March 11, 20232 yr 11 minutes ago, DrPhilly said: Nope, just the normal World Cup circuit. Then why would anyone care?
March 11, 20232 yr 17 hours ago, DaEagles4Life said: @vikas83 any insight The original post trying to blame this on the Fed and Biden is utter partisan stupidity. The issue was caused by the increase in interest rates, but the downfall of SVB was due to the mismanagement, lack of risk controls, and focus on a singular client base. Will try and lay this out in layman's terms. Silicon Valley Bank (SVB) was basically what it sounds like -- the bank of choice for venture capital backed startups in Silicon Valley. Having a banking relationship with SVB was seen almost as a kind of stamp of approval -- if SVB took you as a customer, then VCs were more willing to meet with you and invest. What this means is that their depositor base has very little diversity -- it was all a bunch of venture backed companies focused on high growth with no concern for profits. No one cared about profits because, in a world of zero interest rates, these companies could just keep raising more and more venture financing at higher and higher valuations -- the ultimate example of this was WeWork. So SVB has banking relationships with all these VC backed startups that are just hemorrhaging cash in operating losses and covering the shortfall by continually raising more money at higher and higher valuations. So what does SVB do? They start making loans to these companies based off their inflated values. So now all these companies are flush with tons of cash from both the venture capital raises and the SVB debt, and they take those billions and deposit them into their bank accounts at SVB. SVB's deposits more than doubled to $102 billion at the end of 2020 from $49 billion in 2018. So what did SVB do with all that cash? They bought a bunch of US Treasury bonds and agency mortgage backed securities (Fannie and Freddie). Super safe investments that, at the time, were trading at yields of ~1%. Fast forward to 12 months ago, and the Fed starts raising rates to combat inflation. Inflation that was caused by a number of factors -- COVID spending under Trump and Biden, supply chain disruptions, the war in Ukraine, etc. The Fed hikes rates from 0 to 4.5% in the span on 1 year, and US Treasury rates skyrocket. Well, this has a 2 massive impacts on SVB: - First, SVB's customers can no longer raise money from venture capitalists. Turns out, all these guys were bull market babies propped up by low interest rates, and the VC market basically closed last summer. Just look at the valuations of any high growth, money losing company -- they have all collapsed. So since these guys could no longer raise money from investors, they had to start funding operating losses with their large cash balances. So that meant SVB started seeing deposits fall as guys needed to access their cash. - Second, in a remarkably stupid move, SVB didn't hedge its interest rate risk at all. So all those US Treasuries and agency MBS they bought were now worth less than what they paid -- on just the available for sale, they took a ~15% haircut. So at the exact time they needed to fund withdrawals, they were selling at a loss. So on Thursday morning, they announce they have sold ALL their available for sale securities and taken a $1.8 billion loss. They also announce a plan to raise $2.25bn to try and fill the hole. But...their hold to maturity investment book is much larger and has all the same types of securities. People freak out and start pulling money quickly -- $42 billion was withdrawn on Thursday, and they couldn't meet it. And that is how a bank fails.
March 12, 20232 yr 1 hour ago, vikas83 said: The original post trying to blame this on the Fed and Biden is utter partisan stupidity. The issue was caused by the increase in interest rates, but the downfall of SVB was due to the mismanagement, lack of risk controls, and focus on a singular client base. Will try and lay this out in layman's terms. Silicon Valley Bank (SVB) was basically what it sounds like -- the bank of choice for venture capital backed startups in Silicon Valley. Having a banking relationship with SVB was seen almost as a kind of stamp of approval -- if SVB took you as a customer, then VCs were more willing to meet with you and invest. What this means is that their depositor base has very little diversity -- it was all a bunch of venture backed companies focused on high growth with no concern for profits. No one cared about profits because, in a world of zero interest rates, these companies could just keep raising more and more venture financing at higher and higher valuations -- the ultimate example of this was WeWork. So SVB has banking relationships with all these VC backed startups that are just hemorrhaging cash in operating losses and covering the shortfall by continually raising more money at higher and higher valuations. So what does SVB do? They start making loans to these companies based off their inflated values. So now all these companies are flush with tons of cash from both the venture capital raises and the SVB debt, and they take those billions and deposit them into their bank accounts at SVB. SVB's deposits more than doubled to $102 billion at the end of 2020 from $49 billion in 2018. So what did SVB do with all that cash? They bought a bunch of US Treasury bonds and agency mortgage backed securities (Fannie and Freddie). Super safe investments that, at the time, were trading at yields of ~1%. Fast forward to 12 months ago, and the Fed starts raising rates to combat inflation. Inflation that was caused by a number of factors -- COVID spending under Trump and Biden, supply chain disruptions, the war in Ukraine, etc. The Fed hikes rates from 0 to 4.5% in the span on 1 year, and US Treasury rates skyrocket. Well, this has a 2 massive impacts on SVB: - First, SVB's customers can no longer raise money from venture capitalists. Turns out, all these guys were bull market babies propped up by low interest rates, and the VC market basically closed last summer. Just look at the valuations of any high growth, money losing company -- they have all collapsed. So since these guys could no longer raise money from investors, they had to start funding operating losses with their large cash balances. So that meant SVB started seeing deposits fall as guys needed to access their cash. - Second, in a remarkably stupid move, SVB didn't hedge its interest rate risk at all. So all those US Treasuries and agency MBS they bought were now worth less than what they paid -- on just the available for sale, they took a ~15% haircut. So at the exact time they needed to fund withdrawals, they were selling at a loss. So on Thursday morning, they announce they have sold ALL their available for sale securities and taken a $1.8 billion loss. They also announce a plan to raise $2.25bn to try and fill the hole. But...their hold to maturity investment book is much larger and has all the same types of securities. People freak out and start pulling money quickly -- $42 billion was withdrawn on Thursday, and they couldn't meet it. And that is how a bank fails.
March 12, 20232 yr Home Depot co-founder torches ‘woke’ Silicon Valley Bank collapse, warns recession may be here already Banks are more concerned with 'global warming' than shareholder returns, Bernie Marcus argued https://www.foxnews.com/media/home-depot-co-founder-torches-woke-silicon-valley-bank-collapse-warns-recession-here-already
March 12, 20232 yr One more note for those trying to lay blame on the Fed or Biden administration. The CEO of Silicon Valley Bank was on the board of directors of the Federal Reserve Bank of San Francisco. So yeah…he kinda should have known what the Fed was up to.
March 12, 20232 yr 11 hours ago, vikas83 said: One more note for those trying to lay blame on the Fed or Biden administration. The CEO of Silicon Valley Bank was on the board of directors of the Federal Reserve Bank of San Francisco. So yeah…he kinda should have known what the Fed was up to. Did you catch Maher's segment where he was so confused about SVB he implied it was a bailout of bitcoin bros? That dude has lost it.
March 30, 20232 yr 2 hours ago, DaEagles4Life said: <br> I blame Nixon - seriously. He opened up to China as a counterbalance to the Soviets and force their hand in Vietnam. Worked short term, but a couple of years down the pike, South Vietnam fell anyway, so what good was it? World would be a better place today without an emboldened China.
March 30, 20232 yr 15 hours ago, DaEagles4Life said: These tweets and the replies to them are absolutely hysterical.
March 31, 20232 yr 9 minutes ago, lynched1 said: I love when precedence is set.... Let's do this How much of that was paid to men? #payequity
April 1, 20232 yr 3 hours ago, Arthur Jackson said: How much of that was paid to men? #payequity One way to find out
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