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#581 Victoria Watcher

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Posted 13 March 2023 - 04:54 PM

As customers asked for their money, SVB had to sell $21 billion in underwater longer-term assets, with an average interest rate around 1.8%. The bank lost $1.8 billion on the sale and tried to raise more than $2 billion to fill the hole.

 

The loss flagged that something was wrong. Venture capitalists, including Peter Thiel, suggested that companies in their portfolios should withdraw their money and put it somewhere safer. On Thursday the dam broke and there was no way to cover billions in withdrawal requests.

 

Mistake No. 3 was not quickly selling equity to cover losses. The first rule of survival is to keep selling equity until investors or depositors no longer fear bankruptcy. Private-equity firm General Atlantic apparently made an offer to buy $500 million of the bank’s common stock. Friday morning, I’d have offered $3 billion for half the company. Where was Warren Buffett? Or JPMorgan?

 

Before they could get a deal together, the Federal Deposit Insurance Corp. took over to protect up to $250,000 for each depositor. Larger, uninsured deposits are frozen. Since the bank took a 9% haircut on the $21 billion in bond sales, that could mean uninsured depositors might get 90 cents on the dollar, but it could take months or years. So venture capitalists are getting emergency funding requests.

 

Why did so many startups bank with SVB in the first place? Here’s a hint. Apparently, more than half of SVB’s loans went to venture and private-equity firms backed by the borrower’s limited-partner commitments, a legal but slippery way to goose venture funds’ all-important internal rate of return metric, IRR, by investing three to six months before calling investors for cash. VCs are very persuasive with startups.

 

Here’s an important lesson for companies in trouble: On Thursday, Mr. Becker told everyone to “stay calm.” That never works, ever since Kevin Bacon’s character in “Animal House” told everyone, “Remain calm. All is well,” as chaos ensued.

 

Was there regulatory failure? Perhaps. SVB was regulated like a bank but looked more like a money-market fund. Then there’s this: In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have “1 Black,” “1 LGBTQ+” and “2 Veterans.” I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.

 

Management screwed up interest rates, underestimated customer withdrawals, hired the wrong people, and failed to sell equity. You’re really only allowed one mistake; more proved fatal. Was management hubristic, delusional or incompetent? Sometimes there’s no difference.

 

 

 

https://www.wsj.com/...others-b9ca2347


Edited by Victoria Watcher, 13 March 2023 - 04:55 PM.

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#582 LJ

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Posted 13 March 2023 - 07:36 PM

All the depositors will get all their funds in due time, FDIC is covering everybody for everything.


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#583 Victoria Watcher

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Posted 14 March 2023 - 11:00 AM

Facebook parent Meta is slashing another 10,000 jobs, about as many as the social media company announced late last year in its first round of cuts, as uncertainly about the global economy hits the technology sector particularly hard.

 

The company announced 11,000 job cuts in November, about 13 per cent of its workforce at the time. In addition to the layoffs, Meta said Tuesday that it would not fill 5,000 open positions.

 

 

 

https://www.cbc.ca/n...yoffs-1.6778222


Edited by Victoria Watcher, 14 March 2023 - 11:00 AM.


#584 dasmo

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Posted 14 March 2023 - 11:01 AM

“Uncertainty” you mean their Metaverse was a lame duck and they went all in on it.

#585 Nparker

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Posted 14 March 2023 - 11:03 AM

Oh no! Who is going to ensure I don't post one of the verboten words that will send me to Facebook jail?



#586 Mike K.

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Posted 14 March 2023 - 11:05 AM

“Uncertainty” you mean their Metaverse was a lame duck and they went all in on it.

 

Indeed, a complete disaster.


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#587 Stephen James

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Posted 14 March 2023 - 01:49 PM

The Paul Martin government also did some work on the banking sector in the early 2000s, that shielded us from what happened in the US in 2008-2010, I think?

I can't remember when the rules changed but leverage is often a result of financial innovation so, like other tech, regulations are playing catch-up. Our banks stay in line because of the history, and a pretty guaranteed market position locally.


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#588 Victoria Watcher

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Posted 15 March 2023 - 12:31 PM

"Picture a cellphone and an email machine all in one thing."

 

So begins the trailer for BlackBerry, which tells the story of the at-one-time massively successful Canadian smartphone line from Waterloo, Ont.-based Research In Motion.

 

It stars Canadian Jay Baruchel as company co-creator Mike Lazaridis and Glenn Howerton as co-CEO Jim Balsillie. Blackberry had its world premiere at the Berlin Film Festival in February, and screened at Austin Texas festival South By Southwest on Tuesday.

 

Like the film itself, the trailer outlines the rise and fall of the Blackberry, beginning with Lazaridis and company co-creator Douglas Fregin (played by director Matt Johnson) bringing Balsillie into the fold as CEO.

 

 

 

https://www.cbc.ca/n...ailer-1.6779465

 

 

"At one point in time [Research in Motion] controlled 50 per cent of the cellphone market," director Johnson told CBC's Elamin Abdelmahmoud in an interview on Commotion last month.


Edited by Victoria Watcher, 15 March 2023 - 12:32 PM.

