Man I stopped fighting buddy and all hell broke loose.
I will continue to not contest buddy and hope for a more interesting effect.
I will say this SVB appears to have been targeted with a massive run by depositors.
Wonder what Mon and Tues bring us
Unless I missed something SVB had most of its money in government bonds. That's supposed to be the safest thing, aside from just holding cash I guess. But people want returns, so the bank has to do something with the money. They only incurred losses because they had to sell these bonds at lower than face value.
If a bank with the safest investments can be brought down by a bank run in a couple of days, what does that tell us about banks that invest in mortgages, corporate bonds, emerging markets ?
They should have raised funds proactively, once Fed started to raise rates aggressively, but they waited and tried to raise funds only once they sold MBSes at a loss. As a result, market got spooked and they got hit with large amount of withdrawals.
You are right, though, fractional reserve is fractional reserve, it is all based on confidence. However, the question for most is: withdraw where? Apart from bitcoin, as we learn from the last year the answer is probably: who knows?
