馃毃 BANKRUPTCY: SILICON VALLEY & SILVERGATE BANK 馃毃
The best analysis is yours!
Copyright: Joel Padilla 2023
Silicon Valley Bank [SIVB] was an financial institution that supported tech startups and made investments on venture capital. The panic started when he announced the capital increase through a massive sale of shares (for more investments). The underline problem was: its long-term investments (±75%) was not enough safe, and, many of their debt was on fixed rates (and obviously FED policy will negatively impact). Today (10/03/23), clients ran to ask for their money, and not having everything, he went bankrupt. The government has already intervened in favour to them.
On other hand, Silvergate Bank, a financial institution that supported crypto-startups, crashed. They were illiquid because all their long-term investments were backed by short-term investments. In this case, the government will not interevent. Both cases have impacted to financial sector and suggest another 2008 crash. It could be?
As a possibility, it could be, but maybe not now (in other post I will talk about that). The important now is the damage to all sector. However, not all institutions have investments in venture capital. First Republic Bank has a part in them, but the rest, have policies they must comply. Finally, what was the cause of this turbulence? Inflation, interest rates, deglobalization, which has turned capital towards productive investments, fleeing from "innovative" ones. Banking is strong enough to fail, or not?
On other hand, Silvergate Bank, a financial institution that supported crypto-startups, crashed. They were illiquid because all their long-term investments were backed by short-term investments. In this case, the government will not interevent. Both cases have impacted to financial sector and suggest another 2008 crash. It could be?
As a possibility, it could be, but maybe not now (in other post I will talk about that). The important now is the damage to all sector. However, not all institutions have investments in venture capital. First Republic Bank has a part in them, but the rest, have policies they must comply. Finally, what was the cause of this turbulence? Inflation, interest rates, deglobalization, which has turned capital towards productive investments, fleeing from "innovative" ones. Banking is strong enough to fail, or not?
The best analysis is yours!
Copyright: Joel Padilla 2023
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