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#589 Stephen James

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Posted 15 March 2023 - 01:27 PM

 

"Picture a cellphone and an email machine all in one thing."

 

So begins the trailer for BlackBerry, which tells the story of the at-one-time massively successful Canadian smartphone line from Waterloo, Ont.-based Research In Motion.

 

It stars Canadian Jay Baruchel as company co-creator Mike Lazaridis and Glenn Howerton as co-CEO Jim Balsillie. Blackberry had its world premiere at the Berlin Film Festival in February, and screened at Austin Texas festival South By Southwest on Tuesday.

 

Like the film itself, the trailer outlines the rise and fall of the Blackberry, beginning with Lazaridis and company co-creator Douglas Fregin (played by director Matt Johnson) bringing Balsillie into the fold as CEO.

 

 

 

https://www.cbc.ca/n...ailer-1.6779465

 

 

"At one point in time [Research in Motion] controlled 50 per cent of the cellphone market," director Johnson told CBC's Elamin Abdelmahmoud in an interview on Commotion last month.

 

Oh I'm looking forward to this!

 

I stood in front of a room of 400 people in Mississauga 2000-01 when Nortel was about $100 (45++ times earnings) and asked the question "What's the lowest price a stock can go?" in exasperation.

I was nearly lynched (along with the one person, an older woman, who stood up and said "$0"!)


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#590 AllseeingEye

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Posted 15 March 2023 - 04:42 PM

Credit Suisse shares closed today at an all time low, losing ~ 25% of their value; its the second largest lender in the country so lots of eyes on this one as well, although the Swiss central bank late the day did state it wa ready and prepared to provide support if needed.



#591 Matt R.

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Posted 15 March 2023 - 11:05 PM

Make sure you’ve seen Halt and Catch Fire if this movie appeals to you.

#592 Victoria Watcher

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Posted 16 March 2023 - 03:23 AM

Credit Suisse's shares soared 30 per cent on Thursday after it announced it will move to shore up its finances by borrowing up to nearly $54 billion US from the Swiss central bank, bolstering confidence as fears about the banking system moved from the U.S. to Europe.

It was a massive swing from a day earlier, when shares of Switzerland's second-largest commercial bank plunged 30 per cent on the SIX stock exchange after its biggest shareholder said it would not put more money into Credit Suisse.


https://www.cbc.ca/n...ering-1.6780519

Edited by Victoria Watcher, 16 March 2023 - 03:24 AM.


#593 dasmo

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Posted 16 March 2023 - 08:42 AM

Lots of people made lots of money on that swing I bet
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#594 Mike K.

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Posted 16 March 2023 - 08:53 AM

30%!

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#595 Stephen James

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Posted 16 March 2023 - 11:52 AM

Make sure you’ve seen Halt and Catch Fire if this movie appeals to you.

seen it beginning to end



#596 Victoria Watcher

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Posted 17 March 2023 - 02:54 PM

screenshot-twitter.com-2023.03.17-18_54_23.png


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#597 Victoria Watcher

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Posted 19 March 2023 - 09:54 PM

In a story in the Financial Times out Thursday, current and former Silicon Valley Bank employees cited the bank's commitment to remote work as one reason for its failure.

 

https://www.axios.co...or-bank-failure



#598 Stephen James

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Posted 20 March 2023 - 08:56 AM

In a story in the Financial Times out Thursday, current and former Silicon Valley Bank employees cited the bank's commitment to remote work as one reason for its failure.

 

https://www.axios.co...or-bank-failure

I dunno... 

They, like all of us, could have executed their stupid decision to load up on the most vulnerable bonds on a computer from any one of their home or work thrones... 



#599 Stephen James

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Posted 20 March 2023 - 09:08 AM

The mystery of American capitalism is how the individual's so closely protected right to choices (or, really, the responsibility for those choices), supposedly so fundamental to their values, disappears just as soon as the tech bros (in this case) realize they'll be wiped out. Now there's a seemingly unlimited number of justifications for saving them from themselves. No diff than the morons who loaded up on crappy mortgages just because they could, 2002 - 2008. (And I assume we all noticed that one of those morons is responsible at SVB.)

 

It's messed up, and tied to research showing that any initiative desired by industry has a 60% probability of successful legislative change in the US, but initiatives desired by John & Jane Everyperson has less than 1% probability.

 

The shareholders should be wiped out for voting for the board. The board should be wiped out for hiring the idiots from Lehman. The exec team should be fired with cause, and the depositors should be made whole for only the insured amount. If banks in the US want to be saved with any resources that cost the taxpayer money, then the taxpayer has a right to oversee their investment choices. Simple.

 

The whole principal behind having the medium and small banking ecosystem is faster, easier credit, and a competitive market... both of which are realistically tied to higher productivity in the US. The assumption in the same market is that depositors have to do their homework, need to be be happy with their banks investment choices, and vote with their feet. 


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#600 AllseeingEye

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Posted 23 March 2023 - 11:11 AM

The tech carnage continues - Accenture is in process of dumping 19,000 staff, roughly 2.5% of its global workforce although it still leaves nearly 720k people on the payroll:

 

https://www.cnn.com/...9000/index.html



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