Opinion: 'Just as there are no atheists in foxholes, there are no libertarians in a bank run,' writes navalang. 'Despite the anti-government braying, as soon as a crisis loomed, the venture capitalists who are the figureheads of tech begged for help.'
There was panic last week when clients, fearful for its liquidity, pulled billions out of Silicon Valley Bank. The $200B institution promptly failed. That same weekend, after a flurry of conversation,Contagion contained, then. There are lessons to be learned of course, perhaps most obviously about the risks of deregulating banking.
Yet, as we now are left dissecting the various factors at play, what perhaps stood out most about the entire affair wasn’t the financial fallout, but the cultural one.something called “Silicon Valley Bank” was getting its comeuppance. If there was panic in the tech sector, there was something nearly bordering on glee elsewhere. A viral article on Slate by Edward Ongweso Jr. invoked a phrase from famous economist John Maynard Keynes and suggested “euthanizing” the Valley’s venture capitalists.
There is, after all, a predictable symmetry in the way Silicon Valley Bank was run and the approach of its tech clients. The bank collapsed because rising rates meant it risked not being able to meet its liquidity requirements. While investing in long-term bonds is par for the course for banks — what is safer than an American T-bond after all? — SVB had a far greater higher percentage in its holdings than was wise, hence the sudden panic and consequent catastrophe.
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