COMMENT: Rising interest rates...the system can't handle. But, at the same time, if they raised them enough to stop inflation the economy crashes. It's a lose-lose situation.
From the article:
"How rising interest rates led to SVB failure
Silicon Valley Bank, which primarily caters to tech startups, saw its assets and deposits nearly double in 2021, during a boom in venture investing amid low interest rates.
The bank poured most of those funds into US Treasuries and other government bonds for safekeeping. But on Wednesday, the bank revealed its deposits have dropped sharply, with many startups drawing down their accounts as venture funding dries up due to the Fed's rising interest rates.
To cover the withdrawals, SVB sold off many of its bonds, which decreased in market value as interest rates rose, taking a $1.8 billion loss.
To cover the investment sale loss, the bank announced plans to raise more than $2 billion from investors. The announcement sparked fears over the bank's solvency, triggering a huge run on deposits that tipped SVB into failure. "