The failure of SVB is Good!, as it might send a message to the
Fed - "Hey Fed bozos, maybe way too fast and way too much!"
Next will be some Commercial Real Estate failures since:
almost every commercial real estate building is owned with leverage
50-60-70+% and hence, the huge "cost of goods sold" is cost of
capital, which has now way more than doubled. Imagine any
other type of business where the cost of goods sold doubles!
Commercial Real Estate transactions are almost frozen in shock
wave. Imagine a year ago paying 3% Debt to acquire a building
or adjustable loan, now paying close to 7%.
Posted by DigiNomad on 10th of Mar 2023 at 03:06 pm
I don't think the keepers / admins of the punchbowl, aka SVB,
going down when the punchbowl got taken away is going to or
should send a message to the Fed about interest rate
policy....other than Fed rate should have never been so low for so
long.
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The failure of SVB is
Posted by Walt on 10th of Mar 2023 at 03:02 pm
The failure of SVB is Good!, as it might send a message to the Fed - "Hey Fed bozos, maybe way too fast and way too much!" Next will be some Commercial Real Estate failures since: almost every commercial real estate building is owned with leverage 50-60-70+% and hence, the huge "cost of goods sold" is cost of capital, which has now way more than doubled. Imagine any other type of business where the cost of goods sold doubles! Commercial Real Estate transactions are almost frozen in shock wave. Imagine a year ago paying 3% Debt to acquire a building or adjustable loan, now paying close to 7%.
I don't think the keepers
Posted by DigiNomad on 10th of Mar 2023 at 03:06 pm
I don't think the keepers / admins of the punchbowl, aka SVB, going down when the punchbowl got taken away is going to or should send a message to the Fed about interest rate policy....other than Fed rate should have never been so low for so long.