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Re: Today In Biden Land
https://www.mediaite.com/trump/trump...g-to-collapse/Originally Posted by palmerq
We've had zero or effectively zero rates for many years now but the Fed had to start putting them up recently to flatten inflation. When you raise rates after so many years of free money it catches out firms who were doing risky or iffy business that was only profitable due to zero rates. You also get loanees defaulting and lots of bank loans going bad which makes the banks insolvent if they have a lot of those loans. I'm sure there are a few banks out there sitting on a ton of bad loans or soon to be bad loans. There'll definitely be more banks in trouble in the next few years. Commercial real estate is in trouble too.
SVB catered to a lot of tech startups. These startups were flush with venture capital cash that had been invested in them, SVB had no expertise in what to do with that money so they bought a bunch of longer dated bonds. These bonds lost money when the Fed raised rates and at the same time SVB's customers suddenly needed cash as it turned out their businesses were geared to low interest rates so SVB had to sell their securities at a lot to pay them back and the whole thing spiralled.
Signature did a lot of real estate business in NY but then got into crypto just before it went pop. Curious timing, the people who ran the bank are not blithering idiots so there's some hidden reason for going after crypto money when they knew the whole thing was a scam. They must have been short of cash somehow, made some bad loans probably. A crypto bank called Silvergate that catered to the crypto industry got shuttered a week ago but didn't make much news.
The Fed have now jumped in to backstop the system which should end the panic but bank runs are about irrational fear and can happen in an instant these days now everybody has electronic banking so you never know. Luckily there's nobody out there trying to fuel the panic for their own grift or profit:
https://www.mediaite.com/trump/trump-pours-gasoline-on-the-fire-amid-economic-fears-following-silicon-valley-banks-failure-the-banks-are-already-starting-to-collapse/
https://www.mediaite.com/trump/trump-pours-gasoline-on-the-fire-amid-economic-fears-following-silicon-valley-banks-failure-the-banks-are-already-starting-to-collapse/
It'llbe interesting to see if the feds investigate the people like Peter Thiel who started the SVB panic last week. This is just uninformed speculation here by somebody who has no knowledge of this at all but it's just possible some of these fuckers were shorting the bank's stock while they were telling people to pull their money out. Maybe the authorities might look into this.
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