FNArena’s Weekly Insights – March 13 2023
In this week’s Weekly Insights:
-Fear & Greed (Rinse & Repeat)
-February Results: Final Observations
By Rudi Filapek-Vandyck, Editor
Fear & Greed (Rinse & Repeat)
…and as it turned out, yet again, all roads that started off from the Federal Reserve’s tightening policy lead to the next US bank failure.
Few of us, investors in Australia, would have heard about Silicon Valley Bank before the week past, but we’re going to hear and read a lot about it in the days and weeks coming.
On Monday morning, when FNArena has also been struck by a tech failure at the datacentre that hosts our website, the most important news is that deposit holders will get their money back, in full, while bond holders and shareholders will pay the ultimate price of risk.
This likely means even a sniff of a full blown banking crisis in the US, let alone worldwide, has most likely been averted. This is not a rerun of 2008, though we all need to be aware the situation remains fluid and unexpected developments can still come out of the proverbial woodwork.
It’s early days, but enough details have already been published to underpin one firm conclusion: ‘SVB’ failed because of insufficient risk management. Whether this is the result of managerial incompetence or simply greed shall always remain the topic of biased debates, but if I were a betting man I’d back the second option (with some incompetence thrown in as the proverbial cherry).
