Aside from the main topic but related to the books, wtf happened to howstuffworks.com? "Pisces and Taurus Compatibility in Relationships: What You Need to Know" Did he sell off this domain before his death or what is going on?
the tests were for these local (metal direct connect ssds). The issue is not network overhead -- its that just like everything else in cloud the performance of 10 years ago was used as the baseline that carries over today with upcharges to buy back the gains.
there is a reason why vcpu performance is still locked to the typical core from 10 years ago when every core on a machine today in those data scenters is 3-5x or more speed basis. Its cause they can charge you for 5x the cores to get that gain.
The parent claims that though aws uses better hardware, they bill in vcpus whose benchmarks are from a few years ago, so that they can sell more vcpu units per performant physical cpu. This does not contradict your claim that aws buys better hardware.
> Amazon SimpleDB measures the machine utilization of each request and charges based on the amount of machine capacity used to complete the particular request (SELECT, GET, PUT, etc.), normalized to the hourly capacity of a circa 2007 1.7 GHz Xeon processor. See below for a more detailed description of how machine utilization charges are calculated.
SimpleDB is over 15 years old. I guess it's the only service still using "normalized" pricing. Newer services like RDS tell you exactly which processor you're getting and how many cores.
Generally each vCPU is a dedicated hardware thread, which has gotten significantly faster in the last 10 years. Only lambdas, micros, and nanos have shared vCPUs and those have probably also gotten faster although it's not guaranteed.
In fairness, there are a not insignificant number of workloads that do not benefit from hardware threads on CPUs [0], instead isolating processes along physical cores for optimal performance.
yeah in that regard SVB also lost hundreds of billions on trades it could have made optimally in the market with those funds (looking with hindsight).
Should you look at the opportunity costs for lost potential gains in this scenario -- yeah. Does it "lose money" -- no, not unless you are forced to sell before maturity.
lost earnings are a wish for what could have been, not lost in reality.
When you own a 1.5% 10-year and balance it against a 3% deposit your losses are very real and amount to 15%. If you don't offer 3% deposits you lose clients and your problem just got worse.
A ton of capital at the ready to offer bridge loans at shark rates or for blood equity for companies panicking and impacted by the same act of gathering those funds out of SVB to crash it seems like motive -- only time will tell.
yeah I think there are two things that will be interesting here. The real detailed timeline. How much Thiel's cohorts jumped into offer bridge loans or stopgaps to impacted companies for insane rates/equity.
IMHO this feels like a small problem that was turned into a crashed bank by targeted withdraws -- with the goal being blood in the water for the industry so the companies and investors that yanked out could clean up.
this is why imho I see the pull out of the clients especially those that happened before the sale offer even came to term as an orchestrated ploy to tank the bank and then be in a position to offer shark bridge loans to those impacted. These were not naive clients making the move early -- and to me it seems less to do about the actual bank asset state and more to do with wanting blood in the water for wringing out equity and loan shark rates on those bridge offers.
The whole argument is whether uninsured deposits should be provided by the FDIC. I have no problems with the insured amount being returned to customers.
The FDIC is a government owned business and shouldn’t be acting outside of it’s financial interests and obligations.
The other good news is that it will probably net out to costing little to nothing in the long term as they had enough assets to cover liabilities -- it was a liquidity crunch. Seems very much relevant to what the FDIC was created for -- to make depositors whole and stop contagion. It would be different if the bank was not properly asset backed.
Banks are not being "bailed out." Depositors are. SVB no longer exists. Now, you can certainly argue over the merits of bailing out depositors, but disingenuously framing it as a "bank bailout" is not the position to start from.
On that point, the government does have an obligation to "provide for the common defense and the general welfare of the United States," and that is clearly one of the overarching purposes of the Constitution itself. I find it hard to argue that saving tens of thousands of jobs[0] but by making the depositors whole, when the assets of SVB, illiquid though they may be, can cover 60-90% of the cost, is at all the wrong thing to do. This is literally part of why we have a government, and why markets are regulated at all.
[0]: I couldn't find a good source on the number of jobs, but that seems like the correct order of magnitude, anyway.
