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Make no mistake, this bank failure is the first sign of a western capitalist and international depression. Too much liquidity followed by the hike in interest r
by FollowingTheDao 4y ago
Make no mistake, this bank failure is the first sign of a western capitalist and international depression. Too much liquidity followed by the hike in interest rates....works every time.
From Bloomberg:
“The issues at SVB have been like a cold shower and with the Fed having just countenanced the idea of faster hikes once again, the potential for a very unhappy equity market should the jobs data surprise on the upside is very real indeed,” James Athey, investment director at global investment company Abrdn, told Bloomberg. “It has always been the case that the sort of hikes we have seen from the Fed were going to cause problems somewhere,” he added.
- gitfan86 4y agoThe plan was to cause problems in the labor market. They wanted all types of companies including startups and banks to layoff lots of workers hoping many of those workers would become desperate and take any job at any wage which would drop labor prices and also inflation due to people having less money to spend. Somehow they didn't understand that it is much easier to move money from low yield bank accounts to higher yield t-bills than to fire lots of employees and then rehire others at lower wages in an already tight labor market.
- ISL 4y agoThose higher yield t-bills are a great way for banks to make money, too. SVB is a case of misreading the trend and getting caught out. I see a ton of banks offering CDs at half a percent below the matching T-bills rate....
- gitfan86 4y agoSBV is a symptom of the whole SV culture over the past few years. Crypto, Over Hiring, Over paying, 100x ARR valuations, are all tied together. A frenzy of greed and incompetence took over the industry (partially due to ZIRP), it all had to come crashing down at some point. Just like in 2007 when everyone said that houses only go up in price every year. That just isn't reality.
- cdiamand 4y agoWasnt this issue caused because SVB bought a long term, illiquid instrument? I.e they made a rather individual choice to lock up most of their assets this way. Does that actually suggest this is more broadly systemic?
- luckylion 4y agoDid you mean Western capitalism or is Eastern capitalism some technical term that I'm unaware of?
- FollowingTheDao 4y agoHa, yes, western capitalism. Corrected.