yego.me
💡 Stop wasting time. Read Youtube instead of watch. Download Chrome Extension

SVB: The Canary in the Coal Mine


2m read
·Nov 8, 2024

You're mentioning like crack starting to appear. Um, and I know you wrote a piece about Silicon Valley Bank's downfall being the canary in the coal mine. Can we just explore that a bit further?

Um, so the canary in the coal mine is meant to reflect two things. Uh, first, that the, um, it's not just the Silicon Valley Bank; it is a pervasive thing about holding a lot of debt that has gone down in value, um, and being leveraged long. So it's a pervasive thing, and also meant to convey that there's a sequence of events that are like dominoes falling.

So, for example, those who are hurt financially and have a lot of that debt don't want to buy more of that debt. Yet the government is going to have to sell the debt. In other words, when they run a deficit, that means they have to sell bonds. And there are, um, all of those who have bought bonds, including foreigners, um, who are increasingly worried about, um, even, uh, the value of the debt.

Um, but also, uh, sanctions. Sanctions means that you know, you freeze the debt. Um, so certain holders of the debt say, “I've got a lot of US dollar denominated debt, and I already have maybe too much. And then do I want to buy more?”

And so you have, um, an imbalance there in terms of selling and buying, which is a risky situation. In addition, there's this sequence of events that takes place, such as, um, those who were making loans—uh, banks who now are suffering from this condition—don’t want to make as many loans.

And so if you look at, let’s say, like Regional Banks, those Regional Banks make a lot of loans for, uh, residential real estate. Excuse me, commercial real estate. Although there’s a problem with residential too. But so if you look at, um, real estate, commercial real estate, um, there's, um, it's vulnerable.

And they haven’t gotten the consequences that are yet to come in the form of running out of adequate cash flow and not having the money and then having to sell assets, and so on.

More Articles

View All
Mentoring New Photographers | Sea of Hope: America's Underwater Treasures
So, is lighting the whole secret down there? Yeah, I think one of the best things, um, to do underwater is to sort of meter for the background, the ambient, and then maybe underexpose that just a little bit. It kind of creates a nice, richly saturated bac…
Renewable Energy For the People | From the Ashes
Here we are in one of the reddest cities and one of the reddest counties in one of the reddest states. But we put the silly national politics aside to do what’s best for the people we were elected to serve. The best thing to do was to sign contracts for …
A Defense of Comic Sans
Hey, Vsauce. Michael here. Text. The printed word. Vitally important, but never naked. When words and letters are printed, they have to wear the clothing of a typeface. A font family. We don’t always think of it this way, but you cannot type without using…
Prosperity in Song China (960-1279) | World History | Khan Academy
In other videos, when we talked about the various Chinese empires, we talked about the Song Dynasty in particular as a time of significant technological innovation. Here are just some of the examples that we talk about. Most notably, gunpowder, movable bl…
War with China?
You also talked about what you think is a potential war, frankly, either economic war, uh, or physical war between the U.S. and China, either over Taiwan or other things. Where do you think that sits in this calculus of yours? Well, we are, you know, the…
Molecular geometry (VSEPR theory) | Chemistry | Khan Academy
A molecule of carbon dioxide is pretty much straight, whereas a molecule of water is bent. Why the difference? More importantly, is there a way to predict what the shape looks like in three dimensions of any molecule? The answer is yes, by using a theory …