2023-03-10 Markets
The problem with bank failures is that no one knows where the knots are and who or what will come next. Like an outbreak of Ebola, you know the virus is there but you don’t know where it will pop up. Or, for the mathematically inclined, like the behavior of a chaotic system after a few iterations.
Despite this observation, I will venture that Silicon Valley Bank’s event is not another ‘Lehman moment’ as many are touting (in reference to the 2008 bank failure that defined an era), because the underlying story and scope are vastly different, because the banking system in general (and especially in the US) is in far better shape than it was then, and finally because the authorities are handling it by the book (so far).
Equity markets took a beating last week, but the good news is that bonds did the opposite, which for once means things went the way the normally go.
[Cover: Where is Waldo, poster, https://www.amazon.com/Wheres-Waldo-Toys-Poster-24in/dp/B07CGQNQQM]
Despite this observation, I will venture that Silicon Valley Bank’s event is not another ‘Lehman moment’ as many are touting (in reference to the 2008 bank failure that defined an era), because the underlying story and scope are vastly different, because the banking system in general (and especially in the US) is in far better shape than it was then, and finally because the authorities are handling it by the book (so far).
Equity markets took a beating last week, but the good news is that bonds did the opposite, which for once means things went the way the normally go.
[Cover: Where is Waldo, poster, https://www.amazon.com/Wheres-Waldo-Toys-Poster-24in/dp/B07CGQNQQM]
