’s because the potential isn’t there, so we don’t care.

See, that's exactly the attitude that's prevailed for the past 6 years or so. And what I'm saying is that to me that's clearly a rationalization. It's something the finance bros tell themselves to explain why the stuff they like (dealmaking) is more important than the stuff they don't (making stuff people want). Interestingly, we've been here before, in the hangover of the dot com boom. And what lifted us out of that…

Yeah, this is ultimately very much needed. A recession is a great time to start a business of you're smart and focused on solving problems.

Re: There have been 562 bank failures since 2000

#97

Post by swatcoder »

mike_d wrote: post #52
arcticbull wrote: post #28

Earlier quoted context omitted.

That chart would probably be more useful if expressed as the shortfall between assets and deposits. It's not really a huge issue if a bank with $1T in assets has a $1M shortfall but the regulators will sure a shit still close it down.

Almost all failed banks (including SVB) in recent history held more assets than deposits. Liquidity is the issue. Imagine you take your $10 million fortune and convert it all into gold bars and hide it under you bed. Then you order a pizza. When the pizza guy shows up, even though you are "rich," you are also in that moment broke and can't pay for the pizza. Not only will the pizza guy not take gold, you can't find s…

That analogy only works when your gold is obviously worth a lot more than your pizza bill.

For SVB, the knock on the door is more like a loan shark coming by to call in for their return. You have gold under the mattress that is sometimes worth plenty, but it’s value isn’t determined until it sells and it isn’t looking to square up with what’s due.

Re: There have been 562 bank failures since 2000

#98

Post by paulddraper »

arcticbull wrote: post #28
ezekg wrote: post #2

I’m surprised the author didn’t include a chart like this: https://twitter.com/alistairmbarr/status/1634275645235793920 . It shows how bad the SVB situation really is. It’s been very quiet since 2008 and its aftermath. Until now.

That chart would probably be more useful if expressed as the shortfall between assets and deposits. It's not really a huge issue if a bank with $1T in assets has a $1M shortfall but the regulators will sure a shit still close it down.

I agree.

Also, the shortfall is never tiny (else there wouldn't be a failure) not is ever large (else there would have been a failure sooner).

So there is some standardized range.

Re: There have been 562 bank failures since 2000

#99

Post by xwdv »

ajross wrote: post #24
xwdv wrote: post #12

Earlier quoted context omitted.

It’s because “ramen profitable” is for losers now: Small bootstrap operations with uninteresting tech trying to not starve. The days of dorm room wunderkids are over. You don’t build a company like Facebook anymore with one guy and a website. Big tech is always watching and anyone that is doing anything of potential will attract money. If they aren’t, then it’s because the potential isn’t there, so we don’t care.

See, that's exactly the attitude that's prevailed for the past 6 years or so. And what I'm saying is that to me that's clearly a rationalization. It's something the finance bros tell themselves to explain why the stuff they like (dealmaking) is more important than the stuff they don't (making stuff people want). Interestingly, we've been here before, in the hangover of the dot com boom. And what lifted us out of that…

Not sure what you’re proposing. Y Combinator was started for a different era, those days aren’t coming back until there’s a new greenfield catalyst for some engineers to build on, where simple implementation of some new tech can birth huge businesses quickly, with little existing competition.

Re: There have been 562 bank failures since 2000

#100

Post by dylan604 »

mike_d wrote: post #52
arcticbull wrote: post #28

Earlier quoted context omitted.

That chart would probably be more useful if expressed as the shortfall between assets and deposits. It's not really a huge issue if a bank with $1T in assets has a $1M shortfall but the regulators will sure a shit still close it down.

Almost all failed banks (including SVB) in recent history held more assets than deposits. Liquidity is the issue. Imagine you take your $10 million fortune and convert it all into gold bars and hide it under you bed. Then you order a pizza. When the pizza guy shows up, even though you are "rich," you are also in that moment broke and can't pay for the pizza. Not only will the pizza guy not take gold, you can't find s…

um, i'm sorry, but if i'm the pizza dude and i show up at your house where you offer to pay for the pizza in 1 bar of gold (sorry, we don't make change), then i'll gladly take that deal and pay for the damn pizza myself.

of course, we've already done all of the tests to prove it is gold and not lead dressed up in sheep's clothing

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