RE: Knee jerk14 Mar 2023 09:49
The whole thing centred around QE. FED and other central banks were flooding World with lots of free money and kept interest rate to zero. SVB is not a typical bank All startups raise billions from private investers and deposit in SVB. As SVB is not a retail bank it doesn't lend money to public. So they parked all the deposits in US treasury which normally safe bit. Then two events coincided. FED raising interest rate fast and the startup were have hard times as with all reck stocks. So they started withdrawing money fast. If you ever deal with bods, which moves inversely to rates. At the interest rate raise, value of the bonds fall. As you sell them to the startups you loose money. Once the word is out, everyone want to take their money and bank keep selling bonds and loose more money and becomes insolvent