Obviously, the technology is gonna become even more omnipresent so the tech sector will be stronger. Just that it might have a couple of painful years ahead.
Silicon Valley Bank Collapse
- Thread starter Kaush949
- Start date
Credit Suisse to borrow $54bn from Swiss National bank
I am not sure whether that's enough to be honest.
its enough to pay out the bonuses
I'm in tech. We're stable but we've kept very tight on budgets for the last year or so. Any unnecessary costs were removed to weather the storm, and we've avoided the need for redundancies. It's survival of the fittest at the moment, tech has been struggling for 12 months or so. Not that you would think it. We've partly avoided redundancies because many other startups were throwing near double-wages at our staff, meaning we've had a bit of staff attrition and haven't rushed into replacing every role. The tech bubble has been deflating for quite a while now and yet many companies were still throwing stupid money around because they had shaken the magic VC money tree once or twice. The high growth, high risk type companies with zero buffer are the first ones to fall.
It actually meant your company is only doing well by sheer of luck your employee got hijacked right left centre
Well, no, that's not what it means at all.
I'm so sick of these "we need to rescue the banks because otherwise all the average persons savings will be lost" plot.
Every bank account i insured for hundreds of thousands in I think every major country in the world. The only people losing big amounts of money in a bank crash are millionaires/billionaires and companies. Stop pretending to save the average Joe when in fact you bow to your wealthy influencers and donators.
Look at the shit show that is the american banking system and stock market. Look at the balances of the biggest hedge funds with some of them accounting ~90% of their income as "sold not yet repurchased". Look at the "failure to deliver" rates in many stocks.
The average Joe cannot sell a car he doesn't own. It's just logical. Banks and hedge funds sell billions of stocks they don't own and just claim to buy it on a later date.
Everything is overleveraged to the max.
And what do these greedy bank and hedge funds managers learn again and again? That they can take all the risks they want and gamble with the money of the investors and everyday Joes because if they fail they can be sure that the government will bail them out. Again and again....
Every bank account i insured for hundreds of thousands in I think every major country in the world. The only people losing big amounts of money in a bank crash are millionaires/billionaires and companies. Stop pretending to save the average Joe when in fact you bow to your wealthy influencers and donators.
Look at the shit show that is the american banking system and stock market. Look at the balances of the biggest hedge funds with some of them accounting ~90% of their income as "sold not yet repurchased". Look at the "failure to deliver" rates in many stocks.
The average Joe cannot sell a car he doesn't own. It's just logical. Banks and hedge funds sell billions of stocks they don't own and just claim to buy it on a later date.
Everything is overleveraged to the max.
And what do these greedy bank and hedge funds managers learn again and again? That they can take all the risks they want and gamble with the money of the investors and everyday Joes because if they fail they can be sure that the government will bail them out. Again and again....
My Brother in Law works for a small SF based software company that had a deposit account at SVB that was used for everything from payroll to overhead expenses. Had SVB not been "rescued" (which it wasn't, the bank itself is dead) his company would have gone out of business and 50+ people would have been instantly unemployed. In your mind that would be cool? Should every company be doing due diligence and performing a risk analysis of every bank to see how they can handle interest rate hikes?
That would of course be shit for those people, but people lose their jobs all the time when companies decide to move their factories to China or somewhere else and no one saves the average person in that case.
And no, in a working and secure system companies shouldn't have to perform due diligence because their banks just couldn't gamble with all their money.
SVB, Credit Suisse don't have these problems because of a rate hike, you get that, right?
The banking system and stock market are the biggest drivers of the ever widening gap between the rich and the poor.
And every bailout just cements the current system.
Other countries don't allow their banks to gamble like the US banks. At least not to that extent.
Do you think it's coincidence that 2008 and now this happened in the US and not in Europe or Asia?
They shouldn't have to. The stress tests should cover this.
I think it's slightly harsh to say SVB gambled with their customers money. Their problem was the were too reliant on the tech industry and didn't attract enough customers from other fields. When the tech industry dipped and started withdrawing their funds SVB had to sell their underlying assets which were government bonds mainly. Those bonds were worth less than they once were so they sold at a huge loss, which caused the run on the bank. So it could be argued they did in fact fail because of the interest rate hike. A lot of experts have been warning that the Fed was hiking too high too quick.
For me CS is a different issue. The have been poorly run for years and this has been a long time coming for them.
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If we can consider AI an employee, how long before AI employees outnumber humans in the tech world?
When people lose their jobs because companies move that is a direct result of the companies taking an action. Same if the company shuts down due to changes in the market. Those are all business forces. In the case of banks these companies issues are due to the negligence of the bank, and the Federal Government has set up backstops to protect against this kind of thing. Essentially the Fed is stepping in now to bridge the gap between SVB going tits up and when the banks assets can be sold off to make their customers whole. If the asset sell off is not enough to cover the deposits there is a fund, paid into by all banks, that can be drawn on to cover the remainder. This is not a bail out, the bank is dead and their investors are bust.
