by Karl Denninger, Market Ticker:
Lots of questions flying around about SVB and what it means.
There are plenty of moving parts here and lots of unknowns, most-specifically who’s connected to what, where, and with what reserves?
Apparently the firm attempted to raise capital, failed, and now is looking for a buyer. The FDIC stepped in and locked the doors — they typically do this on a Friday after the market closes but acted early this time.
One very interesting element of this situation is that the bank, being a bank, is supposed to have reserves against this type of loss, especially startup funding which is extraordinarily risky even in the best of times. As I’ve repeatedly noted one of the big concerns anyone with a brain ought to have is the wildly-distorted market picture you get from a long-term run of negative interest rates in real terms.
Do you want to stop overreaching federal power?
Not learned a thing since the Financial Crisis. Relying on ratings, preferred stock holders found themselves bailed in, bondholders got crushed.
New forms of weapons.
