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Silicon Valley Bank’s Failure Is Now Everyone’s Problem
- PaulHoule 4y agoIt’s a nothingburger. Some other bank gets $200B of AUM at the cost of eating a $2B loss and gets a loan from the Fed to tide them over. Film at 11. It is a lot of stress for people right now but the Atlantic is right to be rushing an article out about it now because in 3 weeks people won’t be talking about it, they will be going to the same bank branch, it will just have a different sign in front.
- rogerkirkness 4y agoThe $2B loss was on the highest quality 10% of the assets is my understanding, would that not imply the floor of the real loss will be more like $20B?
- PaulHoule 4y agoBonds are risky in their own special way. If you hold 20 years bond odds are very good you will get the exact cashflow you expected. If you need to sell in 5 years though and interest rates go up you face very predictable losses. Interest rates dropped and dropped and dropped some more since a peak circa 1980 and people have long been saying they have nowhere to go but up. In fact many people thought they would have gone up long before they did. There are many rumors why Bill Gross left PIMCO, then the world’s largest bond fund administrator, I think one is that it’s inevitable that the world’s largest bond fund will post the largest ever loss for investors when there is an interest rate, not because anybody did anything wrong but because bonds are just that way. I can’t say I am enthusiastic 100% about equities but i have few bonds, all inflation protected bonds in my portfolio despite most advice that someone my age should have a lot of bonds because I think that big bust is inevitable. Stocks are hurt by rising interest rates too but bonds will really get killed.