Plain English with Derek Thompson The SVB Debacle: The Biggest Myths, the Out-of-Control Blame Game, and the Worst Takes
14 snips
Mar 15, 2023 Michael Batnick and Ben Carlson, co-hosts of the Animal Spirits podcast, dissect the unraveling of Silicon Valley Bank and the narratives that followed its collapse. They delve into the blame game directed at the Fed and venture capitalists, while emphasizing systemic issues over individual fault. Their discussion includes parallels with historical banking crises, the influence of small banks on financial stability, and the evolving trust in the economic landscape amid rising inflation and potential recession.
AI Snips
Chapters
Transcript
Episode notes
LERP Economy
- Many things perceived as innovative were actually fueled by low interest rates (LERPs).
- Examples include Peloton, streaming entertainment, crypto, metaverse, and SVB itself.
Unsustainable Growth
- SVB's rapid growth from $11B to $44B market cap in two years was unsustainable.
- The bank's valuation mirrored speculative assets like crypto, not a typical financial institution.
SVB's Central Role
- Half of tech startups banked with SVB, highlighting its central role in the ecosystem.
- Multiple factors contributed to SVB's failure, including the Fed, VCs, regulators, and auditors.