Paul Krugman

@paulkrugman ↗

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Last Checked April 3, 2023

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Sun Mar 12 13:29:42 +0000 2023

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Paul Krugman @paulkrugman

SVB did indeed provide services to startups — loans, investment guidance, etc. But that wasn't where it made most of its money. Instead, it basically just attracted deposits and put the funds in long-term securities, a simple carry trade that went very wrong 2/ — PolitiTweet.org

Posted March 12, 2023

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Paul Krugman @paulkrugman

More SVB: I think we can learn a lot about what happened from this 2001 Barry Ritholtz interview with SVB's CEO, which describes it as "the only bank dedicated to the global innovation sector" — which is indeed how it portrayed itself 1/ https://t.co/dTgPar8taW — PolitiTweet.org

Posted March 12, 2023

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Paul Krugman @paulkrugman

And in fact longer-term securities paid more than short precisely because there was a one-sided risk that what did happen, would happen — that short rates couldn't go down, but could go up. So this wasn't a brilliant investment strategy, just unacknowledged risk-taking 3/ — PolitiTweet.org

Posted March 12, 2023