gm ☕, PV 🤙
Discussion
The most interesting thing about the SIVB situation is that it seems they were ground zero of VC finance - vulture finance. Which has been in a massive bubble for years.
It’s the exact same situation that DGC caused in digital assets hitting crypto and Bitcoin.
VCs have been throwing around Monopoly money on deals that make no sense, and doing so at astronomical multiples.
The music stopped and firms (Theil and other VCs) began scurrying back up the daisy chain of leverage seeking prestine collateral and pulling funds from institutions they knew mostly likely wouldn’t survive because of the levered books they had. Those books that “appeared” like normal looking collateral but were actually complex web of lending on the same underlying or fixed income positions that yield 1-2%… when yields blew out it blew them up.
Same exact thing that happened in the crypto crunch. Shades of issues, a ton of leverage, and then 3AC went down to start the dominos.
Luna > 3AC > Celsius > BlockFi > FTX > and back to where it started > DCG
Thing is...where did all that excess cash come from?