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Where was the “courage” to quote this article while it was happening? This was exactly what I was saying but it was drowned it by people saying it was for the “

Where was the “courage” to quote this article while it was happening? This was exactly what I was saying but it was drowned it by people saying it was for the “little guys” which was lies.

jmeister 3y ago
"On the startup bailout. It is claimed that the startups who put all their cash in SVB will now be forced to close, so get going with the bailout now. It is not startups who lose money, it is their venture capital investors, and it is they who benefit from the bailout. Let us presume they don't suffer sunk cost fallacy. You have a great company, worth investing $10 million. The company loses $5 million of your cash before they had a chance to spend it. That loss obviously has nothing to do with the company's prospects. What do you do? Obviously, pony up another $5 million and get it going again. And tell them to put their cash in a real bank this time." https://johnhcochrane.blogspot.com/2023/03/silicon-valley-bank-blinders.html https://johnhcochrane.blogspot.com/2023/03/silicon-valley-ba...
- coder9874 3y ago
  Just my 2c as a startup guy - this is patently absurd. VC's would not just write checks for millions again after such huge losses. Many, many startups would shut down and the entire startup/VC ecosystem would be devastated.
- s1artibartfast 3y ago
  I'm not sure why this analysis assumes that the startup doesn't have $5 million of debt or somehow gets back the equity they sold. They're not in the same position they were before. If you're worth 10 million when you have five million in the bank, you are now worth 5 million without it. If you sold half your company to get the first 5 million, why would keep working if you have to sell the other half?
- muzz 3y ago
  The "haircut" would have been less than 15%, this is why the bailout of $151B in uninsured desposits was less than $20B and not $151B. So if they had $5M uninsured in SVB they would have received $4.25M and suffered only a 750k loss.
phailhaus 3y ago
The first line in the article: > When federal regulators stepped in to backstop all of Silicon Valley Bank’s deposits, they saved thousands of small tech startups and prevented what could have been a catastrophic blow to a sector that relied heavily on the lender. Both can be true. Thousands of the "little guys" were saved. Some big names benefitted too. And?
- flappyeagle 3y ago
  Job well done. Everyone was saved. Firemen went into the building, and got everyone out. Building owners lost their investment. Look, they could have looked up the architectural plans and realized the building was skirting the edge of code. Chose a different building. Someone of them should have known better. Had the resources to do all of that. But the building had nice amenities at an attractive price. I mean, they should have been sophisticated enough to know that this kind of deal is too good to be true. Rents are high for a reason you know! Why is it up to the public to rescue them?
- mehlmao 3y ago
  The "thousands of small tech startups" would have gotten $250,000 immediately so they could make payroll, the majority of their holdings back in a week, and 95-98% of their money back in a month under normal FDIC operation. There was no need to bail out giant companies with no risk management like Roku and the venture capitalists who sparked the bank run.
  - muzz 3y ago
    It would have been even quicker than that-- a large portion of the uninsured deposits would have been available on Monday March 13 ie _the next business day_ after the bank was seized: https://www.bloomberg.com/news/articles/2023-03-11/fdic-races-to-start-returning-some-uninsured-svb-deposits-monday https://www.bloomberg.com/news/articles/2023-03-11/fdic-race...

Where was the “courage” to quote this article while it was happening? This was exactly what I was saying but it was drowned it by people saying it was for the “little guys” which was lies.

jmeister 3y ago

"On the startup bailout. It is claimed that the startups who put all their cash in SVB will now be forced to close, so get going with the bailout now. It is not startups who lose money, it is their venture capital investors, and it is they who benefit from the bailout. Let us presume they don't suffer sunk cost fallacy. You have a great company, worth investing $10 million. The company loses $5 million of your cash before they had a chance to spend it. That loss obviously has nothing to do with the company's prospects. What do you do? Obviously, pony up another $5 million and get it going again. And tell them to put their cash in a real bank this time." https://johnhcochrane.blogspot.com/2023/03/silicon-valley-bank-blinders.html https://johnhcochrane.blogspot.com/2023/03/silicon-valley-ba...

coder9874 3y ago
Just my 2c as a startup guy - this is patently absurd. VC's would not just write checks for millions again after such huge losses. Many, many startups would shut down and the entire startup/VC ecosystem would be devastated.
s1artibartfast 3y ago
I'm not sure why this analysis assumes that the startup doesn't have $5 million of debt or somehow gets back the equity they sold. They're not in the same position they were before. If you're worth 10 million when you have five million in the bank, you are now worth 5 million without it. If you sold half your company to get the first 5 million, why would keep working if you have to sell the other half?
muzz 3y ago
The "haircut" would have been less than 15%, this is why the bailout of $151B in uninsured desposits was less than $20B and not $151B. So if they had $5M uninsured in SVB they would have received $4.25M and suffered only a 750k loss.

phailhaus 3y ago

The first line in the article: > When federal regulators stepped in to backstop all of Silicon Valley Bank’s deposits, they saved thousands of small tech startups and prevented what could have been a catastrophic blow to a sector that relied heavily on the lender. Both can be true. Thousands of the "little guys" were saved. Some big names benefitted too. And?

flappyeagle 3y ago
Job well done. Everyone was saved. Firemen went into the building, and got everyone out. Building owners lost their investment. Look, they could have looked up the architectural plans and realized the building was skirting the edge of code. Chose a different building. Someone of them should have known better. Had the resources to do all of that. But the building had nice amenities at an attractive price. I mean, they should have been sophisticated enough to know that this kind of deal is too good to be true. Rents are high for a reason you know! Why is it up to the public to rescue them?
mehlmao 3y ago
The "thousands of small tech startups" would have gotten $250,000 immediately so they could make payroll, the majority of their holdings back in a week, and 95-98% of their money back in a month under normal FDIC operation. There was no need to bail out giant companies with no risk management like Roku and the venture capitalists who sparked the bank run.
- muzz 3y ago
  It would have been even quicker than that-- a large portion of the uninsured deposits would have been available on Monday March 13 ie _the next business day_ after the bank was seized: https://www.bloomberg.com/news/articles/2023-03-11/fdic-races-to-start-returning-some-uninsured-svb-deposits-monday https://www.bloomberg.com/news/articles/2023-03-11/fdic-race...