The Fed ended Free Money, and the only thing it broke is the consensual hallucination that spawned during the Free Money era. And look what we got.
What we saw on Friday was large-scale fear of taking big uninsured deposits into a potentially gruesome FDIC weekend.
At around 4.75%, plus collateral, these are expensive loans for banks.
We laugh, but it’s a start. SVB Financial collapsed with investment-grade ratings.
Banks as stock-pump schemes in the era of consensual hallucination.
Treasury/Fed/FDIC issue joint statement with Tough Love for investors in failed banks.
Not learned a thing since the Financial Crisis. Relying on ratings, preferred stock holders found themselves bailed in, bondholders got crushed.
The bank survived the Dotcom Bust. But this bust is far bigger because the Free-Money bubble was far bigger. FDIC may not have a loss on this deal.
Oh dearie, those bonds.
SVB is massively involved in all segments of the startup scene that is now facing a mass extinction event.