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Apparently they put a LOT of cash into treasuries when yields were low. They maybe be in the same position as SVB: * bought a bond for $100 * now it's only w

Apparently they put a LOT of cash into treasuries when yields were low. They maybe be in the same position as SVB: * bought a bond for $100 * now it's only worth $80 * so they either hold it for 10 years and get their $100 back or sell now for 80, realise a huge loss and go bankrupt

hanoz 4y ago
Why have so many companies been been betting on 200 year low interest rates continuing indefinitely?
- Stranger43 4y ago
  because none of them did long term statistical modeling or risk evaluation but kept focusing only a few quarters ahead.
- s1artibartfast 4y ago
  Because they need to park Capital somewhere that gives a return, even if it's a small one. It's not a bet that interest will stay low as much as I bet that they as a company will be around in 10 years to see the returns. It's a guaranteed profit if they make it to the finish line.
  - hanoz 4y ago
    Of course it's a bet that interest rates will stay low, as subsequent events have amply demonstrated. Managing to hang on until maturity doesn't magically make it turn into a profit, when you consider the time value of money. The bonds are worth so little today precisely because they're only returning the original amount at maturity, plus 200 year low interest.
- LatteLazy 4y ago
  In fairness, it worked for the first 48-ish quarters they did that for. And they're rewarded for thinking in quarters, not years. Also, stupidity and laziness.
onlyrealcuzzo 4y ago
Or, use the Fed's new facility announced Sunday - before market open - to borrow unlimited cash using their treasuries as collateral at PAR value.
- LatteLazy 4y ago
  If you qualify, not sure SVB do. Also, the interest rate on those loans is quite high, higher than the fed rate. So it might buy you time, but you're basically commiting fraud by doing it...
  - onlyrealcuzzo 4y ago
    > If you qualify, not sure SVB do. SVB is already done. They obviously don't qualify. All functioning banks do. > Also, the interest rate on those loans is quite high, higher than the fed rate. By .1% > So it might buy you time, but you're basically commiting fraud by doing it... It's not fraud. The Fed literally made this investment vehicle to bail out banks.
- Scoundreller 4y ago
  I have a stock that went down over the last year, can I do the same kind of thing? If I made more money last year than this year. I can still put the older higher salary on this credit application, right?
  - onlyrealcuzzo 4y ago
    Silly rabbit, hand outs are for the banks.

hanoz 4y ago

Why have so many companies been been betting on 200 year low interest rates continuing indefinitely?

Stranger43 4y ago
because none of them did long term statistical modeling or risk evaluation but kept focusing only a few quarters ahead.
s1artibartfast 4y ago
Because they need to park Capital somewhere that gives a return, even if it's a small one. It's not a bet that interest will stay low as much as I bet that they as a company will be around in 10 years to see the returns. It's a guaranteed profit if they make it to the finish line.
- hanoz 4y ago
  Of course it's a bet that interest rates will stay low, as subsequent events have amply demonstrated. Managing to hang on until maturity doesn't magically make it turn into a profit, when you consider the time value of money. The bonds are worth so little today precisely because they're only returning the original amount at maturity, plus 200 year low interest.
LatteLazy 4y ago
In fairness, it worked for the first 48-ish quarters they did that for. And they're rewarded for thinking in quarters, not years. Also, stupidity and laziness.

onlyrealcuzzo 4y ago

Or, use the Fed's new facility announced Sunday - before market open - to borrow unlimited cash using their treasuries as collateral at PAR value.

LatteLazy 4y ago
If you qualify, not sure SVB do. Also, the interest rate on those loans is quite high, higher than the fed rate. So it might buy you time, but you're basically commiting fraud by doing it...
- onlyrealcuzzo 4y ago
  > If you qualify, not sure SVB do. SVB is already done. They obviously don't qualify. All functioning banks do. > Also, the interest rate on those loans is quite high, higher than the fed rate. By .1% > So it might buy you time, but you're basically commiting fraud by doing it... It's not fraud. The Fed literally made this investment vehicle to bail out banks.
Scoundreller 4y ago
I have a stock that went down over the last year, can I do the same kind of thing? If I made more money last year than this year. I can still put the older higher salary on this credit application, right?
- onlyrealcuzzo 4y ago
  Silly rabbit, hand outs are for the banks.