This is really semantics to me. Customers gave SVB their money because they paid high returns and engaged in risky behavior. That money was used to fund exec and employee salaries. People who take risks should bear the responsibility. Whether the bank still exists or not doesn't really concern me, since the people who ran it into the ground can turn around and do the same thing tomorrow.
> "provide for the common defense and the general welfare of the United States,"
We'll have to agree to disagree that bailing out well-off startup founders and employees is the best way to provide for the general welfare of the United States. I'd start with people undergoing medical bankruptcy, then about a million other categories of people before I got to them. Either way, I'd prefer the accounting to be transparent. The FDIC isn't acting as a corporation here, so they shouldn't be a corporation.
"People who take risks should bear the responsibility."
Exactly. In Russia we had people who'd serially deposit money into the shadiest of banks offering highest returns. Deposits are ensured upto some amount, so they'd collect interest, get their money from the state after a bank bankrupts (while the bank owners are enjoying stolen money in a no extradition country) and go to the next bank.
SVB was a bank that mostly served corporate operations accounts for tehc nad healthcare startups and small businesses. People were not banking there for high returns. This is not at all about risky investments (ffs the bank liquidity crunch came from long term bonds being too illiquid -- not exactly exotic asset management). The accounts impacted are mostly payroll, daily operating accounts (for expenses/manufacturing expenses/real estate lease payments etc).
The bank managers and investors are not being bailed out -- they have already lost everything.
You seem to be attaching some kind of anger for some ill conceived and non existant "happy go lucky risk wall street bet" type of activity, when this is about buisnesses losing their operating accounts who did nothing wrong except for have accounts at this bank instead of the next bank over.
Also, if your entire clientbase is in a single groupchat, you should be much more prepared for a bank run. This is like common-sense stuff. The fact that this is a bad business model isn't really my concern.
> The bank managers and investors are not being bailed out -- they have already lost everything.
The bank managers will walk away having earned millions of dollars in salary and bonuses, funded by risky bets, and the investors will walk away without bearing the consequences of the risks SVB took. Their investments in SVB went to zero, but there's still money that's been lost.
It is not at all about risky investments! It’s about poorly managing risk, which is entirely different. The underlying instruments are among the lowest-risk securities on the planet, the risk that killed SVB was in the investment strategy.
You can call it whatever you want. They lobbied to not be subject to liquidity stress tests, and then didn’t have liquid assets when customers came looking for their money. That was risky. They could have invested in shorter term contracts but they didn’t.
You really think employees of SVB bank clients should bear the burden of decisions made by their employers without their input, likely without their knowledge, and very little reason to care 99.99% of the time? Quick, without looking at your paystub, what bank does your employer use?
I don't disagree that doing things like addressing medical debt are worthy ways to promote the general welfare, but let's not pretend it's an either/or, thing here, either. You don't seem to want to acknowledge the full context of the situation, which seems at least on the edge of disengenuousness. This as well, after you try to frame it as a "bank bailout" then backpedal when called on it.
I believe employees understand that working at a small, highly-leveraged startup is risky, whether or not they know which bank they use. The employees, by law, get 2 months wages guaranteed by the government (under the WARN act), and should have additional savings from their highly-paid SV tech job (which is partially highly paid because the employer engages in risky behavior) which I think is plenty of cushion to get their finances in order.
But the real problem I have is with special treatment. There's plenty of people out there who get screwed by their employer's negligence/malice but the only ones who get bailed out beyond the letter of the law are the ones with the networks, money, and influence to make noise about it.
> but let's not pretend it's an either/or, thing here, either.
But it is. You either spend money in 1 place, or you spend it in another.
> "bank bailout"
This isn't like a well-defined term as far as I'm aware, so 2 situations where banks/customers rely on the government to come to the rescue when risks don't pay out can both be called bailouts, whether or not the company remains in tact. You see plenty of media organizations and people calling this a bailout despite the fact that the bank is being dissolved, because it's a colloquial term.
Be honest: have you ever asked an employer what bank they use when you were interviewing? Is this your general policy? 10:1 says it's not, and you haven't. Even if you're the exception, I'm sure 99% of employees have literally never asked this question. Think about why that might be.
When I cared about stability I picked a big employer from which one would expect prudency. When I worked at a small company, I expected it to get ruined at any moment and planned accordingly. Since I became self-employed, I care a great deal about which bank I use and never put all eggs in one basket.
