5 min read

Run, bank

Run, bank
Photo by Edvinas Kumšlytis / Unsplash
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Lithuania Tech Weekly #112
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Big one or not so? SVB collapse is being contained quickly.  Now we got the news - US depositors bailed out, UK SVB is being acquired by HSBC.

Smart people have made some important remarks on the situation - unusual SVB risk profile (undiversified depositor base and reliance on long-term bonds), the vast majority of uninsured money (above 250k), and suddenly the bank getting trapped in monetary policy change. More by Politano, or much quoted Matt Levine:

And so if you were the Bank of Startups, just like if you were the Bank of Crypto, it turned out that you had made a huge concentrated bet on interest rates. Your customers were flush with cash, so they gave you all that cash, but they didn’t need loans so you invested all that cash in longer-dated fixed-income securities, which lost value when rates went up. But also, when rates went up, your customers all got smoked, because it turned out that they were creatures of low interest rates, and in a higher-interest-rate environment they didn’t have money anymore. So they withdrew their deposits, so you had to sell those securities at a loss to pay them back. Now you have lost money and look financially shaky, so customers get spooked and withdraw more money, so you sell more securities, so you book more losses, oops oops oops

Also - we have become really good in bank runs, which happen like a flash (SVB run was $1m per second, 10 hours straight) - time for some preventive systems? LT startups affected - not really unless some that have done banking/debt with SVB in UK. SVB happens to be of investors in TransferGo.

work in progress

More about the upcoming Tech Zity Vilnius
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rounds and capital

But there are also solid business reasons for the fund’s interest in Lithuania, rather than the more dynamic start-up ecosystem of Estonia, for example. “After visiting Lithuania, we found that it is a better match for Taiwanese companies and industry,” said Yang. “The number-one attraction is being able to use Lithuania’s femtosecond lasers in our electronics applications. It’s likely that this technology will play a role in the next generation of semiconductor development.”


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further insight

  • The Tail End (When you look at that reality, you realize that despite not being at the end of your life, you may very well be nearing the end of your time with some of the most important people in your life.)
  • Does more money correlate with greater happiness? There was this study that showed happiness plateau after $75k mark. Now it's been revisited and apparently, this is limited to a small group - the majority enjoy raising incomes without any limit.  


three questions, previously

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