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Before people get too excited about letting it all burn, I recommend everyone watch this talk by an economist on the 2008 recovery: https://www.youtube.com/wat

Before people get too excited about letting it all burn, I recommend everyone watch this talk by an economist on the 2008 recovery: https://www.youtube.com/watch?v=RrFSO62p0jk https://www.youtube.com/watch?v=RrFSO62p0jk Spoiler alert (18:30): It was entrepreneurship that turned the economy around. Not fed policy. SVB put their deposits in US Treasury Bonds. Commonly regarded as the safest investment vehicle there is. Then the fed raised interest rates, completely screwing over this strategy. Then VCs panicked, like sheep. So now we're in a situation where the most successful startups in the innovation sector are at risk of being wiped out while the US economy is being guided toward recession to cool inflation. Go watch that talk- then tell me you really think its a good idea to let it all burn.

postexitus 4y ago
US Treasury Bonds are one of the safest investment vehicles, IF you match the interest and maturity to your liabilities. You cannot go and buy bonds that will mature and give you 1% per annum in 10 years when you have a debtor awaiting payment in 90 days. That's the huge risk mismanagement SVB did. Having said that, I don't think startups will suffer big time - but they were the ones also who created the bankrun fueled by VC panic. However mismanaged SVB was, given enough time they had enough resources to turn this around.
- Bluecobra 4y ago
  This needs to be sticked at top. It’s not that hard to build a Treasury ladder with three month bills. This is not complicated and you don’t need to be Warren Buffett to figure this out.
- theRealMe 4y ago
  One thing to remember about your last point is that the startups and VC’s that DIDN’T cause the bank run are the ones that will be hurt by this. So if anyone is in here thinking “they shouldn’t have tried to withdraw their money, thereby creating a bank run, if they didn’t want to lose their money!” You have to realize that there two separate groups of people here: the ones that withdrew their money and caused the bank run, and the other ones that didn’t cause the bank run and lost their money. That said, I don’t blame anybody for causing the bank run. If I had a reason to believe that my personal bank might not be able to give me my money if I didn’t get it out right now, there is zero chance that I would leave my money there to vanish just to avoid causing a bank run for other people. Morals break down when my life savings and livelihood are on the line.
NotACop182 4y ago
By design the feds wanted to increase unemployment and salaries. Problem solved? I'm not trying to be mean or condesending. But who would / should the unemployed / wages come from? What sector?
- tsunamifury 4y ago
  It turns out that you can make everyone unemployed and it won’t fix the supply/labor shortage created by a lack of immigration and supply chain disruptions. The fed is using a hammer to fix a chipped vase because it’s all they know what to do.
  - NotACop182 4y ago
    I strongly agree. The feds do not have the tool set to fix the problem on inflation. 50% of inflation is opportunity by companies testing new price points. We are in a pickle I don't think we are ready for what's to come in the future. I feel there will be a lot of pain in the future for the “little guy”
    - tsunamifury 4y ago
      In 2008 and 2020 they had all sorts of special acquisition funds to do targeted support, now when the little guys is screwed suddenly they don’t have anything but raising interest rates? Like not even targeted interest rates? You know what I think? This is just like any other time in history the labor class started getting too big for its britches. We are being told to go back down and stay there. And that’s a really stark reality now that might change someone peoples support for government.
matheusmoreira 4y ago
So what you're saying is the bank made investments based on a whole lot of assumptions. These assumptions were quickly invalidated by US policy changes and then the bank lost everything. Yes, absolutely let it all burn. They risked it all on their "strategy" and lost. Why should they get bailed out in literally any way? I don't see the government showing up to bail me out when my "strategy" gets me liquidated, why the hell do these banks deserve that treatment? Let them face 100% of the consequences of their choices.
- TigeriusKirk 4y ago
  The bank is already gone. It's been wiped out. The discussion is now about the depositors.
  - matheusmoreira 4y ago
    Depositors lent their money to the bank. They took a risk by trusting a bank to manage their money for them. The bank took their money, invested it and lost it all. Let them lose too.
    - baq 4y ago
      It didn’t lose it all. About 90% is still there as assets and is being sold as we speak. The liquid assets have been sold already, so 50% will go back to the depositors next week.
      - matheusmoreira 4y ago
        If it hadn't become insolvent in the first place, there would have been no need to liquidate its real assets in order to pay off liabilities.
        baq 4y ago
        Of course but the point still stands. If it lost it all we’d all be in serious trouble. It lost ~10% and there’s a nonzero chance depositors will be made whole anyway (with zero taxpayer money involved).
EFreethought 4y ago
> It was entrepreneurship that turned the economy around. Not fed policy. Then get yourselves out of this mess.
derivagral 4y ago
SVB did not put their deposits only in tbonds. https://news.bloomberglaw.com/bankruptcy-law/svb-mbs-sales-may-explain-recent-widening-in-lower-coupons-wfs https://news.bloomberglaw.com/bankruptcy-law/svb-mbs-sales-m...

