Market Crash

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:SVB is not just a west coast problem. I’ve worked with 10 tech companies in the DC region and all use SVB. This is going to be detrimental to so many that don’t get a paycheck next week.

It will clear out unsustainable businesses. Thin the herd.

DP: A lot of these are great sustainable businesses--you need to have a lot of cashflow for a start-up. The problem is with the bank, not the quality or payback of loans.

What is the problem with the bank? That they didn’t hedge their treasury investment and had to take 1% loss? It is not a big deal, they must be holding 10% reserves for that. But if the heard panics there is no stopping it.

20% loss on treasury holdings.

1% of their assets

[Anonymous]

Anonymous wrote:

Anonymous wrote:the politics on this thread belongs in the politics forum.

meanwhile, the collapse of SVB and silvergate is happening right now, and the risk of contagion seems real.

Anything is possible, but it seems unlikely. As someone who was intimately involved in the stuff at the heart of the financial crisis, at least so far I don’t see the kinds of unrecognized systemic interconnections that were at play there. Banking is much more highly regulated now than it was then. Guess we’ll see.

Is your name Ben or Tim by any chance? Just wondering.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:SVB is not just a west coast problem. I’ve worked with 10 tech companies in the DC region and all use SVB. This is going to be detrimental to so many that don’t get a paycheck next week.

It will clear out unsustainable businesses. Thin the herd.

DP: A lot of these are great sustainable businesses--you need to have a lot of cashflow for a start-up. The problem is with the bank, not the quality or payback of loans.

What is the problem with the bank? That they didn’t hedge their treasury investment and had to take 1% loss? It is not a big deal, they must be holding 10% reserves for that. But if the heard panics there is no stopping it.

20% loss on treasury holdings.

1% of their assets

That’s what they lost yesterday. About half their holdings were in long dated treasuries. So if rates continued to rise and they continued to liquidate to raise capital as VC starved startups spend their reserves, they would be at least 10% short.

That’s why they were trying raise more cash selling equity.

[Anonymous]

According to year end financials, capital about $16 billion, unrealized losses on held to maturity securities $15 billion. Losses on the securities have increased materially since end of year.