2,157 karma · joined November 25, 2017
Yield chasing is equally gross negligence and avarice.
I'm not sure what you mean by "what's the advantage". What's the advantage of going 100% into Tesla stock call options, rather than an SP500 index fund? There is no advantage when Tesla is returning 4x the S&P. There's a rather large disadvantage when it drops 30% in a quarter.
>Revoke banks ability to invest deposits. They can't get to have the cake and eat it too. They could offer higher interest rates for non guaranteed accounts which bear risk, or zero risk for the already zero interest rates.
You are missing something crucial here - treasury bonds are a loan to the government - this is all by design.
Who will loan the government tens or hundreds of billions of dollars besides the banks? The [Fed/Treasury/FDIC] has no incentive to prevent banks from loaning customer deposits, because the Treasury needs banks to purchase government bonds
Any normal, non-degnerate bond manager would would keep a significant amount of 1-3 year treasuries in their mix of bonds. Feel free to call your 401k provider to verify this.
Thiel may be guilty of various things, but SVB's failure was due to overleveraged yield chasing.
Yield chasing blows up overleveraged entity, nothing new here really, except usually people rightfully criticize the yield chasers/overleveragers for being greedy; this time people are acting like SVB was a victim of the Fed instead of their own extreme incompetence.
You can literally call up your 401k/403b provider tomorrow and ask for the bond fund/portfolios/allocations available. See if you can find any bond fund with no short-dated maturities.
It's equivalent of having a 100% tech stock portfolio and not hedging sector risk. Maybe it isn't as irresponsible as going 100% into a single stock ticker, but it's still extremely irreponsible
Why was reducing rates in response to the COVID crisis a "problem"?
This "banks are victims from Fed rate policy" narrative is not accurate. A bond portfolio consisting entirely of 10-30 year hold-to-maturity securities is absolute, pure greed and insanity. Any bond manager not engaging in degenerate activity will hold a mix of bond maturities.
This is the bank equivalent of putting all your clients' money into a single stock ticker, and people are doing incredible mental gymnastics to claim that SVB was a victim of external forces
And they put even more into 30-year mortgage backed securities. Bonds are normally purchased across a mix of maturities by banks. It's strange how everyone is absolving them for the mistake of holding almost no 1-2 year bonds and instead blaming VCs for pulling out.
To be explicitly clear: it's the responsibility of the bank to maintain their own liquidity (just like the borrower needs to do the same with their loan repayments), and putting $100B (33%+) of assets into 10-30Y securities was highly irresponsible and poor risk management.
If your entire business model revolves around moving multiple billions of dollars via an asset-backed stablecoin model, it's reasonable to expect you to have dozens of bank accounts, in at least 3 time zones, and likely more.
I don't know why people (not saying you specifically) seem to have this expectation any entity should be able to deposit billions of dollars risk-free at a single institution.
Ironically it's often the same people who can intuitively grasp why to hold your crypto across multiple wallets, who cannot fathom that infinite $ cannot be deposited at a single bank, without risk.
If you're leaving 7 to 9+ figures in a single account, then either buy custom insurance, or only do business with banks which offer excess insurance.
>In comparison, there aren't nearly as many high end, elite educational institutions.
The college enrollment rate is under 70%, and I am not sure if you were aware, but the percentage of people in homes is much greater than this.
I mean, you just proved the point I was making. High-end, elite, Division 1 schools overwhelmingly offer athletic scholarships, vs not offering them. Stanford, Duke, Northwestern, and UC Berkeley have greater student enrollment than all the ivy leagues combined. People always try to do mental gymnastics with some "any non-Ivy League is by definition not an elite school" but using any objective ranking measure, just add Georgetown, UCLA, Notre Dame, UNC, Michigan, and suddenly the enrollment of athletic-scholarship-offering schools are >10x that of the ones that don't offer them.
You're making rather wild unsubstantiated claims at this point ("# houses > # schools == ivy leagues have greater impact") after repeatedly failing to demonstrate how HOA is not a good analogy to this situation. Comically these claims are completely false - over 25% of the USA lives in HOA communities, but nowhere near that many D1 schools (and even less by enrollment) does not offer athletic scholarships. Congrats, you inadvertently proved that Ivies not giving academic scholarships has a negligible effect, especially compared to housing.
It seems unlikely that would be the case, 5.4B would represent only 2.5% of their AUM at the time of failure. However the Fed did reduce the bank cash reserve requirement to 0% in March 2020, so it's technically in the realm of possibility... but having to sell off assets after a 2.5% drawdown is analogous to being 40x leveraged.
It would be unbelievably poor risk management if this were the case, and seems more likely a much larger event than a few crypto companies (which are small in the grand scheme of things) withdrawing deposits.
I hope you find something soon, but let's be realistic here, claiming SWEs with FAANG experience on the resume are "fucked" is some real extreme hyperbole.
If you could pass the engineering hiring bar at FAANG, surely you can do an approximation of how many people with 4 years of career experience don't have FAANG on their resume, aren't engineers, or both. You have an advantage over nearly all of them.
Like others have said, networking/connections are key, but that's still true even when the job market is hot.
Citation needed. Again, the vast majority of Division 1 schools offer athletic scholarship. Where is this large collusion effect?
This is not correct. There are HOAs spanning dozens of miles, with and tens of thousands of homes.
>But large, major players in the education space (each of which enrolls thousands of students), all agreeing together to do something, has a much larger effect, in comparison.
