how much of the gig economy's labor payments moved through SVB? Door dash, Uber, etc. those companies suck ass, but their precarious workers could very well get caught out. even one day's pay could be catastrophic.
and what about our lovely private "money apps* in the US? any exposure there?
Here's my theory - Silicon Valley is run on multiple layers of debt derivatives and it finally popped.
the free money dried up and there's tons of unprofitable startups with no plan to be profitable. they started spending more than they were depositing and the geniuses as the bank had put their deposits into bonds with 10 year terms that only pay 1-2% interest. rates went up, resale value of the bonds dropped at the same time that the net withdrawals began. eventually the bank had to go ask for a loan to cover the short-fall, they failed to secure funding, and word got back to the startups who panicked and tried to pull their money out of the bank, collapsing it. those bonds included MBS, but in this case the issue isn't that the bonds might not be paid back in 10 years - it's that the bank put all their eggs into the bond market basket and the fed smashed that bucket. congress also removed all reserve requirements for banks back in 2020 so at the time of its collapse, SVB had only $1 in equity for every $90 owed to customers, once the investment losses were factored in.
so colossal stupidity at all levels but I don't think debt-derivatives are the issue this time. just deregulation, greed, incompetence, and a deep desire to crush the working class.
I didn't believe you reading that bit about the reserve requirements being gone, but holy fuck that's true.
We live in the stupidest timeline, capital can't not shoot itself in the foot in the most well-understood way imaginable.
yea I bust out laughing when I read that they'd done so yesterday. we're dying to recreate the great depression. there's supposed to be stress tests done regularly to make sure the banks have adequate reserves but SVB just claimed exemptions they got inserted into the banking regulations through lobbying.
The fact that Etsy’s model even allows for this to happen should result in prison for the executives. How the fuck do you not have the money? Someone gave you the money to give to me, what the fuck do you mean you don’t have it? Why’d you give it to anyone except me? That wasn’t your money to lose.
Digital funds are transferred via banks. The bank that Etsy uses to transfer funds no longer exists.
What do you expect them to do?
I guess my question is “Why is the bank that should simply be transferring funds doing things that can allow it to go out of business?” And also, “Why is it sitting in the transfer bank long enough to be a problem?”
The path the money should take is buyer’s bank > card processor > seller’s bank (and Etsy’s cut to Etsy’s bank). I’ll accept buyers bank > card processor > temporary transfer space > seller and Etsy’s banks, but why is that transfer space at risk? That transfer space shouldn’t be doing anything that could result in failure, it’s just a number in a spreadsheet.
The only way Etsy shouldn’t be able to pay sellers is if they also can’t accept payments, and they still shouldn’t owe any sellers money except the ones who sold items in like, the 30 seconds before SVB closed, because they should’ve already given it over.
Let's fill all the gaps of our economy with gig jobs - gig jobs that by definition come and go like leaves in the wind, companies that by definition rise and fall overnight.
Very stable.
yea this has been worrying me with Stripe as well. it's gonna make a bunch of small to medium businesses have to close up until this resolves.
Really hate how bazinga brains persuade small businesses to switch over to their “low fee” “modern” platforms when in reality it’s all subsidized by even bigger bazinga brains who don’t know how to manage money
This reminds me of a good reason to "bank" with a credit union, not a bank - I read CUs are not subject to bail-ins (seizing deposits to pay secured creditors of the bank)