Also, at least in SVB this was indeed the case, as @Rooney24 pointed out. The main issue was the lack of diversification, but it was indeed the interest rate hike that was the core root of the issue. There was a mini run on the bank, the bank was cash low due to a decrease in deposits, the bank needed to sell the bonds to generate cash but because of the interest rate hike they were worth less than they cost on the bank took an almost 2 billion dollar hit which spooked people and the run cascaded.
As for your last point, where do you think Credit Suisse is located?
Given that something like 40% of all internet users are bots, it’s probably already true by a substantial ratio.
Hopefully not too long from now.
What is an "AI"? A whole combined set of different programs working together for one purpose? 1 program? 1 microservice? One algorithm?
How do you count 1 "AI"? How many AIs is a machine learning algorithm running in AWS/Google Cloud/whatever on 100 nodes/pods and on every node 8 threads run in parallel?
Googles web crawler could be considered 1 AI or thousands of AIs depending on the way you count.
I have to admit that I've not read that deep about the special case of SVB and may have thrown them in a bag with other banks here.
Yeah, duh. And if you look at how they operate and how their government regulates it they are easily the most "american bank" in europe.
What do you mean here exactly?
I guess my own definition of it would be something that takes away a paid job a human could do.
I think you've been reading one of the meme stock subreddits or something, about Citadel Securities' balance sheet. I guarantee you that those arguments are not a correct assessment of the hedge fund business, starting with the fact that Citadel Securities is that market-making arm of Citadel, not the investment advisory/hedge fund arm.
Also banks and hedge funds are not one and the same, and although they do business, they are not necessarily always on the same side of every situation (nor are banks or hedge funds as collectives always on the same side).
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This is a bank shotgun wedding.
That’s a great line.
It's a wild deal. The CS shareholders will still get something (in the form of UBS shares, but valued at way less than CS was valued even as of Friday close), but there's a class of CS bonds (Tier 1) that is getting wiped out and getting nothing. Not sure the Swiss regulators got it right on that one, and bank debt markets will be significantly under pressure when markets open Monday, at least in Europe but likely everywhere.
Banking overall is wild, part math, part con, part magic, part alchemy. And I say this as someone that works within a bank. But it's really always a bit of a house of cards, and it can unravel very quickly.
You sound angry and misinformed my dude
Credit Suisse is now to be called Debit Suisse
Certainly a wild ride for AT1 investors - spoke to a bond fund manager today who was baffled by it and expects stacks of lawsuits.
UBS don't want this deal either. The fact that the Swiss government effectively changed the law to bypass a shareholder vote confirms that.
There was an interview with their CEO from the WEF in January where he said they had no plans to by CS as well.
Life changes fast.
There was an interview with their CEO from the WEF in January where he said they had no plans to by CS as well.
Life changes fast.
@WI_Red
You argued last week that the previous administration lax rules on capital and liquidity for banks of SVB's size were to blame for its collapse. However, SVB would have met the stricter requirements in the first place (see this study below: https://bpi.com/silicon-valley-bank-would-have-passed-the-liquidity-coverage-ratio-requirement)
You argued last week that the previous administration lax rules on capital and liquidity for banks of SVB's size were to blame for its collapse. However, SVB would have met the stricter requirements in the first place (see this study below: https://bpi.com/silicon-valley-bank-would-have-passed-the-liquidity-coverage-ratio-requirement)
Fair enough, although I didn't intend for my argument to be that the new regulations were the cause of the collapse, only that the lax regulations prevented regulators from identifying and requiring rectification of those issues. Ultimately it was poor risk management and oversight by SVB itself that led to the failure.@WI_Red
You argued last week that the previous administration lax rules on capital and liquidity for banks of SVB's size were to blame for its collapse. However, SVB would have met the stricter requirements in the first place (see this study below: https://bpi.com/silicon-valley-bank-would-have-passed-the-liquidity-coverage-ratio-requirement)
I guess I have to remove "finance and bank policy expert" from my LinkedIn profile. Damn you @Suedesi, damn you.
2008 did happen in Europe, or at least in the UK it did
Misinformed? No. I work in the IT in the financial sector and i know what im talking about. I quitted my last job in 2021 because my team was told to change our software in a way that would only benefit market makers and hurt retail Investors even more.
What is now public knowledge, has been known for several years for "insiders". In fact the only surprise is, that it took so long to unfold.
Archegos and Credit Suisse were just the beginning, well at least unless more countries decide to change laws over night and to bail out more banks with even more money.
Angry? Yes, absolutely. And I can't understand a single person who knows about the shit banks and hedge funds keep pulling for decades now, that isnt angry.
I sometimes feel like a Covid denier or some other conspiracy theory lunatic just because the average Joe doesnt have a clue about whats going on behind the scenes in the financial sector.