The vast majority of universities offer athletic scholarships, this is not really true either.
There are HOAs with tens of thousands of homes, spanning dozens of miles, this is not true.
There are hundreds of schools or more that _do_ compete for consumers in that way. Similarly, HOAs in some areas may restrict boat parking. Other HOAs however, will allow it. Why is the metaphor not appropriate?
https://www.binance.com/en/support/announcement/binance-adds...
Individuals in many countries (but not the USA) have access to Leverage Trading on Binance.
You could also use any of the following DeFi liquidity pools: https://nomics.com/markets/usdt-tether/usdc-usd-coin/markets
-Purchase high-limit cash insurance from a Reinsurer like Lloyds of London or Berkshire Hathaway up to their underwriting limit, perhaps $100M. Do this across 4-5 different banks with 4-5 different reinsurers.
-Put the remaining $2-2.5B into mixed US Treasuries of varying maturities
From where would the money come from, US taxpayers? How is this different from asking for a bank bailout?
> Longer term, Congress should work to restore stronger regulatory oversight and capital requirements for regional banks, and any malfeasance or mismanagement on the part of SVB executives leading to this failure should be investigated.
SVB execs successfully lobbied congress to lighten banking regulations affecting them [0].
Their C sold millions of stock the week prior to insolvency (yes, these sales were scheduled in January, but execs would have been well aware of the impending liquidity crisis at the time) [1]
They also paid bonuses to staff hours before the FDIC shut down the bank [2].
I cannot sign this petition in good faith knowing the above, at least without these questions being answered: what is the mechanism through which depositors can be backstopped without bailing out SVB? What would be the source of this money? How does the ask differ from a bank bailout?
[0] https://www.theguardian.com/business/2023/mar/11/silicon-val...
[1] https://twitter.com/unusual_whales/status/163455502148748083...
[2] https://www.cnbc.com/2023/03/11/silicon-valley-bank-employee...
It is by definition a risk for a corporation (or individual) to keep over $250k at a single institution ($750k if including SIPC-protected accounts). Reports are stating 97% of SVB's customers kept more than FDIC guaranteed limits. How can you claim this is not risky?
There is also additional insurance clients can purchase or the financial institution can themselves provide a statement they've purchased excess insurance for their clients.
>Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks?
If they're keeping more than $250k in a single account, absolutely, yes, I cannot be sure this is even a serious question.
SVB overleveraged into long-term bonds in 2021 when interest rates were at an all time low. A financial institution/bank normally would hold a mix of maturities in their fixed-income holdings - 1 year, 3 year, 10 year - to maintain liquidity and reduce insolvency risk.
"If they were able to hold them to maturity there wouldn't have been a problem" does not make any sense - it's as if your company told you just wait an extra month for your paycheck, there won't be a problem. And then you told the mortgage lender to forget about this month's payment - if they just wait until next month, there won't be a problem.
Not to mention they had well over a year's advance notice to do _something_ because they knew exactly by how much their assets would decline in value. In March 2022 the Fed announced the decision to raise rates and continuing to do into 2023. By Sept they had announced the terminal rates would be over 4%, and have continued to openly increase that target since then.
Bond prices moving inversely to interest rates is Econ 101; anyone (at SVB) could've quite literally calculated their ~$25B 10-year 1.8% notes would drop by _at least_ $5B in 2023 before the terminal rate is even reached.
The run was the result of a clearly impending liquidity issue due to lack of near-maturation assets, not the other way around.
Over what timeframe are you making this claim? A week? A year? 10?
The entire index dropped, driven by a selloff in the Financial Services sector after FDIC placed them on the failed bank list, so in effect it has already affected the index.
Can you cite any metric showing there is "no real ongoing inflation"? CPI, PPI, PCE, and other less-commonly used metrics all indicate ongoing inflation. It would be interesting to understand how you've arrived at the conclusion there isn't ongoing inflation.
>The devaluation of the dollar already occurred and the new price has to propagate through the market.
The DXY has been uptrending for nearly a decade, even more rapidly so since mid-2021.
Odd take to be honest. Like suggesting you cannot believe someone is a good materials scientist, because their CAD/mechanical design skills are not up to par with a mechanical engineer.
More relevant to the article, is it a net good or net bad? It's easy to make a claim motor vehicles are dangerous and bad, as motor accidents kill over a million people per year. It is much more difficult to justify the counter argument that "the benefits of cars bring much more value to the world than the harm caused by the million deaths per year".
The author of this article states that tiktok brings him and the content creators enjoyment and in some cases livelihood. If the net societal harm of social media outweighs the net good, maybe we should get rid of it entirely.
But if the net good outweighs, perhaps it makes more sense to treat it like cars - enact regulations, restrictions, and safety measures, rather than trying to eliminate it completely.
Also describes Youtube, Facebook, Snapchat, Twitter, Instagram, etc. I've seen a bunch of slippery slope arguments here but no justification for Tiktok being any worse than the previous generation of social media. I'll agree Tiktok is more addictive than radio, sure.
If the argument is "all modern social media is optimized to take advantage of human psychology" I would agree, but if the argument is "tiktok is worse than the previous generation of social media" then I'd need to see some data/studies/evidence supporting the claim.
I've certainly seen friends and family compulsively scroll and obsessively check instagram and snapchat in a manner no different than what people are criticizing about tiktok. It seems like people witness their "their generation" using instagram/snapchat for hours on end; then they see the younger generation using tiktok for (the same number of) hours on end, and get the idea it's far more damaging.