easyt65
Diamond Member
- Aug 4, 2015
- 90,307
- 61,329
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"1st, the collapse had "nothing to do with Trump or Dodd-Frank" and more to do with an "unusual confluence of events."
"The bank "dealt almost exclusively with tech firms which usually rely on continuously rolling over large debts" which means that the firms are "not paying off their debt but simply taking out new debt to pay off the old."
"2nd, SVB put a disproportionate amount of its cash into long-term bonds. Ordinarily, that’s not a bad strategy, but it’s unwise when interest rates are zero because those rates must rise eventually.
When rates rise, bond prices fall. This is because an investor with the choice to buy an existing bond at a low rate or a new bond at a high rate will choose the new bond since it’s a better return on investment.
If you want to sell the old bond with its lower interest rate, you must be willing to sell it at a discount; otherwise, no one will buy it."
"SVB's undiversified clientele meant "too many depositors needed cash all at once" forcing the liquidation of bonds that had lost value and a "death spiral" quickly ensued."
To highly efucated,intelligent people,this clearly spells out the fact that the BI-PARTISAN law Trump signed into law had NOTHING to do with the Silicon Valley Bank's collapse.
Democrats, however, are desperate to avoid being blamed for the second-largest bank collapse in United States history.
www.foxbusiness.com
"The bank "dealt almost exclusively with tech firms which usually rely on continuously rolling over large debts" which means that the firms are "not paying off their debt but simply taking out new debt to pay off the old."
"2nd, SVB put a disproportionate amount of its cash into long-term bonds. Ordinarily, that’s not a bad strategy, but it’s unwise when interest rates are zero because those rates must rise eventually.
When rates rise, bond prices fall. This is because an investor with the choice to buy an existing bond at a low rate or a new bond at a high rate will choose the new bond since it’s a better return on investment.
If you want to sell the old bond with its lower interest rate, you must be willing to sell it at a discount; otherwise, no one will buy it."
"SVB's undiversified clientele meant "too many depositors needed cash all at once" forcing the liquidation of bonds that had lost value and a "death spiral" quickly ensued."
To highly efucated,intelligent people,this clearly spells out the fact that the BI-PARTISAN law Trump signed into law had NOTHING to do with the Silicon Valley Bank's collapse.
Democrats, however, are desperate to avoid being blamed for the second-largest bank collapse in United States history.
Liberals blame Trump for Silicon Valley Bank collapse citing 2018 bipartisan bill
Liberals took to social media to place blame on former President Trump after FDIC regulators shut down Silicon Valley Bank on Friday after it lost $2 billion.
www.foxbusiness.com