But, you didn't actually ask. And that is literally my point.
I care about stability in my employment situation as much as the next canine. I've worked at 4 startups, each with under 150 employees apiece. I've asked questions about funding, client base, growth plans, etc. All the normal "hard" questions you have to ask as a prospective startup employee. Not once have I ever asked where they banked. Not once has anyone I know asked where their employer banked.
I would submit that if the banking system becomes fragile enough that asking about such a thing is actually a good idea, we have bigger problems as a whole, which would make a prospective employer's answer to any such question irrelevant. And if that's the case, why ask?
Another way to put it: it's not employees and consumers putting "all eggs in one basket." It's the economy as a whole. If there's one thing that the 2008 financial crisis proved, it's that if the banking system gets gummed up, second and third order effects very quickly begin to set in and ruin things for everybody.
Now, if you know how to reconstruct the banking system to avoid this, I'd like to hear it. But as long as my employer's payroll funds aren't stored under the CEO's mattress, I think I'm good with that.
I understand, but my point is that most people don't need it -- they either use proxy for that or already accept startup-level risks. So bankruptcy of a startup due to poor bank choice is just one of many failure modes for startups.
"we have bigger problems as a whole"
I don't think so, at least based on Russia's experience. In the previous decade plenty of banks got closed with businesses losing money, but economy was ok and the banking ecosystem got healthier.
The only risk for other banks is opportunity cost: right now, there are much more productive uses of their money than buying old agencies at par. If you had $200b or whatever laying around, you could buy their portfolio and make about the lowest risk $10b there is. But if you just bought new agencies at the same durations instead, you could easily double that.
EDIT: To clarify, this is the primary risk at large banks, where they could absorb a chunk of the bonds without significantly affecting their average maturity. Smaller banks obviously risk replaying the SVB run.
> The only risk for other banks is opportunity cost
To be clear, if banks can improve their risk profile for free, they will do that (because it frees them to invest in other risky stuff). A no-risk 5% return while the fed is giving out sub-5% interest rates is a no-brainer. The reason no banks are coming in to help is because it would be a bad investment.
They are 5-10% total return, not annual. My point is that it is not a bad investment, it’s just a less-good investment than equivalent bonds with the exact same (extremely low!) risk profile at today’s rates. They were a perfectly fine investment in 2021-22, they just aren’t as attractive in 2023. Could very well be good again in 2024 though, who knows.
The FDIC charter:
The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system. The FDIC insures deposits; examines and supervises financial institutions for safety, soundness, and consumer protection; makes large and complex financial institutions resolvable; and manages receiverships.
This feels like you're agreeing with me. Is that the case? Receiverships have a pretty specific meaning, which explicitly does not include resolving liquidity issues using third-party funding.
They had 13b in cash going into this year and other highly liquid assets, those evaporated as the draw downs happened. Its not like they tucked away all assets into 10 year lockups (or higher risk loans). Even the bonds they did lock up -- in what would be considered 99% "normal" markets given the last few decades a sell off of those bonds would not have been highly problematic. It became problematic when they were so low return needing to be sold to reblalance the 10/90 rule when market rates were much better and they needed to be discounted due to the huge rate hikes.
SVB was pretty much considered the "boyscouts" of the industry and in normal circumstances they took a super conservative placement of the deposits. The only thing they could have done better was to (what would have normally been considered) overly hedge the bonds reducing their return even more.
I personally think they were too transparent with the liquidity crunch, and the investors and their companies that pulled out 20-30b before they even could execute the sell probably saw the ability to crash the bank and offer shark hooked bridge funding to the competitive companies left in the lurch. Its not like these folks were naive clients -- imho they were looking to do damage and get blood returns/equity on those bridge funding after the fall.
They had a customer base that would knife them at the first hint of a liquidity issue, then they had a liquidity issue. Of course a different approach would have reduced their returns, but then they’d still be in business.
Deposits from financials are treated as disappearing at the first opportunity from a regulatory point of view. Corporate deposits are considered volatile but less volatile. So the behaviour we have seen isn’t entirely unexpected.
It seems SVB has VC deposits and corporate deposits from startups that were effectively controlled by VC and behaved like financials in term of deposit outflows.
