Alex Spiro أُعيد تغريده
Everyone has given their 2 pennies on SIVB...mine is this:
Fed jacks up rates
Deposit rates can't (or don't rise)
Deposits flood into CD's and bills, leaving the banking system.
Any mark-to-market losses on the banks' investments now compound their weak capital base.
The depositors and shareholders get the "fear"
Deposits flee.
End. Literally.
Answer? Probably - stop QT, free up Reverse Repo market, protect the banks with weak deposit bases (smaller banks). Quickly....
In the 1980's, we saw similar in the S&L crisis... it wiped out the regional property markets for some time.
This problem today will wipe out both Start Ups and small regional businesses and local property markets if it continues.
Summary: The Fed overcooked it. They need to pivot or they can let it all burn. There is an election next year. Politics will play a big role. The firemen will be forced to put out the flames.
Note: This is what happens when you raise rates too far, too fast in a massively indebted economy.
Reply guys: My exact facts may be not perfect but the direction is right.
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