8 ms·

My understanding may be incorrect (if so, someone please correct me), but I thought this was caused by SVB buying long-term bonds which fell in value after inte

by vecter 4y ago

My understanding may be incorrect (if so, someone please correct me), but I thought this was caused by SVB buying long-term bonds which fell in value after interest rates went up. I don't think this has anything having to do with unprofitable zombie startups being kept alive by "free" money (which roughly ended at the end of 2021). It seems you're angry at tech folks, but they didn't do anything wrong. They're just the victims of SVB's bad bet. I'm not saying a bailout is justified either (I have no opinion on that), just pointing out who's responsible here.

jmclnx 4y ago
>I thought this was caused by SVB buying long-term bonds which fell in value after interest rates went up I heard the same thing, but they took a gamble and lost. That is free enterprise. People who when to SVB will loose too, again free enterprise. It was no secret interest rates were going to go up, so 2 years ago they should have sold those bonds and took a small loss.
zpeti 4y ago
Also if the FDIC just buys these assets at non firesale prices, and eventually sells them to other banks, SVB depositors could easily come out of this whole, with no damage to anyone. I think everyone is being way too hysterical. This isn’t a massive bank run.
janee 4y ago
I don't think this is really comparable to 2008. Grossly simplified 2008 for me is more about bad debt, while this is around bad risk management...svb bought too many long term bonds which was a bad bet given current rates and an industry "correction" as you put it. They just didn't manage the risk of a market "correction" and high interest rates. The tech sector was/is due a correction, but this isn't 2008
- vecter 4y ago
  I agree, but I didn't mention anything about 2008 in my comment. Did you reply to the wrong comment by accident?
  - janee 4y ago
    Ah yeah, I was try to reply to op
sangnoir 4y ago
Hear me out: shouldn't venture capital be providing backstop capital for it's ventures? The money is there, and will eventually be unfrozen; the individual startups only need access to make the next one or 2 payroll runs.
- ahzhou 4y ago
  VC firms don't hold capital either - LPs do. They may be able to do a capital call, but it'll take time. Many SVB startups with more than 20 - 30 employees can't make payroll on Monday. Edit: It's also unclear today whether the assets held by SVB can cover all the missing deposits, since they will likely need to be sold under market rates to liquidate all of them in the near-term.
  - sangnoir 4y ago
    > VC firms don't hold capital either - LPs do. They may be able to do a capital call, but it'll take time. Are you (and the YC boss) suggesting that the government is more nimble than VC machinery at deploying capital when shit hits the fan? Re: your edit: how is it unclear? There are no allegations of fraud or other irregularities- the thesis that they put depositors funds in long-term bonds (with positive interest) and then had a run
    - ahzhou 4y ago
      > Are you (and the YC boss) suggesting that the government is more nimble than VC machinery at deploying capital when shit hits the fan? I can't speak for YC. VC is almost certainly faster, but it's not built to wire money over the weekend. The issue happens when the FDIC insurance isn't enough make payroll on Monday. I don't think the government can bail anyone out in that time period either, but a lack of solutions doesn't make it any less of a problem. > How is it unclear? On paper, they have enough in assets (as of Dec), but there's no way to know if the market takes that price as the FDIC sells it off to cover the deposits in the coming months. Typically liquidating a position impacts the price of an asset.
      - 4y ago

by vecter 4y ago

jmclnx 4y ago

>I thought this was caused by SVB buying long-term bonds which fell in value after interest rates went up I heard the same thing, but they took a gamble and lost. That is free enterprise. People who when to SVB will loose too, again free enterprise. It was no secret interest rates were going to go up, so 2 years ago they should have sold those bonds and took a small loss.

zpeti 4y ago

Also if the FDIC just buys these assets at non firesale prices, and eventually sells them to other banks, SVB depositors could easily come out of this whole, with no damage to anyone. I think everyone is being way too hysterical. This isn’t a massive bank run.

janee 4y ago

I don't think this is really comparable to 2008. Grossly simplified 2008 for me is more about bad debt, while this is around bad risk management...svb bought too many long term bonds which was a bad bet given current rates and an industry "correction" as you put it. They just didn't manage the risk of a market "correction" and high interest rates. The tech sector was/is due a correction, but this isn't 2008

vecter 4y ago
I agree, but I didn't mention anything about 2008 in my comment. Did you reply to the wrong comment by accident?
- janee 4y ago
  Ah yeah, I was try to reply to op

sangnoir 4y ago

Hear me out: shouldn't venture capital be providing backstop capital for it's ventures? The money is there, and will eventually be unfrozen; the individual startups only need access to make the next one or 2 payroll runs.

ahzhou 4y ago
VC firms don't hold capital either - LPs do. They may be able to do a capital call, but it'll take time. Many SVB startups with more than 20 - 30 employees can't make payroll on Monday. Edit: It's also unclear today whether the assets held by SVB can cover all the missing deposits, since they will likely need to be sold under market rates to liquidate all of them in the near-term.
- sangnoir 4y ago
  > VC firms don't hold capital either - LPs do. They may be able to do a capital call, but it'll take time. Are you (and the YC boss) suggesting that the government is more nimble than VC machinery at deploying capital when shit hits the fan? Re: your edit: how is it unclear? There are no allegations of fraud or other irregularities- the thesis that they put depositors funds in long-term bonds (with positive interest) and then had a run
  - ahzhou 4y ago
    > Are you (and the YC boss) suggesting that the government is more nimble than VC machinery at deploying capital when shit hits the fan? I can't speak for YC. VC is almost certainly faster, but it's not built to wire money over the weekend. The issue happens when the FDIC insurance isn't enough make payroll on Monday. I don't think the government can bail anyone out in that time period either, but a lack of solutions doesn't make it any less of a problem. > How is it unclear? On paper, they have enough in assets (as of Dec), but there's no way to know if the market takes that price as the FDIC sells it off to cover the deposits in the coming months. Typically liquidating a position impacts the price of an asset.
    - 4y ago