Night Before The Storm

I woke up again yesterday at 2:30 in the morning. I can't shake this jet lag, but it's not all bad, at least until I read the news.

SVB, Silicon Valley Bank, went under. SVB was the 18th largest bank and probably the most important in Silicon Valley as a ton of start ups & VCs use it.

If you don't understand what is going here is what I know. SVB doubled in size since 2020. Government handing out free money has that effect. SVB invested a lot of that money into bonds paying 2%. As interest rates rose, those bonds lost value. Who wants a bond paying 2% when you can get one paying 4%? This left a $2 billion hole and earlier this week they decided to plug that hole by offering $2billion in preferred stock. That caused a panic and VCs like Peter Thiel said get your money out.

Only 1 day earlier another bank went under, Silvergate. However Silvergate decided to shut down and pay out their depositors. Very different than SVB. The problem with Silvergate is it was a crypto & fintech involved bank. Apparently exposure to FTX, crypto in general & pressure from the US Government caused them to say it's just not worth it anymore. This has caused the drop in crypto & stable coins.

Some people have said these are the early salvos against crypto and stable coins by both the legacy financial dinosaurs and the US Government. Time will tell.

One real world, small people's, contagion effect of the SVB failure is Etsy's inability to pay sellers. This would directly affect me, but I always close my shop and withdraw my funds when I head back to Japan. However, I can understand how brutal this is to thousands of small entrepreneurs. We won't know until Monday how bad this will all get though.

I am now scanning Japanese news to see how SVB & Silvergate are affecting things here. I expect big red across the board, but until the US markets open we won't know the real damage.

Rest assured though, the Casino always wins and always stays open. At least the train ride here will be comfortable.

Keep your eyes on https://www.signatureny.com/home .

Thanks for reading!