postexitus 4y ago

US Treasury Bonds are one of the safest investment vehicles, IF you match the interest and maturity to your liabilities. You cannot go and buy bonds that will mature and give you 1% per annum in 10 years when you have a debtor awaiting payment in 90 days. That's the huge risk mismanagement SVB did. Having said that, I don't think startups will suffer big time - but they were the ones also who created the bankrun fueled by VC panic. However mismanaged SVB was, given enough time they had enough resources to turn this around.

Bluecobra 4y ago
This needs to be sticked at top. It’s not that hard to build a Treasury ladder with three month bills. This is not complicated and you don’t need to be Warren Buffett to figure this out.
theRealMe 4y ago
One thing to remember about your last point is that the startups and VC’s that DIDN’T cause the bank run are the ones that will be hurt by this. So if anyone is in here thinking “they shouldn’t have tried to withdraw their money, thereby creating a bank run, if they didn’t want to lose their money!” You have to realize that there two separate groups of people here: the ones that withdrew their money and caused the bank run, and the other ones that didn’t cause the bank run and lost their money. That said, I don’t blame anybody for causing the bank run. If I had a reason to believe that my personal bank might not be able to give me my money if I didn’t get it out right now, there is zero chance that I would leave my money there to vanish just to avoid causing a bank run for other people. Morals break down when my life savings and livelihood are on the line.

NotACop182 4y ago

By design the feds wanted to increase unemployment and salaries. Problem solved? I'm not trying to be mean or condesending. But who would / should the unemployed / wages come from? What sector?

tsunamifury 4y ago
It turns out that you can make everyone unemployed and it won’t fix the supply/labor shortage created by a lack of immigration and supply chain disruptions. The fed is using a hammer to fix a chipped vase because it’s all they know what to do.
- NotACop182 4y ago
  I strongly agree. The feds do not have the tool set to fix the problem on inflation. 50% of inflation is opportunity by companies testing new price points. We are in a pickle I don't think we are ready for what's to come in the future. I feel there will be a lot of pain in the future for the “little guy”
  - tsunamifury 4y ago
    In 2008 and 2020 they had all sorts of special acquisition funds to do targeted support, now when the little guys is screwed suddenly they don’t have anything but raising interest rates? Like not even targeted interest rates? You know what I think? This is just like any other time in history the labor class started getting too big for its britches. We are being told to go back down and stay there. And that’s a really stark reality now that might change someone peoples support for government.

matheusmoreira 4y ago

So what you're saying is the bank made investments based on a whole lot of assumptions. These assumptions were quickly invalidated by US policy changes and then the bank lost everything. Yes, absolutely let it all burn. They risked it all on their "strategy" and lost. Why should they get bailed out in literally any way? I don't see the government showing up to bail me out when my "strategy" gets me liquidated, why the hell do these banks deserve that treatment? Let them face 100% of the consequences of their choices.

TigeriusKirk 4y ago
The bank is already gone. It's been wiped out. The discussion is now about the depositors.
- matheusmoreira 4y ago
  Depositors lent their money to the bank. They took a risk by trusting a bank to manage their money for them. The bank took their money, invested it and lost it all. Let them lose too.
  - baq 4y ago
    It didn’t lose it all. About 90% is still there as assets and is being sold as we speak. The liquid assets have been sold already, so 50% will go back to the depositors next week.
    - matheusmoreira 4y ago
      If it hadn't become insolvent in the first place, there would have been no need to liquidate its real assets in order to pay off liabilities.
      - baq 4y ago
        Of course but the point still stands. If it lost it all we’d all be in serious trouble. It lost ~10% and there’s a nonzero chance depositors will be made whole anyway (with zero taxpayer money involved).

EFreethought 4y ago

> It was entrepreneurship that turned the economy around. Not fed policy. Then get yourselves out of this mess.

derivagral 4y ago

SVB did not put their deposits only in tbonds. https://news.bloomberglaw.com/bankruptcy-law/svb-mbs-sales-may-explain-recent-widening-in-lower-coupons-wfs https://news.bloomberglaw.com/bankruptcy-law/svb-mbs-sales-m...