Business, Economics, Political Commentary, Technology and Society What Happened To SVB? March 15, 2023 Rand Simberg 2 Comments A comprehensive explanation, and what it potentially means. Newsom’s corrupt years of lobbying and donations pay off.
2 thoughts on “What Happened To SVB?”
Long story short: fixed income securities did exactly what they always do when interest rates increase, their value decreases in proportion to the relative change in interest rate. If the issue rate is near zero, guess what happens when you divide by zero. They were lucky to get 70%. I suppose we can speculate on what the managers were learning at their, undoubtedly, wildly expensive and well appointed schools instead of this elementary relationship.
So now the government is going to have to print enough money to keep all this from running down hill, or I suppose, the Fed can call “do over” and lower interest rates back down while we find out just how many zeros will fit on a Starbucks receipt. There’s a good chance things have progressed to the point we’ll find out whatever they do.
A lot of speculation that the Fed will lower rates later this year to goose the economy for the election.