General > General Technical Chat
Silicon Valley Bank Collapses
Sal Ammoniac:
"All we have to fear is fear itself" -- FDR
Sal Ammoniac:
--- Quote from: themadhippy on March 14, 2023, 10:55:22 pm ---what gets me is the bank expect the government to bail them out when things go bad,but try every trick in the book to keep every penny in there pockets when times are good
--- End quote ---
Privatizing the profits while nationalizing the risk is a common theme for business in the States.
bdunham7:
--- Quote from: tooki on March 14, 2023, 10:29:38 pm ---What exactly is your point? Mine wasn’t to explain SVB’s thinking, but rather to elucidate that the bailout isn’t high-risk for the buyer of SVB, since the bonds will more than cover the deposits once they mature. (And indeed, that it’s not really a bailout in the traditional sense of dumping money into a company to replace actual losses.)
--- End quote ---
You're proving my point by insisting that getting paid in full 6 years from now is effectively not taking a loss. That was maybe sort of true during ZIRP, but it isn't true at all now. Getting paid in full 6 years from now represents at least a 30% loss. That's why nobody rushed in to buy SVB even though by your rationale it looks like has positive value. It doesn't, it is completely and unequivocally under water.
tooki:
You know that bonds pay interest, right? (But only if allowed to mature.)
iMo:
--- Quote from: james_s on March 14, 2023, 10:46:32 pm ---..If people continue on as usual it's unlikely to fail..
--- End quote ---
That would also allow that Ponzi_schemes/Airplain_games/Pyramid_schemes work fine forever.. :)
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