I’m going to leave “economic reports” for later – why bury the lead (lede)?
Silicon Valley Bank (SIVB) collapsed on Friday. Excuse me, what I meant to say was: US regulators have shut down Silicon Valley Bank (SVB) and taken control of its customer deposits in the largest failure of a US bank since 2008 (Source – BBC). “The Federal Deposit Insurance Corporation (FDIC), which typically protects deposits up to $250,000, said it had taken charge of the roughly $175bn (£145bn) in deposits held at the bank, the 16th largest in the US.”
Lots of Valley startups stored their funding cash in this bank. FDIC only insures up to $250k. My guess: lots and lots of payrolls won’t be met in the next month or so, from this one event. If you could pick a target to blow up a bunch of startups in the Valley, knocking off SIVB would be a pretty good candidate. Did I mention FDIC only insures up to $250k per account?
How did it happen? Short answer: a bunch of long-bond holdings, a sharp rise in long bond rates, followed by a bank run by customers, which forced SIVB to sell their long bonds to raise cash, resulting in losses => the bank blows up. Here’s the trade in a nutshell:
Congratulations Bankster! You just turned $1,000,000 into $779,362, in just two years!
by cmartenson 
